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STAFF NEWS & ANALYSIS
India’s Cash Crisis May Benefit Silver
By Daily Bell Staff - December 02, 2016

Silver: Being Bearish A Crowded Trade …  Bullish sentiment on silver is at its lowest reading since July of last year.  …  A Trump win in the election was supposed to be bullish for precious metals stocks, but instead investors have seen the plunge in mining shares exacerbated. Despite the 40-week moving average being strong support this year, silver plunged through it post-election like it did not even exist. –

Gold and silver have been criticized as bad investments for decades, ever since the modern, central banking economy became the dominant form of economic organization.

Always, when markets are not responsive, gold and silver have seen considerable, organized negativity.  In fact, denigration is inevitable. When gold and silver move up against the dollar, the move is seen as an aberration.

When gold and silver move down against the dollar, the move is seen as confirmation that the public is finally coming to its collective senses.

Recent gold and silver action have conformed to the larger idea that gold and silver have less rather than more value, and this is as it should be.

More:

Since the summer months, there has been a massive sea change in silver sentiment. Silver sentiment topped this year at a reading of 97% bulls on July 3rd, which also coincided with the 52-week high for silver of $21.14.

On Monday of last week, silver sentiment closed the day with a mere 6% bulls. This equates to a drop of over 90% in bullish sentiment over the past 5 months.

Writers like Jay Kaeppel of Investing.com are recommending that if you want to play the Silver Miners (NYSEARCA:SIL), that you only play from the short side.

Yet with the cash debacle in India,  things may be changing for silver. In fact, given that the sustained attack on cash in India may soon be accompanied by an attack on gold, silver is being looked on more favorably.

Here, from Quartz:

The Indian government has been trying to reduce its citizens’ demand for imported gold through a number of means over the last few years. This is part of a wider crackdown on currency used in the black market, that included the withdrawal and replacement of its two largest-denomination bank notes in early November.

An alternative would be to permanently reduce gold imports. To that end, in 2013, the government started to increase import taxes on gold imports to 6%; this now stands at 10%.

However, falling gold prices during that period meant that there was still a 12% increase in gold imports in 2015 as consumers snapped up what they saw as bargain prices.

The key graf in this Quartz article is here:

Following the recent import tax hikes for gold, 2015 saw Indian silver imports grow to almost 8,000 tonnes, 14% up on the previous 2014 record. At the same time, demand for gold jewellery, which accounts for 75% of all Indian gold demand, is down 30% for the 12 months to the end of September 2016, according to the World Gold Council. This points to a possible shift back to silver as a more prominent investment in India.

We’ve reported previously that anti-cash movements might spill over into gold, though not silver. In fact, the government is indeed trying to retard gold purchases, and it is possible there are more moves to come. If so, silver would likely benefit.

Conclusion: Upcoming salary payments in India may well exacerbate the current cash crisis and cause a good deal more violence. Such a scenario may kick-start an ascension of silver prices against the dollar that might spread well beyond India. The longer India’s cash crisis is perpetuated, the more likely it is to spill over into precious metals, especially silver.

 

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  • jacob

    For more than 100 years gold and silver have been in a deadly war with other, government orchestrated, representations of wealth for public acceptance. That which the public perceives as the best repository of wealth without interference will prevail. The jury is still out how far governments will go to achieve their ends, hopefully without becoming tyrannical. This is a real war, of a different kind.

    • esqualido

      There’s no war between gold and silver, the war is freedom-loving people vs. legal tender laws (and an income tax system that requires accounting and payment in same). If there were no income tax, the government would not care if you used gold, silver or seashells, and the world would be a much more peacful place.

      • Mstrjack

        Yes, income tax is simply slavery. 100% income tax would be complete slavery just like in the Old South leaving only crumbs for the workers. 35% income tax is 35% slavery. Income tax is slavery plain and simple. To be free, income tax has to be completely abolished.

        • disqussted999

          It’s far beyond 35% for the real working class when one considers all the other taxes, esp. those disguised as something else, that it is forced to pay. And then again, there’s the “inflation” tax, which has destroyed 98% of the value of the (non-)Federal(nothing in)Reserve(debt)Note since over the past 100 years or so. The 16th Amendment turned WeThePeople into the chattal, the milk cows, of the intl bankster cartel and its owners.

