Readers in the Alternative Media may have noticed a distinct
drop-off in the number of articles that are published on “the gold market” or
“the silver market”. This is true even with respect to precious metals
commentators.
There is a very good reason for this. We no longer have
markets. To prove this assertion, as always, the place to start is definition
of terms.
What is a market? There are a number of ingredients in any
definition. However, first and foremost, a market is a forum for
human commerce – person-to-person
buying/selling of merchandise and services. By this definition alone, we
clearly no longer have markets, on any national or international scale.
A market is some setting (physical or virtual) established
explicitly as a meeting place for buyers and sellers. The purpose of markets is
improved efficiency in commerce. This greater efficiency comes in several
forms.
To begin with, by having a publicized and prearranged focal
point for such commerce (a market), we maximize the number of participants. In
turn, this provides a number of spin-off benefits.
People minimize the amount of time they need to devote to
the day-to-day purchases which are required in order to meet our basic needs,
through being able to shop in a single venue – designed for larger numbers of
shoppers. The “supermarket” acquired its name because the ability to purchase
all of one’s food items from a single vendor was seen as an enormously useful
gain in efficiency.
Having large
numbers of buyers for any particular market produces an additional efficiency. When
large numbers of transactions start to take place in any market, one of two
things usually starts to happen. The inventory of that vendor begins to
decrease at a faster-than-expected rate, or it begins to decrease at a
slower-than-expected rate.
The vendor has a desired target for sales and a limited
inventory. If the inventory falls rapidly and the vendor senses strong demand,
that vendor raises the price. This is done to capture the maximum price for
that product while still meeting the desired sales target.
Conversely, if the vendor senses weak demand because few
purchases are taking place and the inventory is falling slowly, the vendor
lowers the price of that product. The lower price entices more buyers and the
vendor still attempts to capture the maximum price for that product while
(hopefully) continuing to meet the sales target.
This self-adjusting feature of markets is called price
discovery
. As several rounds of
commerce take place in any market, both buyers and sellers acquire a better
sense of
the true price for that
product: the price at which the demand from buyers is equal to the sales target
of the seller.
In economics, this true price is known as the equilibrium
price, for obvious reasons. When supply meets demand, that market is stable.
Buyers and sellers become accustomed to the equilibrium price and that price will
remain in effect unless/until the parameters for that market change.
For example, if a vendor is a producer (farmer) of wheat and
a late winter frost causes damage to the crop, the vendor’s supply of wheat is
diminished. Either the vendor raises the price (to maintain a constant
inventory level), or the inventory of wheat is depleted, when buyers want to
purchase more wheat than is available – at the previous equilibrium price.
These fundamentals are symmetrical, so the reverse is also
true. If a wheat farmer enjoys ideal growing conditions and produces a bumper
crop, then that farmer needs to lower the price for wheat or else the farmer
ends up with an excess of inventory. Naturally, fundamentals can also change on
the demand side, with identical dynamics.
The normal condition for human markets is equilibrium. As
populations grow and societies evolve, our markets have become larger and more
sophisticated. Supply/demand fundamentals tend to balance more readily, meaning
greater price stability in markets.
This is what is supposed
to happen
, in legitimate markets, over any longer term time horizon.
Economics has a term for legitimate markets; they are called “free markets”. In
order for any market to be a free market, there is a long list of conditions,
all
of which must be true.
Only a free market
will efficiently produce a legitimate price for any product
, genuine price
discovery, and thus price equilibrium. In order to prove that we do
not have free markets (and thus do not
have legitimate markets), only the two most important conditions need to be
discussed.
a)
Perfect
information
b)
The market must be truly “free” (from
interference)
There may be many readers who genuinely believe that we come
close to satisfying condition (a), in what we call our markets. Maybe
information isn’t quite “perfect”, those readers argue, but with our
free press information in the
marketplace is nearly perfect.
The obvious rebuttal to this, which regular readers could
supply without hesitation, is that we do not have anything which remotely
resembles a free press. What we have is virtually all large-scale media in our
societies controlled by a tiny handful of gigantic corporations (an
oligopoly).
All of the tentacles of this oligopoly say virtually the same thing, all of the
time.
That is not called “a free press”. That is called a
propaganda machine
. It’s very easy to distinguish the difference.
With any free press, most media outlets will be saying
different things, most of the time. We are a naturally contrarian species. We
disagree, we argue, and (if really angry) we fight.
There will be occasional moments of media consensus,
reflecting the fact that absolute truth does exist in the universe. However,
most of the time a free press is a cacophony of perspectives and a full
spectrum of opinions.
