Short Memories and Silver Shortages

It's now one year after the 50th anniversary of the official beginning of the great
silver shortage. For the outside world, it may very well be the least known.
For the precious metals trading community, it is one of the most ridiculed or
outright denied fundamentals of silver.
President Johnsons speech can be found in full here:
http://www.presidency.ucsb.edu/ws/?pid=27108
I have included a few illuminations from that speech as follows:
When I have signed this bill before me, we will have made the first fundamental
change in our coinage in 173 years. The Coinage Act of 1965 supersedes the act
of 1792. And that act had the title: An Act Establishing a Mint and Regulating the
Coinage of the United States.
Now, all of you know these changes are necessary for a very simple reason-silver
is a scarce material.
Our uses of silver are growing as our population and our economy grows. The
hard fact is that silver consumption is now more than double new silver production
each year. So, in the face of this worldwide shortage of silver, and our rapidly
growing need for coins, the only really prudent course was to reduce our
dependence upon silver for making our coins.
If we had not done so, we would have risked chronic coin shortages in the very
near future.

If anybody has any idea of hoarding our silver coins, let me say this. Treasury
has a lot of silver on hand, and it can be, and it will be used to keep the price of
silver in line with its value in our present silver coin. There will be no profit in
holding them out of circulation for the value of their silver content.
The new coins are not going to have a scarcity value either. The mint is geared
to get into production quickly and to do it on a massive scale. We expect to
produce not less than 3 1/2 billions of the new coins in the next year, and, if
necessary, twice that amount in the following 12 months.
So, we have come here this morning to this, the first house of the land and this
beautiful Rose Garden, to congratulate all of those men and women that make
up our fine Congress, who made this legislation possiblethe committees of both
Houses, the leadership in both Houses, both parties, and Secretary Fowler and all
of his associates in the Treasury.
In a nut shell, silver uses were putting pressure on the underlying currency back
in the mid 1960s, before the array of electronic devices, and myriad of other uses
we have now. This was before the suppression of prices had relegated most
primary miners to the scrap heap.
Greshams law was already working its way into the system. Fifty years ago, bad
money was chasing out the good.
A promise was made and a clear warning: We will fight you if you choose to
invest in silver. We will use our stockpile to suppress the price.
A few years later, Nixon shut the international gold window. All that was left of
the old Bretton Woods standard ended in yet another default.
Many trillions and more defaults later, not much has changed.
Silver was the lynch pin, gold is legally suppressed by the Exchange
Stabilization Fund the real plunge protection team.
As silver and its paper derivatives go, so goes the entire facade.
The Thin Ice
Beyond decades, the silver price has been managed; as it is today.
Intent and motivation has changed only slightly with the times and the financial
industry was a fraction of what it is today.
The manipulation that occurs today is celebrated by the profit motive; the unutterable intention to keep prices low is in full force.

More obscure, consider the true potential value of silver in fiat terms.
The inflation adjusted value when using real inflation numbers not the
academically altered madness served up by the U.S. Bureau of Labor and
Statistics.
Jeff Clark recently reported (using John Williams ShadowStats numbers for CPIU):
The $48 peak in April 2011 was less than half the inflation-adjusted price of
January 1980, based on the current CPI-U calculation. If we use the 1980 formula
to measure inflation, silver would need to top $470 to beat that peak.
A quick visit to coinflation.com shows that a 1932-1964 Washington would value
at $85 with a silver price of $470/troy ounce.
Silver is just playing the same role it has played for the millennia.
The financial markets are goosed beyond reality, giving rise to an untouchable
trading culture and mentality.
General market fundamentals are a farce. The Greenspan-Bernanke-Yellen put
reinforces the mantra dont fight the Fed.
Every system predicated on fractional reserve lending will achieve exponential
growth.
Debts eventually and always grow increasingly faster than the currency available
to pay it.
Raise interest rates or shrink the money supply and you freeze the ability to pay
outstanding debt. This leads to collapse and liquidation.
Entropy and waste are built into the system and, like a giant star; massive
concentrations of capital warp the normal rules.
And we all become slaves to the private banks which have taken the issuing power
from The People to whom it properly belongs.
A commodity-less currency gives rise to finance unhinged. Once the growth of
finance captures the imagination of government and bureaucracy, it is a very
slippery slope toward outright crime and fraud.
Current silver prices, like most other commodities and asset classes, are an
artificial phenomenon only more so.

Ignored, ridiculed, and scarcely held, silver is the penultimate value investment.
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