ROSS NORMAN – A Rising Tide Lifts All Boats - Except Silver
ROSS NORMAN – A Rising Tide Lifts All Boats - Except Silver
I was enjoying lunch with some old chums in the City earlier this week – mainly educated financial industry types – not especially precious metals savvy - when the conversation turned to precious metals. As non-bullion investors, they conceded that gold was interesting, but they would not touch silver because apparently the 'price is massively manipulated' they had read somewhwere. I had heard this before...
… and therein lies a story.
I don't normally bother myself with that kind of crap but I thought yes... time to share a thought. It must have got my dander up.
While gold is enjoying an epic run these last 12 months, silver has only just about managed to keep up when it should, by tradition, have risen significantly (gold up 36%, silver up 27% last 12 months) ; silver could normally be relied upon to massively outperform at these inflection moments … but it hasn't. Silver is coming along for the ride, but very clearly reluctantly so.
Meanwhile the commentariat are claiming silver is about to “go parabolic”, “the elites are losing control” … “massive short short covering is imminent” … yet they never stop to consider the consequences of all this hyperbole.
In short – firstly they fail to understand how markets work (banks are long physical and short the futures - they are square barring the time mismatch between those different trades) – they are price neutral – its a mechanism to borrow or lend metal to companies for financing or inventory management, such as refinery work-in-process or mine production or other. Some will know this but think its too good a story to pass up. … what the hell, lets give the banks a kicking anyway. Let's make the claim and maybe everyone else will “pile on” … and we get what we hope for. But it doesn't work like that.
Those who are silver bugs are already in on the trade – they are long silver - while those who might be minded to buy silver (and it has some great fundamentals) are put off because who would want to enter a market that is fundamentally flawed.
For some reason they fail to see they are working against their own interests.
If you keep crying wolf – you do not educate people to hate wolves – you only teach them to mistrust the messenger.
Sadly all the while they are peddling these mis-truths they genuinely think they are doing god's work. And with all the zeal of 16th century Jesuit Conquistador missionaries in South America, spreading the word – and smallpox, typhus and measles – until the local population dies out. Brilliant.
So silver finds itself friendless - and they wonder why.
About 20 years ago I remember telling GATA they were actually working against their own interests – it caused a pause for reflection but their instinct to damage the market they profess to love was too great. Amen.
Rant over – have a nice weekend.
Ross Norman
CEO
Metals Daily Ltd
www.MetalsDaily.com
ross@metalsdaily.com