Boycott the FED…Buy Silver

December 19, 2013

There are several potential reasons to buy silver. For some, it is about inflation protection. For others it is about the financial privacy offered by a real asset. Still others look to own silver as a play on industrial demand, while other people own silver as insurance against social dislocation or political misfortune. But there is another reason to buy silver that I don’t often hear enough about—and that is the idea that people buy silver to boycott a corrupt, broken financial system.

Boycotts, as any good American knows, can play a big role in changing the course of history. Just spend some time reading about the Stamp Act protests, Townshend boycotts, or Tea Party in the 1760s and 1770s to understand the importance of boycotts in the creation of the United States. And who knows whether boycotts might also play some role in transforming our financial system for the better in the years to come.

It is a fact of history that there are those moments when the social mood, or mass psychology of a generation or of a people play a role in creating great change. I am thinking, in particular, about silver and the social mood today because of the inane discussion of tapers and recoveries here in the United States. The intense focus on FED tapering may be of interest to some in the financial blogosphere, but, as usual, it deflects from discussion of the real issues facing the financial futures of westerners. If anything, the fact that the conventional financial media spends so much time obsessing about FED policy shows how they intend to mislead people on several fronts. First, and foremost, is the idea that you or I as mere mortals are even allowed to know what goes on behind closed doors either at a central bank, or at your local bank, unless you are being told to believe something for the good of the system. Whatever news is laid in front of you represents an effort to manipulate, or jawbone, both you and the markets in one direction or the other. Looking back you can see this at work in the spring of 2009. We saw central bankers allow for the mark to make-believe fantasy so as to ensure that reality did not enter into calculations of what bank assets were or are actually worth. Then we saw the blunt statement by Chairman Bernanke that there “would not be another Lehman” and watched the Chairman and his crew pump unprecedented amounts of liquidity into the system. The central planners wanted to get the animal spirits back on Wall Street, to simply convince enough of the super rich that the central bankers had their back so as to create the great reflation of 2009 to the present that still impacts equity markets. In other words, it was important to break the social mood of pessimism and despair that had gripped Wall Street. If that psychological war could be fought and won, then all would be well, since in our current financial system, the confidence of the super-rich is everything.

This last idea leads me to my second point, namely, that quantitative easing was NOT about the “real” economy—whatever that term means. Quantitative easing was about the banks—period. If the FED feels that the banks have had their fill and that they can be deemed “solvent” (or solvent enough) either through accounting gimmicks or something else—then quantitative easing can end. If the FED feels that the super-rich have seen their fortunes restored, then to the FED all is well with the world. There has been a recovery for those who count—just look at stock prices, luxury goods prices, artwork, high end real estate etc. For those people, 2008 was an inconvenient annoyance.

I’m not sure that the central bankers care all that much about the broader economy or society, or even believe that they can do much for the guy on the street—no matter what the propaganda leads you to believe. If you have a hard time believing that financial elites either aren’t able or willing to extend prosperity to the great, unwashed masses, then you haven’t traveled much around the world. Gross inequality and great disparities between the few and the many is the norm around the globe. To the extent that the United States managed to buck this trend in the 20th century simply represents an historical accident, nothing more. The U.S. may simply be reverting to the mean when it comes to global inequality, by the way, in the years ahead, as many elements of its society descend into the Third World. So don’t go expecting central bankers to implement policies designed to help you--- unless you are an overleveraged financial institution. I would argue, if you are an average middle class person, that this “recovery” was not for you anyway.

However, as this more realistic, unconventional, or conspiratorial view of the world gains traction, you should understand why I buy silver. Precisely because silver has been demonetized from national money supplies as well as from official stockpiles, the elites have very little silver to monkey around with through leases and swaps and for God knows what else (like they do with gold, I might add.) Private individuals are the ones who really own the silver. For me, the social mood laid out above—one of skepticism toward the ability of the financial system to aid the average person—should in the years ahead continue to encourage people to accumulate real, physical metal. If people think about purchasing silver as a protest against a system that has let them down, or as a vote for a different system—one where entities like the FED play less of a role--then you can understand why I think silver prices should eventually resume their upward trend.

I would also add that the Federal Reserve is largely helpless against efforts by foreigners to divest themselves of the US Dollar—which is something that can be manipulated only with the greatest of difficulty. It is worth wondering that if all is well with the world, why is China still trying to diversify away from the greenback? Why is the dollar not rallying in the face of this wonderful news about the “recovery”?

Is there more to this “recovery” story than you are being told?

Especially over the last five years, the alternative view of reality laid out above has been making a comeback and has received a hearing in various corners of the internet. And it is not a surprise that over the last five years, physical silver sales have exploded from in the single millions of ounces to probably close to 150 million as I write.

Someone is voting with their feet, and eventually it will be hard to ignore.


Read more of Ryan Jordan's analysis at  where you can also learn  about his book, Silver--The People's Metal.


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Ryan Jordan currently teaches U.S history at the University of San Diego. He has previously taught at UC San Diego, Lafayette College, and Princeton University, where he received a Ph.D in 2004. His book, "Silver- The People's Metal," published in 2012, recounts the past, present, and future of the silver market.  Visit Ryan's blog:

Gold falls on firm dollar, China rate cut lends support