  • esqualido

    tribuneindia.com is still reporting long lines and people’s inability to get cash from banks or ATMs. The press as usual employs misdirection in the matter: “The Indian government has been trying to reduce its citizens’ demand for imported gold [as] part of a wider crackdown on currency used in the black market.” This is not about fighting the black market, it is all being done under the influence of the central bank, as part of a worldwide effort to eliminate cash and force everyone to tithe a bit of his wealth with every transaction. In Australia, Citibank has declared a ban on cash deposits, and the full court press is on.
    A billion Indians, whose affinity for gold has much to do with not trusting banks, has ever less reason to trust them. I am only surprised that no one has thought to produce small silver coins, which would be readily accepted in basic goods trade, regardless of legal tender laws which just eliminated 80+% of their banknotes. And what was Modi’s excuse: “We couldn’t print up small notes in advance to replace the big ones or it would have let the cat out of the bag.” People like this should not be trusted with matches, much less money.

    • D

      Hardened silver rounds are available at around $20. Usually there is a Hindu scene depicted.

      • esqualido

        Thanks. Smaller coins of value $.50- $5.00 would facilitate routine use.

  • apberusdisvet

    All anyone needs to know about the true value of any asset is its relative scarcity. This is how we are supposed to measure real estate, precious metals, and works of art or valuable sports memorabilia. BUT …..to give the illusion of the almighty USD, the bankers have suppressed PM prices for decades, even though they are the most scarce elements on the planet, and the only real historical money used in commerce. Silver may be the most price suppressed asset in existence. The current gold, silver price ratio is 70.5, even though gold is discovered and mined in volumes only 9-10 times that of silver. Even more outrageous is that amount of gold available globally is greater than that which exists for silver. 90% of silver is used up in industrial, medical, water purification, etc. applications, a gram at a time and hardly ever recycled; gone forever in landfills. Over 10,000 uses for what is probably the most strategically important element on the planet. The USGS estimates that there will be none left to be mined economically within 2 decades at most. The conclusion to be drawn is that silver is the most undervalued asset on the planet. Buy now while it is still available.

    • disqussted999

      Agree with what you said, but you need to make a correction (to make it say what I’m sure you meant to say)–“gold is discovered and mined in volumes only 9-10 times that of silver.” You want to switch “gold” and “silver” in that sentence. (You might also want to change “volumes” to “weight.”)

      • apberusdisvet

        Thanks

  • Bruce C.

    I think the biggest problem with peoples’ acceptance and investment in gold and/or silver is the possibility that it’s ownership would be outlawed or highly taxed.

    Outlawing g/s is not necessarily the same thing as confiscation. I don’t think TPTB would try to do that. Instead they could simply make it illegal to own or buy or sell so anyone who has it would not be able to benefit.

  • ICFubar

    Even with India’s withdrawal of cash from circulation and a possible subsequent rise in the use of silver coinage, causing a rise in the price of silver on the leading silver trading commodity sites, those sites are rigged as the paper ‘equivalent’ of silver can be shorted enough to bring the price to where the financial class wants that price to be. We have repeatedly seen massive amounts of paper silver, sometimes up to a year’s worth of world wide production dumped in a matter of minutes to demolish price. How would India’s people using de facto monetized silver change this factor if indeed silver becomes a black market currency there but the silver markets are all fixed where it counts at these silver betting fronts? A stable price for silver would be necessary in order for it to become a tradable commodity on a daily basis.

    • esqualido

      I doubt the Indian people would strenuously object to being able to obtain silver at artificially low prices. They and other workers, particularly in Mexico where a large percent of annual silver derives, and whose citizens have seen their peso decline dramatically in the past year alone, should welcome- Hugo Salinas Price says demand- the reintroduction of silver coinage. Why should they be working, at ever lower real income, to produce precious metal for everyone but themselves?

      • ICFubar

        I heartily agree that a return to silver coinage would be a good thing for the working population but that would require a stable price for silver and the central banks are dead set against remonetization of precious metals, or indeed paper money and are conducting operations to these ends. Perhaps in the end analysis all money is just what people will accept as currency, be it cigarettes or whiskey on a black market or sticks of wood with notches carved in them to denote value, good for the payment of taxes? What is really needed is a permanent and stable money supply which again the central bankers are dead set against. The bankers are set on providing digits as data on a computer as money for ultimate control for themselves.

  • georgesilver

    As fiat currencies collapse Gold and Silver will be more and more the ‘currency’ to have. If they try to ban or highly tax Gold and Silver it will become the ‘must have’. The black-market will thrive and people will eventually ignore the government by not complying with ‘legal’ form filling and filing when making purchases and transactions. To even have a slight chance of a ban or high tax it would have to be a World-wide control and this seems almost impossible.
    Governments like India only show the public how valuable Gold and Silver are by trying to control it.

