Cornering the Silver Market is Impossible at Current Prices

April 21, 2011 By 5 Comments

Rumors of a corner of silver in process have been swirling overnight.

A cornering of silver by a billionaire is in process?  Really?  Here’s the definition of Cornering of the Market from Wikipedia, “In finance, to corner the market is to purchase enough of a particular stock, commodity, or other asset to allow the price to be manipulated, by analogy to the general business jargon where a company described as having “cornered the market” has a very high market share. The one attempting to corner a market hopes to gain control of enough of the supply of the commodity to be able to set the price for it.” 
Anybody who is just now trying to corner the market is late to the ball game!  Just look at Silver American Eagle Sales over the last 5 years. 


(in ounces/number of coins)
2007- 9,887,000
2008- 19,583,500
2009- 28,766,500
2010- 34,662,500
2011- 14,530,000
Total- 107,427,500

And based on yesterday’s report of COMEX registered silver bullion dropping by 13% overnight ,  COMEX available silver for May delivery has dropped from 41 million to 35.8 million ounces.   A drop of 5,287,142 ounces of silver overnight.  A big drop to say the least; but even if those 5 million ounces went to one buyer, what percentage of the bullion market would they now control if we only looked at just the past 5 years of American Silver Eagle Bullion sales? The true number is much smaller but we are just looking at a simplistic approach, we are not factoring in…
1.      Extrapolated out since 1986 when bullion coins became available from the US Mint
2.      If we considered all other types of bullion (Maples, rounds, Comex bars, etc, junk bags, the list goes on)
3.      If we considered all other mint sales and direct mine or refinery sales from all across the world
If one individual removed 5,287,142 ounces last night from the Comex registered supplies and they were converted to American Eagles they would control 4.9% of the Silver American Bullion Sales since 2007.  Now, I wish I controlled 4.9%, but is that really enough to manipulate prices of the entire silver market?  State Street Corporation (who?) holds 4% of JP Morgan…nobody is accusing them of cornering the market of JP Morgan shares! The Hunt brothers accumulated PHYSICAL SILVER FOR YEARS IN ORDER TO COME ANYWHERE NEAR CORNERING THE SILVER MARKET!


Now for the REAL STORY.

There has been a silver shortage for years.  Manipulated prices by the big banks have just expedited the process through suppressing prices (aka JP mentioned above….wonder why their stock is only trading at 9.94 Price to Earnings even when they pay a dividend of over 2%, but that’s a story for a different day!). 

1.      JP Morgan’s current silver short contract obligations are 3.3 billion ounces.  (There is only 600 to 900 million ounces of above ground silver in existence by some estimates which would be equal to shorting 4 times the amount of silver physically available)
2.      According to the USGS, at current consumption rates, there are 16 years of silver supplies left or 12.8 billion ounces.
3.      127 billion in silver OTC derivatives as of June 2010, as reported by the Bank of International Settlements (BIS).  Houston…we have a problem!!

In conclusion, the only ones who are currently in the process of cornering the silver market are the individual silver bugs reading sites like silverdoctors.  Now, could a billionaire come along and attempt to put a billion dollars into physical silver and launch the price 5-fold overnight?
Sure, but this wouldn’t be a true market corner, as THERE ARE NOT ENOUGH PHYSICAL SILVER OUNCES AVAILABLE ANYWHERE NEAR CURRENT PRICES TO CORNER THE SILVER MARKET!  Almost all the available silver is held by little investors like us and our readers who will not release their grip on silver until VASTLY HIGHER PRICES!

If all this information sounds new to you…complete your homework and read your background articles on the silver market at SilverDoctors.com.

The COMEX will default in the near future, at which time silver’s price will return to fair market value.  What you should be doing now is buying physical silver; the opportunity of a lifetime won’t exist much longer.

SilverDoctors

SilverDoctors specializes in precious metals news, commentary, and trading, and can be found at
www.silverdoctors.com


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Comments

  1. Jovil says:
    April 22, 2011 at 5:43 PM

    This is my calculation, is it correct? Sorry I took accounting in college, but we never dealt in these high numbers. JPM 3.3 billion oz. of silver in short positions outstanding at today's price $46.68 X 300,300,000,000 = $140,054,004,000,000. 140 Quadrillion, 54trillion, 4 million? Nothing in balance sheet. Bernie is going to wear his arm out cranking the press that many times. We might have to use newspaper paper to print it on too.

  2. Jovil says:
    April 22, 2011 at 5:47 PM

    We better keep buying physical and a gun to protect it from the looks of it.

  3. SilverDoctors says:
    April 22, 2011 at 5:50 PM

    Point is well taken, but 3.3 billion would be 3,300,000,000. (300,300,000,000 would be 300.3 billion). Also, their contracts were not all started at $0.00, so cant multiply at $46.68. (Give it a week or so and you might be able to!) Im guessing on you could be conservative and guess that their shorts were initiated on average at around $10. So that makes 3.3 billion x $36.68 currently.
    Roughly $120 billion at today's prices. Still enough to take JPM down.

  4. Jovil says:
    April 22, 2011 at 6:27 PM

    You are right and it is still a lot of paper money.

  5. Anonymous says:
    May 1, 2011 at 3:08 PM

    According to the BIS, the bank of international settlements, the world's bankers were short $200 billion at about $20/oz. That means the silver short position is probably now about $500 billion underwater as silver is near $50. JP Morgan probably has about 1/2 of the short position.

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