Manipulation of Silver Markets?

[CaptainClark23]

from Insight Mag, a division of Washington Times (yes, yes, the moonies...)

http://www.insightmag.com/main.cfm?include=detail&storyid=632699

snip

According to Butler: "The problem is that the silver market has not behaved according to the laws of supply and demand, which holds that if you have more consumption of a commodity than you have production - consuming more than you produce - the price has to rise, and has to rise sharply, to correct that condition. Based on the reports of all accepted statistical services which analyze silver, this condition has been present in the silver market for nearly 15 years, yet the price of silver hasn't risen accordingly."

As Butler puts it: "This causes a reasonable person to ask why the price hasn't risen. My answer is that this kind of action can only take place if the market is for some reason not free to re- spond to the iron law of supply and demand. You cannot have a free market in which consumption is more than production without the price increasing. That is the core principle of the marketplace. It is the essential law on which our capitalist economic system is based, the law of supply and demand, and it doesn't get any simpler than that. If the price of silver appears to be immune to the law of supply and demand, there is something wrong."

The situation in the silver market, Butler continues, "doesn't exist in any other commodity traded, and the bottom line is that we've used up 95 to 99 percent of a 5,000-year accumulation of silver and are about to hit the wall. The fact is, we no longer can depend upon inventory to supplement the market. The world known silver inventory now stands at about 150 million ounces, the majority of which is stored in the COMEX warehouses in New York. The world annual production - that is, all the silver produced from the earth in any given year - now is around 600 million ounces per year. Silver supplied from recycling on a regular basis amounts to another 150 million to 200 million ounces. But current consumption of silver is around 900 million ounces, leaving a deficit of 100 million more ounces of silver being consumed than is produced."

The problem gets worse when you consider that the Commitments of Traders Report (COT) for Jan. 27 reveals that commercial traders have increased their net positions in COMEX silver futures and call options to 470 million ounces. And, according to the COT, just "eight or less" traders have sold 330 million ounces of silver - a total net "short" position "three times the size of total world known silver inventories."


endsnip

When it becomes apparent that there is FAR less physical silver available than is being "traded", hold on tight.

Hi Ho Silver, a-waaaaayyyyy.....

[54anickel]

1. Interesting, GATA is now involved. That might explain some of

the bigger moves in silver lately, much like gold. I like to check the charts at INO as you can see when the start unhedging gold by the big long lines in the charts. B-) I've been noticing the same type of movement in silver the past couple of weeks.

Hmmm, dumping those hedges?

Interesting Captain, thanks for sharing. Here I believed those reports of people moving from gold to silver to push down the ratio. :silly: That might be part of the rise in silver but wouldn't explain the big, sudden moves on the charts.

[kalian]

2. Definitely more movement in the silver spot prices....

I strongly believe that there has been "artificial" manipulation of
silver's price but that will change in due course...

[amazona]

3. is silver of any real value at all?

I do hold silver but I don't think it was a wise decision. I am not aware that silver is of any value in the modern world. If its price were to rise, then cheap jewelry would be made of pewter or even hemp! It seems to become less useful in photography every year -- it is a digital world now. Maybe there is artificial manipulation of silver's price but in my humble opinion I believe the reason the price of silver hasn't risen much over the last two decades has to do with both consumers and industries being able to switch easily to another product if silver rises too much. Silver is in "junk" jewelry now -- check out T.J. Maxx, for instance. It is no longer associated with luxury. The kids who buy silver would just buy something else if silver got too high.

Am I missing something here?

[CaptainClark23]

4. Value

You might want to check things like Silver acetate; Silver nitrate, Silver oxide, Silver iodide...etc. Its not just about photo paper.

You also might want to check China's manufacturing base. They seem to require large amounts of the stuff lately.

Last, when someone like Gates starts buying silver mines, I figure its not because he wants to go spelunking.

But hey, I'm not trying to convince you. Tell you what, message me privately and I'll just take that worthless silver stuff off your hands at a price commensurate with its junk rating. ;-)

[amazona]

5. thanks

I'll look into those keywords. Any reassurance that I wasn't a total idiot to buy this stuff is always nice.

