Silver – Caught Inside

July 21, 2016

Most short-term investors know better. At worst, silver is a survival story. At best it is an investment for the ages.

Some place in between it is an intermediate investment, albeit a very emotional and volatile one. Current financial conditions mandate survival as the primary focus. And the essence of financial survival is return of investment.

Return on investment occurs indirectly.  It is the act of taking possession that creates a foundation for preparing for the worst.  There are lots of ways the financial system could fall apart – leading to a currency crisis. I’ve been outlining them for years.

Most investors…

The current financial culture consists of a class of people who believe in financial immortality. A perverse, almost spiritual dogma that requires ignorance of that which displaces finance from economics. A hope the fiat currency will work this time around.

Because it’s different.

When people are new to the concept and begin to ask questions, it helps draw from analogies. Surfing is an obvious one for me, probably because it involves some of the most intense choices that I make.

I surf at a beach break adjacent San Francisco’s Golden Gate. 

The volume of water moving in and out of the gate with the tide creates incredible rivers of rip currents, making it dangerous for swimmers and beginning surfers.

The beach faces the Pacific Northwest, and is open to swell energy originating in the Gulf of Alaska and Sea of Japan. 

There is no continental shelf, so the energy unloads as it makes its way across the outer sandbars.

And it’s a beach, which means the only way to get through to outside is to paddle in on coming waves – a reverse Normandy.

It is notorious for long, half hour to forty-five minute paddling struggles that occasionally end in failure. It reminds me of my near-decade journey attempting to stoke awareness of silver. 

Silver is a tiny market, which lends itself to its own baseline volatility.

Of course, manipulation, like a false wind, makes it that much worse. Volatility and emotion are not for the faint of heart. 

There are many more former silver investors than those who have remained over the last 30-plus years.

The whole concept of precious metals allocation from the mainstream world of certified financial planners and advisors is that it is just something they wouldn’t recommend. As far as it can be measured, the amount of even paper metal held in a typical portfolio is infinitesimal, and it’s been that way for years.

Of course, most people don’t have a portfolio, and no exposure to metals. If you check price performance at pretty much every angle, it doesn’t look good. And if no one is participating (buying, making the price go up), then it’s nearly impossible to commit.

Most people avoid this beach with very little consideration. Just rumor alone is enough to deter. The water is cold and almost every afternoon it is washed out by wind and the setting sun. It’s almost impossible to see how it really is until you get out there; even when conditions are actually quite good.

This is also congruent with the experience of physical silver over the long run. If you haven’t gone through the process and personally taking possession, it may all look a borderline insane from the outside…nerve racking to say the least.

The beach is very difficult to photograph. You’ll never get your picture in a magazine, unless you are a professional, like the one pictured above. There is very little surf culture. The water is cold, and often the air is cool.  Ninety nine percent drive right by without a care in the world as Mother Nature puts on a sight to behold – if you know what you are looking for.

Silver is also an unseen market.

On the surface, it may occasionally get mentioned along with gold but it’s fairly obscure to outside observers. Most think of jewelry or silverware or coin collecting before investment.

Most people, including many who should know better, have no clue regarding the details surrounding the massive disconnect in paper price and physical fundamentals.

Alas, the majority, will ‘drive right by’ the silver opportunity because they really aren’t looking; nor are they even aware that they should. We live in a time where some the most basic principles of wealth and investment have morphed into complex derivatives, and fiat for the sake of money.

And even when relative price performance is good, there are a million stories pointing out why it isn’t — or why it’s (obviously) a bubble. 

For a surfer, all that suits me just fine. Until conditions become dangerous.

When all hell breaks loose, it’s preferable to be on the side of those who are prepared. Part of those who saw it coming. It’s one reason to keep writing these…

I can’t tell you how many times I’ve paddled out alone, having gone through one hundred thousand rationalizations for giving up on the idea all together.

Not to mention the shark issue.

Just as the ocean has its Great White Sharks, for the silver market, there are predators too. Somewhat like sharks, in that they are almost perfect at what they do; only they also need a constant state of motion; in the case of finance – a flow of cheap credit.

This is the case whether it’s the manipulators themselves or the legion of traders pretending to be long-term investors commenting on the rigged price action.

You can always tell when the surf is really serious. The coast guard puts on coast card training exercises in the beach break.

When it’s serious, it’s comforting to find a partner in crime.

While we are small band of monetary (and hopefully) general “preppers”, at least we exist. Eventually, the surf comes up. Fall and winter bring in long period ocean swells, an echo from some far away chaos; mountains of water moving across the ocean toward the impact zone.

It’s one thing to battle froth of oncoming breakers. It is quite another to face the quiet violence of a big wave standing up to dispense with great majority of its energy. Whether you have the quiet determination to ride it, or the stamina to survive comes down to the choices made today.

But it’s all about survival. It’s about being in tune with the core of what makes us human – what ties us together.


Courtesy of

Spanish Conquistadores invaded the Inca Empire in 1528 to steal their silver and gold.