silver crashIncredible as it may seem, at the low price of $20, speculation in silver is rampant. Market participants are trying to front-run a big price move. Due to rumors or gut feel or for whatever reason, they are expecting not only that silver will outperform gold, but that the silver price will rocket to a much higher price. Their frenetic buying of futures has pulled a lot of silver into carry trades.
Maybe hoarders will all of a sudden increase their appetite for silver metal that they will take off the market and bury. If so, the silver futures speculators will be proven right, and they will make a lot of dollars (money is a different story entirely).
I would not recommend that anyone bet his hard-earned money on a maybe.  The data—both open interest and basis—show that the buying in the silver futures market is primarily speculators. They cannot sustain a higher price forever. They are merely trying to front run a higher price driven by hoarders. If hoarders don’t come in, the speculators will be forced to capitulate.  If that happens, watch out below.
The neutral price of silver is in the $16’s today. If the price overshoots as far to the downside as it is now stretched to the upside, we could see silver with a 12 handle.


By Keith Weiner, Monetary-Metals:

There is a stark difference between the states of the markets for the monetary metals. The number of open futures contracts in gold is low, while in silver it’s high. First, let’s look at the data and then we’ll discuss what it means.

Here is the graph showing the open interest.

GoldSilver OI

The picture is clear enough. Since the beginning of fall, the number of gold contracts has blipped up and down and now there are somewhat fewer (-3.7%). Meanwhile, the number of silver contracts has gone up substantially (+39%).

Now let’s look at the ratio of gold contracts to silver contracts, going back to 2010.

GoldSilver OI Ratio

There is an unmistakable downward trend since the middle of 2010, almost 4 years ago. Then, there were about five gold contracts for every silver contract. Today, the ratio is down to two.

OK, but what does this mean?

Open interest is a proxy for speculative interest. This is not simply because contracts are created by buying, and destroyed by selling. You can’t assume that contracts are created and destroyed as the price moves. To see why it doesn’t work that way, look at the stock market. The price of a stock can move all over the place, but there need not be any change to the number of shares outstanding.

In the futures market (unlike in the stock market), the number of contracts changes continually. Contracts are added or removed by the computer software that operates the market. When you buy or sell, an existing contract may be transferred from one party to another, or a new one may be created.

It’s complex, but in essence if you want to buy a contract just when else wants to sell, the contract will change hands. It works similarly if you want to sell short, right when someone who is already short wants to buy.

By contrast, if there is no current owner of a contract to sell it to you, when you want to buy, then a new contract must be created. Who sells, who takes the short side of this contract? It can certainly be someone else wants to speculate on a falling price. There are always (well, usually) traders who go short silver. However, I don’t think that this is the full explanation of the data shown in these two graphs.

I favor a theory of arbitrage. If it’s profitable to buy metal in the spot market and sell a future against it, then someone will take this trade. This short seller is a source of unlimited contract creation, if it’s profitable.

It’s called carrying the metal. If you carry, then you make a small spread—without price risk. This spread is called the basis—the price of the future minus the price of spot metal. Or, more precisely, basis = Future(bid) – Spot(ask), because you must pay the ask when you buy the metal, and accept the bid when you sell the future.

Let’s take a look at the gold basis and silver basis for the Dec 2014 contract, from early fall through today.

  2014 Silver Maples With Security Mint Mark   
As Low As $1.79 Over Spot at SDBullion!

 

gold and silver basis Dec

The profit to carry gold has been steadily falling. It began at 0.35% (annualized), when the duration was 15 months. It was hardly the stuff of legends—or getting rich quick—even last October. That meager margin has been steadily eroding, and is now 0.1% for 8 months. Suffice to say that gold carry has offered little or no opportunity to make money. Therefore the gold carry trade has not been a big source of contract creation.

The profit to carry silver, by contrast, has not much changed. It’s still around 0.5% (annualized) or more. This is far more attractive than gold, and probably more attractive than other opportunities in our zero-interest world. Therefore, the silver carry trade has created many silver contracts.

What drives the basis spread? Speculators, when they buy a future, drive up its price just a little bit. This is the inducement to the arbitrager to buy a bar of metal and sell the future to the speculator. The arbitrager carries metal, to provide a service to the speculator. He is the one who “converts” (I use this term carefully, in the full context defined here) metal to paper, a bar to a contract. He’s ready, willing, and able to deliver that bar should the speculator have the cash to demand delivery.

The long and short of it (to make a tired cliché into a dreadful pun) is that in gold, there just is not much speculation, and therefore no profit to be made carrying the metal, and therefore when a buyer occasionally comes to the market his demand can be satisfied by a previous buyer who is selling a contract.

However, in silver buyers are running at a much more torrid pace. They’re too numerous to be satisfied by the occasional seller. They bid up the price of the futures, which makes it attractive for arbitragers to carry silver and sell them the contracts they desire.

Incredible as it may seem, at the low price of $20, speculation in silver is rampant. Market participants are trying to front-run a big price move. Due to rumors or gut feel or for whatever reason, they are expecting not only that silver will outperform gold, but that the silver price will rocket to a much higher price. Their frenetic buying of futures has pulled a lot of silver into carry trades.

Maybe hoarders will all of a sudden increase their appetite for silver metal that they will take off the market and bury. If so, the silver futures speculators will be proven right, and they will make a lot of dollars (money is a different story entirely).

