Silver gets little respect, but that is sensible in a world dominated by paper assets and pretend values. Similar to a murder investigation, let’s examine the motive, means and opportunity used to “manage” silver prices.
MOTIVE: The price of silver is important to industrial users, since there are thousands of uses for silver, many of which have no alternative except silver. If the price of silver rises too rapidly, people notice. Worse, a price rally in silver probably will spread to the gold market, which is watched globally by banks, institutions, and people. A rapidly rising price of gold informs the world that central banks are “printing” to excess, governments are creating too much debt, and the financial elite are mismanaging by “skimming” too much from the global economies. A rising gold price is worrisome to many.
Obviously, the price of gold and silver must be “managed” so that confidence in paper currencies, central banks, and governments is maintained. We know that central banks intentionally devalue their currencies, but they want the process to remain slow, deliberate, and largely unseen. Hence, central banks, governments, and the financial elite have a strong motive for managing the price of silver and gold.
MEANS: The annual value of all silver mine output is perhaps $15 Billion. By contrast, the US government increases its official debt by that much in less than a week. Comparatively speaking, the silver market is tiny. Therefore the means to levitate or crush the market is both easily available and clear. A few $Billion can drive COMEX prices far higher or lower quickly, especially if “the managers” use futures contracts during illiquid times in the overnight market. Andy Hoffman has extensively documented this process.
OPPORTUNITY: The futures markets are open 250+ days per year. The silver market is also open but illiquid about the same number of nights per year. That alone provides ample opportunity for price suppression or levitation as needed by the financial elite. Additionally silver is traded in London and can be “trashed” or hyped in the media. The opportunity to “manage” prices is clearly available.
Management is not limited to pushing prices lower. Look at the 40 year log scale chart of silver. Clearly prices increased substantially between 2001 ($4.01) and April 2011 (over $48). Subsequent to that large rally silver prices crashed below $15 in July of this year.
But madness it is – paper assets based on fiat currencies crash every seven years or so – and they are due for another adjustment lower to match their underlying value. Similarly, silver is due for an adjustment much higher to regain its underlying value.
Courtesy: Gary Christenson – The Deviant Investor
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