  • disqussted999

    Well, there is deep truth in this statement–

    –Despite the 40-week moving average being strong support this year, silver plunged through it post-election like it did not even exist.–

    “Like it did not even exist” is the operative phrase, because that’s exactly what manipulation does. Those with the wherewithal, the Fed/central banksters/BIS–the owners of the legal fiat counterfeiting mechanisms, through their bullion bankster lackies and their HFT programming, can and do create the moving averages, create the charts, create the sentiment, create the scenarios through the MSM (as in Price Action Makes Market Commentary) they also control, and then smash/distort/remake them all to the upside or downside when it becomes most profitable to do so and/or serves their politico-economic purposes. Consider their position of control:

    -unlimited fiat from Fed or ESF (won’t even discuss where its money might come from, like, for instance CIA et al black-ops/drug money/money laundering…but we won’t go there),
    -unlimited margin [see no. 1],
    -unlimited concentrations on the paper/electronic “market,” esp. in Silver>gold, but also platinum and palladium (“nothing to see here”–CFTC monkeys)
    -impunity to collude and operate beyond the intent of market law [see no. 1&3]–ESF actually has the de facto “right,” as unConstitutional as it should be, to “manage” any and all markets as needed for the benefit of the “stability” of the FRN…read “manipulate”…and the monetary metals are the enemy of that worthless piece of paper, as it shows how worthless it is becoming, er, has become, b/c of its massive creation from nothing…just read what Volcker wrote about messing up by not suppressing the price of gold better in the late 70s to ’80,
    -ability to change the law on the fly simply by dint of declaration, eg, more or less forcing delivery of cash rather than metal when necessary on the COMEX (and force majeure if necessary),
    -leverage over many of the miners that actually produce the metals b/c of the intensive capital requirements of mining, requiring loans from the same, who require hedging, and thereby also gagging those mining execs who might otherwise complain about the manipulation (while absolutely smashing the shareprices of those that do during “declines” in the PM market, eg, AG–Neumeyer).

    And there is much, much more…but enough for now. Charts only mean something while they are allowed to. Yes, one can put stops in place, buy puts, etc etc etc, but that doesn’t negate the fact that the charts have been created…they didn’t just happen.

    • Philosopher

      Thanks
      It’s all being manipulated,
      The silver I bought at $10 I sold for $36.
      Thanks to the manipulators I made bank,
      one of the people I sold my silver to told me that he felt sorry for me for After he bought my silver.

      • Don Duncan

        You will continue to “make bank”, (even as your fiat loses value every year) until you can’t spend your “bank” anymore. Or you could spend all your fiat on hard assets, which would be to go from one asset to another via our present medium of exchange, fiat. As long as you don’t keep your fiat long, that will work.

  • Philosopher

    There is an endless amount of new silver
    mining properties in North And south America.

    It only cost about $11 an ounce to pull silver from the earth in Endless quantities, and still make a fair profit.

    • Sven

      “Endless quantities”! lol

      There’s a book you should become familiar with: The Limits to Growth.

      Also a concept: the Laws of Thermodynamics and Entropy.

      You’re welcome.

    • Don Duncan

      “Endless quantities” make a commodity dirt cheap. $17/oz is not cheap. That’s why it’s called a “precious metal” and that’s why it has been used as money for eons.

  • Curtis

    Thank you!

  • Don Duncan

    Fiat money is a poor medium of exchange, but an excellent hidden wealth transfer (tax) for those who control it, those in power, those who have been given power by the masses out of fear & ignorance. Impaired cognitive critical facility due to public school indoctrination prevents learning from experience, prevents correction of dogma taught from kindergarten-college-adulthood via mainstream media. This is how exploitation of the masses by their so-called leaders/representatives continues with the sanction of the victims. For example, tax evasion is theft evasion, financial self defense, but it is viewed as immoral or unpatriotic. The victims are accomplices in their right to property violations; they self enslave. This would eventually be exposed in a country without rights violations, which is only possible with an enlightened populace because freedom is not a gift of rulers; it is demanded by independent minds. That is why no such sovereign community is allowed to exist. Should one be established, e.g., on an unclaimed pacific island, a thousand miles from nowhere, it would be quickly crushed. (See: The Republic of Minerva) The myth that authoritarianism is a necessary evil cannot stand against a voluntarist counter example. A superstition exposed by a rational alternative is a powerful learning tool. Authorities live by fraud and force, not informed compliance. Once enlightened, no one will volunteer to forfeit their sovereignty as most of the world’s populace do now.

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