This commentary is a SILVERAXIS exclusive.
A certain doctor by the name of Jeffrey Lewis who discloses that his “site was created by someone with no professional background in investing” tells us that silver was also confiscated by FDR in 1934 (the gold confiscation actually occurred in 1933, the 1934 Acts made gold contracts unenforceable and devalued the U.S. dollar from $20 to $35 per ounce):
The history of confiscation of precious metals is well documented, with literally tons of gold and silver ripped from the hands of ordinary Americans during the financially tumultuous years of the Great Depression. However, history books and academic research rarely shine light into the confiscation of silver and rather focus on gold, even though both were made illegal for a total of 40 years.
In this article, we’ll examine the history of confiscation and shed light on the possible future confiscation of silver from investors.
Once Upon 1934
Franklin D. Roosevelt penned the first law to seize precious metal assets from Americans as a way to force savings in banks, rather than allowing Americans to hold their wealth in metals. Prior to the legislation, banks were riddled with liquidity problems, as trust in the American banking system waned and investors looked for the safest place to store their wealth. With both the banking system in question and the stock market still volatile after its peak in 1929, investors wanted hard assets, namely gold and silver.
FDR hoped confiscation would push investors towards the banking system, as well as raise cash for a growing Federal budget. Unfortunately, it did just that – all the while ripping wealth right out of the hands of the American people.
The Confiscation of Silver
Silver bullion was also made illegal to own during the 40 year ban. However, this is often little discussed, as silver coins were still a large part of the money supply up until 1964. Almost all pre-1964 coinage was 90% silver, and the coins were not illegal to own during this time, as it was a mainstay of the monetary economy. Silver bars, on the other hand, were illegal, as they represented wealth outside the monetary system and were systematically “purchased” from their owners at a price well below market value.
This of course is utter BS. Silver was never confiscated by FDR. I don’t think silver has a checkered past of being confiscated by other governments either. You can read a good overview of what “confiscation fears” can do to your bullion accumulation plans here. You can also see this excellent summary of the Hunt silver episode for more information on the silver market in the 1970s. How could the Hunts have acquired 55 million ounces of silver in 1973 if it was illegal to own silver bullion?
I’m not endorsing any particular bullion dealer over another here, I am endorsing the truth.
silverax AG Wisdom Links
This commentary is a SILVERAXIS exclusive.
Elliott Waver Alistair Gilbert has taken a shot at predicting the zigs and zags of silver over the next year with his Market Timing Report - Silver:
This a brief follow up to my Report of 13th January advising a SELL of Silver at $18.52. Silver has since been sold down to $14.62 in Wave 3 of 1 of C of Major Wave 2.
In Wave 4 of 1 we can expect to see typically a retracement of Wave 3 of between 38.2% to 50%. This would give us a target of $16.25 for the 38.2% and $16.75 for a 50% retracement. Obviously the wave 4 retracement can halt anywhere between those two targets and given the pressure to the downside in wave 5 may even fall a bit short.
This is somewhat consistent with my thinking insofar as we should get a relief rally in silver back toward the $16.75 area.
Moving on to the big picture, my weekly DT chart shows how Major Wave 1 topped in March 2008 and we moved down for an “A” wave into October 2008 and up for a “B” wave into December 2009. We are now heading down in the “C” wave which should last until January 2011, and this would complete Major Wave 2. The 3 waves of (C) illustrated are 3 of 1 of (C).
This is the part that most “Wavers” seem so intent to be warning us about, that gold and silver will decline into late this year or early next in a “C” wave of a Major Wave 2 or 3 or 4. I don’t know if these wave counts are being derived purely from an unjaundiced technical look at the charts or as an adjunct to the general sense by the Elliott Waving universe that the world is about to accelerate its depressionary downward spiral. In any case, it is certainly something to be aware of, but unless someone can convincingly show me that Elliott Waves predicted silver would drop to $8 in the fall of 2008, I’m not going to be giving much shrift to this kind of preconceived market “analysis”. Not to toot my own horn, but to my knowledge I was the only one to have publicly predicted a massive drop in a metal (okay, it was copper not gold or silver), developed a strategy to take advantage of it, and ate his/her own medicine (along with a fortunate few SILVERAXIS readers).
silverax AG Wisdom Links
NOTE: Published at Metal Augmentor on February 11, 2010 at 2:21PM EST.
This morning both gold and silver are showing some spunk even in the face of a strong U.S. dollar trading over 80 on the USD Index. While the monetary metals are hardly out of the woods yet, the price action is encouraging as it appears conducive to the formation of a bottom (higher highs and higher lows all this week). In particular, gold was able to easily pierce this morning the 1080 level that previously served as support (but over the past few days it has been resistance). It appears we could have one last pullback in the next several days, perhaps to the 1065-1070 level in gold and back to 15.25 or so in silver. If these levels hold, we could then see a relief rally that takes the monetary metals toward a retracement of their recent losses with initial targets in gold of 1137.50 and silver of 16.75, possibly accompanied by a drop in the U.S. dollar back into the 78.80 area.
