By now I must have written scores of columns on gold and silver price suppression. Many of these columns have posited on events that might change these anti-free market tactics.
What I haven’t written about, however, is the group that is most adversely affected by the price suppression and, arguably, could do the most to change the status quo.
For some reason(s), the companies that mine precious metals have been strangely silent on the topic. To many of us, the lack of interest displayed by mining executives on a topic that literally affects their companies’ bottom lines - and perhaps even their ability to remain in business - is both bizarre and frustrating in the extreme.
If there is a meeker or more passive group of “leaders” in a commercial industry than those found in the precious metals sector, I’m not aware of it.
In the couple of years I’ve been buying silver coins and acquiring stocks in silver mining companies, the silver price has fallen more than 60 percent (from nearly $50/ounce to $19.35/ounce today).
Maybe somebody can help me out here but I can’t think of any other commodity, product or service that has plummeted by this percentage in the span of less than 36 months.
In fact, the price of just about everything (except precious metals) has been soaring. That is, inflation (correctly reported) is sky-rocketing - except for the commodities that common sense says will also rise during conspicuous periods of rising prices.
But real deflation exists (alone?) in the precious metals sector. This despite the fact that “demand” for gold and silver have risen at rates above available supply.
I just read an article that showed a graph of investment demand for silver over the past several years.
In the year 2013, demand for investment silver (as measured by actual sales) was almost five times higher than in 2007. Industrial demand was about the same but overall demand (sales) was up significantly.
Normally, when a product’s price plummets like the price of silver has you expect to see either much greater supply (which hasn’t materialized) or demand for this product falling off a cliff. Instead, demand for physical silver, as far as I can tell, has never been higher.
So supply and demand realities do not seem to explain a plunging price, especially when you remember that the prices of just about everything else have been rapidly rising (including the costs of getting ore out of the ground).
The conclusion many of us make from these observations is that something is amiss in the precious metals “markets.”
When supply and demand don’t matter and when your own costs to produce a product don’t matter, you might be operating in a rigged market.
If such a scenario was impacting the bottom line of, say, ranchers or oil producers or farmers or pharmaceutical companies would the “movers and shakers” in these sectors effectively shrug their shoulders and take it?
I don’t think so, but for all intents and purposes this has been the indifferent attitude displayed by mining company honchos.
Three scenarios ...
Apparently, this collective group has concluded that either: A) The price is NOT rigged and the markets are working just as they should; or B) any conceivable protest or actions they may take would not succeed in changing the status quo; or C) Pro-active actions might even be counter-productive.
If their conclusions are best summarized by A (no market rigging at work here), I don’t know what to say except to perhaps ask one question:
Why, sirs, did you opt to go into a business where you can have robust demand for your product and yet its price continues to plummet? With all due respect, I can only conclude that you went into the wrong business.
All your geological expertise, logistical headaches, financing efforts, efforts to scale environmental hurdles, human resource recruitment efforts, the countless man hours of planning and exertion, your years of commitment, sweat, effort and strain, etc. have been for nil.
The “real” market for your product is trumped by a “paper market” whose only goal seems to be to keep the price of your product as low as possible.
To some of us, the fact you deliver a product the world (and the cause of freedom) needs at (soon to be) cost or below cost is beyond strange. Apparently you accept the “rules” and agree that these rules are being administered fairly.
I might add that your acceptance of your circumstances is no doubt appreciated by central bankers and their too-big-to-fail mega bank agents.
It’s also possible mining company executives believe that prices are indeed rigged (or might be rigged), but have concluded that fighting this is not worth the effort and/or would do no good.
I disagree and, in fact, have created a list of responses mining executives COULD implement if they so desired (see next column for list).
Another possibility might be that mining executives think any aggressive response could somehow backfire and thus would be counter-productive.
What, I ask myself, could be the thought process here? Is it: “If we respond as an industry, we are going to somehow be punished - either in the court of public opinion or by the ‘manipulators’ directly?”
If this is the case, such an attitude wreaks of the pitiful mind frame of a bullied child.
“Yes, I’m being assaulted on a regular basis, but things would be even worse if I stood up for myself.”
Perhaps the mind frame is that “standing up for one’s self” would come across as “whining” in the court of public opinion.
Maybe it will. To which I say: So what? What do you have to lose?
Include me in the group who believes that price suppression is a permanent, perpetual strategy - TPTB’s answer to the nation’s No. 1 “national security risk.” As such, it won’t stop unless someone (or some events) stops it.
To date, The press corps, the “regulators” or a bulldog member of Congress have done nothing to expose this price suppression. If none of the above have acted to date, we can almost be certain they won't act in the future.
Which leaves a series of “black swan events” or the miners themselves to fight for themselves.
What’s the great fear?
Surely it’s becoming clear to at least some mining executives that if they continue to do and say nothing, they will be forced out of business.
Prices of silver and gold are not going to be “allowed” to rise. For the manipulators, the risk of “letting” prices rise a little is that they might rise a lot. Prices then are not only “capped” they are seemingly driven ever lower even at (or especially at) those moments when an impartial observer would expect them to rise.
Sentiment, once killed, must be buried deeper and deeper lest it rise from the dead.
Again, what’s the fear? If you fight back with a massive, multi-pronged PR campaign, the “bad guys” will get really pissed and “teach you a real lesson?”
Is the fear that your mining company might be able to “hang on” at today’s $19.35/ounce silver price, but if you somehow stuck your neck out and “fought back,” TPTB might knock prices down to, what? $16, $12?
No, I believe there is a limit of how low the silver price can be pushed. My guess is that we are approaching this price right now.
Those who argue that miners would be just fine selling their product for the historical “mean” price, must not look at quarterly revenue reports of miners. They are also not the people who have to buy diesel fuel daily by tanker loads, maintain heavy equipment or pay a living wage to the engineers and laborers who perform complex and potentially dangerous work.
The goal, I believe, is to keep silver prices as low as possible without killing an entire industry (which would be counter-productive to those who want to cap the price).
After all, what would happen to the price of silver if no company (or just a handful) was left producing silver?
In other words, silver miners (and gold miners) should have nothing to fear from trying to expose the players and mechanisms that are suppressing the price of their product.
The “risk” is that you would “fight back” by any and every means available to you and your efforts would.... do absolutely no good.
In which case, your business will either barely hang on or continue to die a slow death. By “acting,” the worst that could happen is that you’d be right where you are now. Doing nothing preserves the status quo, which is perpetual life support for miners, nirvana for “fiat bugs.”
The potential “reward” is that your efforts would be successful and the tactics that have suppressed PM prices would end.
Your business, its shareholders and employees would be much better off. So too would the world if much of its population learned a vital lesson about “real money” vs. paper money.
My guess is that the executives of the mining companies are acutely aware that the price of their product is being capped via the rigged buying and selling of paper contracts.
The miners are gambling (praying/hoping) that this manipulation will somehow end on its own without them having to take any action.
For some reason, taking action - standing up to those who are trying to kill your business - is repugnant to them.
Apparently, they’d just rather go broke and let all of their shareholders go down with them.
Which is both bizarre and repugnant to those of us who grew up believing it’s okay to fight back when someone is attacking you. Or if a travesty of justice is being committed, it’s okay to point this out.
“To fight back or not to fight.” This no doubt the question that is being privately debated in corporate headquarters of precious metal miners.
So far, we know the answer. The industry’s tombstone is probably being chiseled even today.
“They chose not to fight.”
Their children must be so proud.
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Bill Rice, Jr. is managing editor of The Montgomery (AL) Independent. He can be reached via email at: bill@montgomeryindependent.com
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