What we get instead is a constant drumbeat of propaganda,
especially with respect to information that concerns our so-called markets. To
create the illusion of some diversity of opinion, the propaganda machine has its
own collection of puppet “analysts”.
Roughly 90% of these “analysts” are given the Right Wing
script to parrot, and roughly 10% parrot the Left Wing script. This reflects
the fact that the Right Wing script is much better for “business” – the illegal
business of our ruling crime syndicate, which regular readers know as
the
One Bank
.
We don’t have perfect information in our so-called markets.
We don’t have adequate information. Instead, we have the opposite of this.
The Corporate media feeds us false information about almost everything, almost
all of the time
. The examples of this propaganda are far too numerous to
mention. However, a particularly illustrative example is the silver “market”.
The quantity of disinformation
(
propaganda)
which we have been fed about silver – for many decades – is beyond the scope of
this piece. However, a few of the more notable examples will be mentioned.
Inventories:
Regular readers know that these commentaries have been the
only place to come to get detailed information on the long history of
inventory
fraud
perpetrated by the banking crime syndicate in the silver market. Only
the most recent false propaganda on silver inventories will be discussed here.
The bankers like to pretend that the silver market is in
balance – or even in surplus – every year. For many years this is what we were
told, even when their own data strongly dictated otherwise.
More recently, these serial liars have finally confessed
that the silver market is in a continuous (permanent) supply deficit. What the
bankers
tell us with their crooked
propaganda is that the silver market just experienced its
“fourth
consecutive supply deficit”
in 2016. What the bankers have shown us (with data they have been
unable to suppress) is that
the silver
market has been in a permanent supply deficit for 30 years
– if
not longer
.
Demand:
Informed readers already know that what the bankers call
“the silver market” is
at
least
99% paper trading, not metal. The vast majority of this fraudulent
paper trading is conducted
by
the bankers
themselves. When they wish to fabricate the lie that “demand is
falling” for silver, they simply slightly reduce the amount of their own
fraudulent paper-trading in this so-called market.
The Corporate media (part of the crime syndicate) cooperates
with the bankers by also pretending that the paper trading represents “silver
demand”. The propagandists in the mainstream media largely ignore the
real
fundamentals
in the silver market (i.e. actual buying/selling of physical
metal) and continuously maintain their false narrative concerning this phony
paper trading.
Supply:
As with inventories, there are numerous direct and indirect
ways in which the banking crime syndicate constantly lies about the supply of
silver, and overlap exists with other categories of their lies. As noted, the
bankers have liked to pretend that the silver market has been in
balance/surplus.
In the case of inventories, that lie has served to reinforce
the myth that silver inventories have been (are) robust. In the case of supply,
this lie creates the myth that the supply of silver is adequate (i.e.
sustainable). Nothing could be further
from
the truth
.
Another way in which the banking crime syndicate pretends
that the supply of silver is greater than it is in reality concerns the sale of
“scrap silver”. This is treated like it is a component of
new, incremental supply to this market each year.
It’s not. Sales of scrap silver represent the
cannibalization of silver stockpiles. These stockpiles are (obviously) finite.
As previously explained, with a permanent supply deficit, we have been
continuously
burning
through
these stockpiles for at least thirty years.
In broader terms, we have been cannibalizing these
stockpiles (off and on) for roughly a century. Noted authority Ted Butler has concluded
that humanity had burned through well over 85% of all stockpiles, i.e. all of
the silver that has ever been mined. Many years ago, he pointed to the obvious
evidence of the
“silver
cartel”
(banking crime syndicate), and the relentless falsification of data
and deliberately misleading pseudo-analysis from the Corporate media.
In the fantasy world of the bankers (and Corporate media)
the silver market can be sustained indefinitely, and thus according to these
liars the price of silver never needs to rise. In the real world, we are
rapidly moving toward a full-fledged supply default in this market – with that
default potentially occurring any day now.
The last, major component of false propaganda in the silver
market naturally concerns the price of silver. However, there is further overlap
here between the other categories of lies as well as overlap with explaining
how/why this market is anything but “free”.
Part II of this series will address the near-infinite
amounts of false information which have been circulated concerning the price of
silver. It will address how and why the silver market is not free from
“interference” (i.e. manipulation), and it will begin to address/explain how
these fundamentals of market corruption apply to
all of our so-called
markets.
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Jeff Nielson is co-founder and managing partner of Bullion Bulls Canada; a website which provides precious metals commentary, economic analysis, and mining information to readers and investors. Jeff originally came to the precious metals sector as an investor around the middle of last decade, but with a background in economics and law, he soon decided this was where he wanted to make the focus of his career. His website is www.bullionbullscanada.com.
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The views and opinions expressed in this material are those of the author as of the publication date, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.