From a price point as well as our own positioning in the silver market, we are effectively no longer short-term neutral and therefore we should really be turning our “alert flag” (which is a legacy device from the old SILVERAXIS days to gauge our own sentiment toward the silver market) from YELLOW back to GREEN. All other time horizons remain GREEN as well for now. For perspective, we came close to turning this “alert flag” to RED on October 27, 2009 [link only works for Metal Augmentor subscribers] after having turned to YELLOW all the way back on May 29, 2009 [link only works for Metal Augmentor subscribers]. While we did get a vigorous pullback in the monetary metals from May into early July, we pretty much blew it in late August and early September and failed to recognize the unfolding of the powerful speculative fervor that would eventually take gold over 1200 and silver to nearly 20. On a positive note, however, we are hopeful that very shortly Metal Augmentor will have the benefit of an institutional level technician and market analyst who not only called the record-breaking run in gold last fall but also picked the fall 2008 bottom in gold almost to the dollar. We believe integrating this gentleman’s analysis in our trading and speculating will have us on the right side of the market much more often going forward.
Read more…
silverax Windbag Wisdom
NOTE: Originally published for Metal Augmentor subscribers on February 10, 2010 at 6:09 PM EST.
PROMOTIONAL NOTE: We are now getting really close to officially launching the Metal Augmentor service. Yeah, I know we’ve said that about a bazzillion times but one of these days it will eventually turn out to be true. As a heads up, we’ve had quite a few additions to the mailing/waiting list lately, so much so that assuming all of our current subscribers and the people on the waiting list all end up registering, we will have completely filled our initial Founding Member roster. Once that happens, we would close the membership again for a while as we decide exactly how many Founding Members we can have while still being able to answer individual questions. So, my obviously biased suggestion would be that you sign up for the mailing/waiting list immediately by going to Metal Augmentor. End promotion.
With the recent weakness in silver, it was somewhat gratifying to see that the iShares Silver Trust ETF, SLV, has just filed a report with the U.S. Securities and Exchange Commission to disclose a recent amendment to their custodian agreement that provides for an increase in the silver bullion storage capacity to 400 million ounces. The iShares SLV is already by far the largest single public owner of silver bullion in the world with just a bit over 300 million ounces in custody at present, and the increase to 400 million ounces indicates that the ETF sponsors, BlackRock, feel confident that the trust’s silver bullion holdings will continue to grow at a rapid pace. By the way, very few in the bullion community have commented much less seem to have noticed that the iShares sponsor is no longer Barclays Global Investors, a division of a troubled bank, but rather a (somewhat) independent publicly-traded asset management firm*. In our opinion, this change in sponsorship structure of the iShares silver ETF represents a reduction in operations risk. Importantly based on some whispers I have heard, BlackRock may become more aggressive compared to Barclays in protecting its image and credibility by going after irresponsible slander and libel against its iShares unit, especially when the lies are being publicly disseminated by competitors. We’ll have to see if these whispers are true or merely wishful thinking by market participants with an ax to grind, but in the meantime I would suggest that those who like to throw around unsubstantiated, self-serving accusations about their competitors should cool their jets. You know who you are.
*I know the merger of BlackRock and Barclays Global Investors is old news, but the deal did just close this past December.
silverax Windbag Wisdom
NOTE: Originally published for Metal Augmentor subscribers on January 19, 2010 at 7:24PM EST.
Going forward SILVERAXIS will return to its original premise, which is “Dedicated to Investment Opportunities in Silver”. That means less generic posts — for example those about gold or whatever else that only peripherally touch on silver. So effectively non-silver commentaries will be reserved for Metal Augmentor subscribers, but the good news is there will probably be more free material here that is specific or at least directly related to silver.
Here is a new series that we may or may not keep up with, depending on how much time we have and reader feedback. It is called Grounding the Hype and tries to analyze and deflate excessive hype in metals and mining. We’ve done this type of thing already with our commentaries in the past such as covering Paramount Gold and Silver and more recently Premium Exploration.
While we don’t want to focus on negativity and will certainly be viewed by some company and industry insiders as “filthy” for exposing some of the tricks and ploys that they rely on to make money on the backs of unsuspecting investors, we have a strong desire to differentiate ourselves from the typical newsletter, research and advisory crowd that in many cases is in bed with the companies they are covering. We are not going to make money that way and we want everybody to know that.
If we are wrong about a particular situation, we will try to be the first to admit that, but we won’t mind being called on it either. Importantly, we are attempting to get at the whole truth, no matter how grainy and dirty, by shedding light on uncertainty and questionable circumstances.
Read more…
silverax Grounding the Hype Grounding the Hype, Silvercorp, SVM
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