Gresham’s Law, Value, Bit-money, Naked Shorts!
The situation over in Greece is revealing that Gresham’s law (in reverse) is active and relevant. The weaker bit-money (credit cards and bit-currencies) are being rejected for the more desired ‘paper’ euro at ATM machines, retail establishments, and bank teller locations. This reveals the relevance within human nature of choosing a superior currency over a less desired currency. Many retail venders over in Greece are now refusing to accept a credit card (bit-money) and they are demanding the ‘paper’ euro for a money transaction. They want the stronger ‘paper’ currency (psychologically) and do not want the imaginary ‘bit-euro’ (say credit card bit-money and similar which can not be held in one’s hand). The definition/description of Gresham’s law is as follows:
Coins were first made with gold, silver and other precious metals, which gave them their ‘value’. Over time, the amount of precious metals used to make the coin decreased because the metals were worth more on their own than when minted into the coin itself. If the ‘value’ of the metal in the old coins was higher than the coin’s face ‘value’, people would melt the coins down and sell the metal. Similarly, if a low quality good is passed off as a high quality good, then the market will drive down prices because consumers won’t be able to determine the good’s real ‘value’.
The concept of ‘value’ is a psychological concept which has relevance in the marketplace. People will discern that which is superior over that which is inferior. If a price is set equally for the superior item and the inferior item, most people will choose the superior ‘value’ over the inferior ‘value’. This subjective evaluation is now being done over in Greece as this country is experiencing a serious currency crisis. The crisis is mostly about the bit-euro and debt. What is paradoxical today is that a superior currency such as Silver and/or Gold are not being ‘priced’ at values which reflect their underlying desirability. This situation is surprising and confusing to many experts on issues of money. Why is this paradoxical?
The above images show a 1 dollar silver coin and a 1 dollar paper note? Which do you prefer? Both are 1 dollar!
In reality, silver and gold are historical monies which were chosen by the people in most marketplaces as money and then defined as a currency. Today these metals are not reflecting their real market ‘value’ (as a form of money) as their ‘prices’ are being suppressed in our futures markets via the strategy called ‘naked short’ selling. This strategy is understood by few of our experts. It appears that one or more Central Bank trading rooms do not desire real ‘price discovery’ when it comes to these precious metals. Today, prices can be suppressed in our digital (electronic) futures markets by this strategy called ‘naked short’ selling.
Naked short selling (increases the imaginary supply within the computer screen) so as to drive down the price and suppress real price discovery in our marketplace!
A ‘naked short’ sale artificially increases the supply (an imaginary supply) of these metals (within the computer screen) and this suppresses the ‘price’ of these metals in our electronic markets. Since our commodity ‘prices’ are now expressed in bit-currencies (digits) and since these bit-currencies are mere electronic bits in our computer screens, these bit-units can be used to manipulate and suppress ‘prices’ in all our global markets. Central Banks (which now have trading rooms) are most likely the culprits as they desire to suppress our historical money units so as to promote their imaginary bit-units. This corruption is ignored by most of our silver and gold miners and most of our educated financial pundits.
Bit-currencies create our bit-prices today! Naked shorts can drive gold prices down indefinitely on our electronic futures markets!
The price of both silver and gold has been suppressed now for some four (+) years via this strategy of using ‘naked shorts’ in our electronic markets to artificially increase the supply of these metals so as to drive down their prices. This strategy is so effective (and deceptive) that it has totally fooled almost all silver/gold investors, media pundits, and commodity speculators. Few of the media pundits (who should expose this fraud on our markets) have discerned how these prices (silver/gold) have been suppressed and most can not discern the imaginary nature and the deceptive process called the ‘naked short’ strategy.
Paper gold is really an imaginary supply created within the computer screen (via computer trading)! The ‘naked short’ strategy increases artificial supply and drives down the price! Miners need to wake-up as billions are being confiscated via this strategy!
The few who do understand the deception and the process are Paul Craig Roberts, Turf Ferguson of TFMetals Report, and Chris Powell of GATA. The vast majority of media pundits and silver/gold prognosticators seem totally confused and unaware of this illegal price suppression scheme (now more than 4 years in operation). They talk daily about how gold and silver prices are bottoming or reaching a buying level (or going side-ways) but they do not discern that select Central Bank trading rooms can suppress these prices ‘indefinitely’ (via this ‘naked short’ strategy). The deceptions today are so great that few (it seems) can separate the wheat from the chaff.
The above is another chart which reveals the price suppression of gold via bit-currencies!
I have been writing and educating many on why prices of silver and gold are being suppressed and manipulated via select trading strategies. Yet the masses of pundits in our silver/gold community simply seem deceived and unaware of these suppression schemes and price manipulation schemes. I am particularly shocked at the MINING community. To date only a couple of miners have expressed concern about this corruption around the price discovery situation. Miners are losing millions and billions because of this price suppression yet they seem unconcerned about WHY this is happening! I will try to advance this education at the coming Silver Summit in October, 2015!
All-in production costs are over $20/ounce yet our manipulated/suppressed silver prices (now $15 to $16) do not reflect the realities of supply/demand (in the real physical markets)! Miners need to get educated on why this paradoxical situation may not change unless the ‘naked short’ strategy used by select Central Bank trading rooms is prohibited! Central banks now have huge trading operations so as to manipulate our markets!
This ‘naked short’ selling (on our electronic markets) could continue indefinitely until the entire silver/gold community wakes up to this suppression scheme. Will it happen in 2015 or 2016? I would hope so! What now needs to happen is for the mining community to start taking some action and publicly expressing concern about this corruption within our markets! Miners need to WAKE UP and start thinking about the issue! Why are prices being suppressed? Who are the culprits? NOW is the time to act! Start with asking some questions! I will continue to express concern until we get some ACTION from our miners and producers! Enjoy! I am: https://kingdomecon.wordpress.com.