Counting Your Chickens In Dollars

December 29, 2014

With silver, you have a rare physical commodity that you can literally take into your possession.

It’s known that quantity, in investment form, is far less than what is perceived by the mainstream. And as a direct consequence, orders of magnitude less than the price indicates.

A never-ending flow is demanded from strategic industries, while the demand for physical continues to grow stronger, despite price – a clear indication of its monetary role and a hint at the ultimate separation from its paper tether.

And the whole thing is held together by an overt, blatant pricing mechanism that systematically destroys the flow of new real supply by crushing the economics underlying production.

Real value is based in trust. Collateral is what is needed to back debt. All currency is debt. Debt is an obligation. In the case of the Federal Reserve, each debt coupon has zero interest with an open-ended term that is tied to confidence and belief and force.

It is backed by an amorphous construct – one that it is powerful and hostile. It is mathematically impossible to repay both official and unofficial debt without collapsing the system that manufactures it.

Without any collateral backing it up, the dollar literal floats in relative value with competing currencies that are equally unhinged. True collateral is consistent – easy to use and measure. Notes are debt without collateral. Fiat is used to buy treasuries, and the interest is rebated to the Treasury.

Individuals still have the opportunity to buy traditional and real collateral. What can you hold outside of the system?

But we also have unrealized (shadow) risk in the background. All of these converge on bullishness. But the shadow aspect of all of this has a dark side effect on most investors.

Naturally, we all want to see a return on investment. Counting your wealth in dollars is the number one prescription for failure in this. Is there a way to profit in the short term?

Yes. But the leverage required to make that happen it is out of reach for most. As is the patience and time to execute proper trades; time better spent preparing for the eventual aftermath of system exponentially fragilized.

For the rest of us, it is a long term play. If you want to watch the price action, watch it…but disassociate from it.

You’ve done all you could. You’ve taken action. Other markets will appear to increase in value. It will seem as if you missed out on unrealized gains. Gains in what? And held where? In whose control?

The problem is that we live in a world of impatience. There is nothing quite like the stoic patience of long term investors in this space. Then it becomes about allocation.

What percentage collateral versus speculative investment? Examined in the context of the recent rally, it is unreal. What is the safest ratio for you?

But the collateral is always there. The trick is to hide it from the people, to disparage it and attack it; to manipulate its price by any all means and completely control it so that the true signal is lost.

The ironic tragedy is that those whose ‘dare’ to hold physical collateral in their portfolios are constantly plagued with worry over the nominal value measured in uncollateralized figments conjured by the financial system itself.

The greater the ability a person has to withstand that truth – the greater is their appreciation for what they have.


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Silver has the highest electrical conductivity and heat of all metals.