At this time I don't plan to sell because (very occasionally, when I'm not being lazy) I enjoy making jewelry and if nothing else, I can make some more jewelry from some of it. "Coin silver" is not as pure as "sterling," of course, but it's good enough for hobby putterings. I just somehow ended up with way more than I needed. It would be great if the price did go up substantially and I could see a profit...the fundamentals just weren't real obvious to me lately. I got caught up in the precious metals hysteria of the early 1980s...it is not true what they say about it being better to buy a decade early than a day late, ha ha. Well, at least not when a decade turns into two decades. Yikes!

[CaptainClark23]

6. A bit more...

Here's a piece from Jim Puplava from the past summer: "Silver, the undervalued asset looking for a catalyst"

Its a very comprehensive look at the current silver market.

Note that when this article was written at the beginning of July, Silver was holding fairly steadily just over $4 per oz., compared to yesterday's tickler at $7.74 per oz.


http://www.financialsense.com/stormwatch/oldupdates/2003/0702.htm

[amazona]

7. I'll go read that right now

Do you have a sell target for your silver?


On Edit -- I still have a lot of pondering to do. I didn't realize silver had already gone up so much. I just checked what people are selling their Libertads for and about fell out of my chair. Hmm. It could be tempting to let a few of them go to lock in a profit.

I found an article on a proposal to introduce the Libertad into circulation in Mexico:

http://www.plata.com.mx/plata/plata/comHSP45a.htm

Still not quite sure what to make of any of this. Appreciate all the help. My brain needs to do some digesting.

[CaptainClark23]

8. No.

I'm not in it to work a margin. I'm in to store wealth and value.

I fear the dollar is going to fail (to one degree or another), and the markets will tank.

Accordingly, the value of PM's will rise. My $1 will be worth more tied into a piece of silver, than it would be were I to put it in the proverbial mattress.

Of course, should I be wrong and everything turns out rosy, well, I'll sell as high as I can, of course. But even if I were to take a huge loss on my purchases, I'd consider them worth every single penny lost just for the sake of my peace of mind during these crazy times.

[CaptainClark23]

9. viva la plata!

Thanks for that link, I'd not seen it before nor heard it mentioned.

a few excerpts:

"These coins could be placed into circulation as legal tender money, with a floating value which would be quoted daily by the Banco de Mexico. The floating value would be determined by taking the international price of silver, presently quoted in dollars, multiplying this price by the exchange rate of the Mexican peso for dollars, and adding on a small percentage of seignorage for the Banco de Mexico. This would be the legal tender value for the one ounce, no nominal (engraved) value, pure silver “Libertad” coin."

=Not tying to the dollar price, but to the Peso!

"The reader may object: “But these higher quality coins would never circulate! They would be hoarded.” The reply: Indeed, they would be hoarded. But, let us reflect that there are two types of circulation, active and passive....This passive circulation is called “hoarding”, but it is still circulating, legal tender money, held in reserve for emergency use."

=Federal establishment of an "emergency currency" for public use =which retains its value when the fiat currency fails. wow.

"The value of the “Libertad” coin would be a floating value, and only a coin like the “Libertad” can have a floating value, because it has no nominal value stamped on it."
"What if the price of silver declines, or if the peso appreciates against the dollar, as it has in fact been doing? In this case, our proposal is that a floating legal tender value, once established by the Banco de Mexico, shall not be reduced. "

"under this proposal an alternative is established and another tool for monetary policy will be in place and ready to be applied when a crisis erupts."


Of course, this would be good for Mexico with their heavy silver resources.

Comments anyone? Sounds like a hell of a good idea to me, at first blush.

Amazona, again thanks for the link.

[54anickel]

10. I think that we will begin to see more of this type of creativity as

countries become more emboldened to refute the IMF (hence the US) policies of debt, but that's JMHO. Malaysia has become somewhat of a role model, and now Argentina's attempt to fight back a bit. They are learning that the only one's with their best interests at heart are themselves.

[TX-RAT]

11. Remember the Hunt brothers?

[CaptainClark23]

12. I do, yes...

What about them?