Silver Price Discovery and The Illusion of

Progress

As of the close of trading Tuesday, silver spot prices have rise through the key
50 day moving average, most likely the result of short covering by the managed
money traders - along with new shorts added by the commercial traders.
In other words, the lock-down pattern of price discovery driven by these two
speculative classes continues unabated and disconnected from physical reality.
Hence, Ive chosen the image of this optical illusion to illustrate macro-market,
as well as the silver market as a series of repeating of cycles that appear to be
cohesive, yet do not represent reality.

Continuing with the theme covered in the last few weekly reviews at the
47Forum, technology evolves geometrically, while societies and their powerful
controlling elites cycle between progress and barbarism.

Indeed, during these cycles, belief in progress creates the illusion that all we need
to do is double down on the what seemed to work before - disregarding the
results.
From the highest echelons of academia, there is unwavering faith in human
transcendence from our animal natures - which leads to drive for control at all
costs.
No better example of this belief gone awry is the so-called advanced technology
employed by the big banks, COMEX, and high frequency trading.
Alas, as Robert Oppenheimer said a short while before he died, "It is perfectly
obvious that the whole world is going to hell. The only possible chance that it
might not is that we do not attempt to prevent it from doing so."
Its true, many participants and professionals must maintain their unwavering
faith that the invisible hand is always at work despite blatant corruption,
manipulation, or price fixing. Without it, they would be lost.
At some point in the cycle, things will break down and the silver price illusion will
end.
Buried beneath paper price discovery, is the underlying reality of supply and
demand.
For now, moving averages, volume, breadth, and momentum - often graphed in
beautiful arrays of seeming rationality - remain the primary markers of technical
analysis, the equivalent to the belief in transcendence of economic principles - or
simply, supply and demand.
As if markets were rational to begin with.
As an extension of the human civility, they cant be. But throw in the high priests
or pied pipers of finance and the whole thing teeters on becoming an irrational
debacle.
For the metals especially, but all commodities in general pricing is the
manifestations of the play between two major classes of traders: The giant
commercial banks and the large pool of technically oriented hedge funds.
Nothing else is having a significant impact from the outside. Despite a 'murder of
crows', there are no exogenous events influencing the decisions of these traders.
Does all of this mean to suggest that we will go back to hard money as
currency or barter?

Perhaps for a time, segments of society barter and the use of precious metals will
be used as currency in an emergency.
But eventually, a new dawning will lead to new extensions of technology, tethered
to the inherent scarcity of resources and commodities.
Technology doesnt disappear with human digress.
Credit is like any other technology - it can be used for good or ill.
The history of money, barter, wealth transfer has been facilitated by credit
technology.
Technology grows geometrically, along with the power it leads to.
The power given to humanity doesnt work this way.
As technology gives rise to power, power corrupts using that very same
technology.
The telegraph gave enormous advantages to traders more than 100 years ago.
Today, it is not high frequency trading and algorithms that are to blame; it is the
abuse of power and influence. The regulators caught up, inept and captured by
the abuse.
In the case of the so-called modern era - convenience in fiat has backfired and
stalled the underlying growth needed to serve the mountain of debt backed by
faith, hope, and promises.
That is where we are now. The underlying disconnect is felt unconsciously by the
greater society as a great unease, or anxiety.
A disappearing middle class, with the aged and disenfranchised at the bottom left
suffer the fates of inflations. At the top, the hollowed out elite must hold tight to
the illusion that what they have is not ephemeral and therefore subject to
implosion from deflation.
And a belief that we can transcend the laws of supply and demand once again
with this new form of electronic alchemy.
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