I would not recommend that anyone bet his hard-earned money on a maybe. The data—both open interest and basis—show that the buying in the silver market is primarily speculators. They cannot sustain a higher price forever. They are merely trying to front run a higher price driven by hoarders. If hoarders don’t come in, the speculators will be forced to capitulate.  If that happens, watch out below.

The neutral price of silver is in the $16’s today. If the price overshoots as far to the downside as it is now stretched to the upside, we could see silver with a 12 handle.


    • Wiener has been polluting the precious metals space with his questionably-motivated innanities for a long time now. If he is aspiring to the dubious mantle of John Nadler, he is on the right track. His specious, tedious diatribe is not worth the read, and I really dont know why Doc is subjecting us to it. Recently he claimed GOFO was negative because of changes in LIBOR, not because of the actual changes in lease rates. Much like his namesake, the contributions from Wiener are comically shaped, and bad for your digestion. I dont know if this is because he is ignorant, or because he is a shill, but the point is, why give a podium to such drivel??

    • @Randall
       
      “However I see oil prices rising as the Petro Dollar goes south, and gold rising as it is being used to buy oil, and silver following because it has no place else to go.”
       
      I also see both gold and silver rising with rising oil prices but not because silver has no other place to go but because silver has value as an industrial metal, its ore finds are fewer and of lower assay as time passes, and it has been a monetary metal for a VERY long time, as has gold.  
       
      The tricky part, for me, in all this is trying to understand why there is a G / S ratio of 65.5 to 1 these days when silver is considerably more useful than gold, is mined in a ratio of about 9 ozs. of silver for every ounce of gold, and silver is consumed and disappears while gold is hoarded in vaults.  Because of this last, there are at least 9 ozs. of gold above ground for every oz. of silver.  Not that all of these ozs. are available for sale, of course, but they do exist.  
       
      Given all this, one would think that the G / S ratio would be well below 30:1 and not more than double that.  So, in order for the G / S ratio to decline significantly, gold prices either will have to fall, silver prices rise, a combo of the two, or silver will have to rise much faster in percentage terms than gold.  This, however, is difficult because gold and silver tend to move in the same direction at any given time unless there are significant differences in their supply and / or demand.  I guess that the bottom line is, ‘Which is more likely?  Gold prices falling or silver prices rising?’.  My guess is that silver prices will rise faster than gold prices but that nobody knows when this will occur.  
       
      At this point, some historical data might be of interest.  What percentage of the time has the G / S ratio been above, say 80, vs. the percentage of the time that it has been below 30?  Knowing that might provide us a clue as to whether gold or silver is the better bet at this stage.  At a guess, I would say that silver is the better bet at the current G / S ratio but that does not prevent me from buying a little gold as well.
       

    • Ed_B … “So, in order for the G / S ratio to decline significantly, gold prices either will have to fall, silver prices rise, a combo of the two, or silver will have to rise much faster in percentage terms than gold.”
       
      Respectfully, I submit that viewing anything real through the phantasmagorical kaleidoscope of banknote credit ‘pricing’ is a complete waste of one’s efforts. The contrivance exists precisely to negate rationality between so-called ‘money’ and goods-at-market, which has become the central tool of monopolists to acquire Labor and raw material, at or below true cost when rather rationally conceived on truly physical terms alone.

      Government says (through its credit scam) that the silver-gold ratio is 65:1 … God (or Nature, if one wishes) proves the ratio to be 9:1. Choose whom to believe; they stand in defiance of each other.

    • Strannick … “If he is aspiring to the dubious mantle of John Nadler, he is on the right track.”
       
      I get the sense Prof. Weiner has his ‘sights set’ higher than that. Academicians who write papers largely supportive of the banknote boondoggle often aspire to lavishly paid offices at the tax-trough. If government wanted to superficially ‘polish its image’ by taking so-called ‘Austrians’ into their fold, fellows like Prof. Weiner would suit the role perfectly. ‘Austro-Libertarians’, after all, hold the dogmatic position that injection of credit notes in public circulation is the ‘right’ of a ‘free person’ … despite mayhem and misery the practice has proven to wreck on finance and economy throughout human history. No … dogma trumps all. Governments LOVE that sort of talk.

    • @PatFields
      “…I get the sense Prof. Weiner has his ‘sights set’ higher than that….”
      I know Keith Weiner.  A couple years ago, I sat with him over many hours as a mutual friend had introduced us.  Keith was in the process of creating a private investment vehicle which promised to make good money for it’s holders by arbitraging paper gold and silver in the futures market, using the basis for his trading triggers.  Our mutual friend wanted my advice on whether Keith’s vehicle was a good investment or not.  I declined to invest with him from the start because 1.) I was worried that he could not guarantee the safety of the underlying physical metal principal of his fund.  (Our conversations took place shortly after John Corzine had relieved MF Global customers of $1.6B of their funds.)  Secondly, I told him I didn’t think he could use Comex-CFTC supplied numbers to guide his trading system because I thought, even back then, the numbers were not reliable. (This was before they actually put that legal disclaimer of responsibility for ALL data at the bottom of all their information releases… how COULD I have known??? LOL!) Besides, how could he trade a market where artificial supply is created on demand solely to control price, as opposed to allowing the market to function in it’s true, price-discovery role and function?
       
      Keith is very proud of being a graduate and a doctorate iirc of the Austrian school, allegedly trained by Antal Fekete himself.  His root position seemed to be that my gold paid no yield.  So, instead of hoarding my gold and silver, why not let him have some, put it in the market and make a return on it in his fund vehicle.  He was very concerned about the impact of the physical being taken out of the marketplace and out of circulation as this endangered the markets and increased the possibility of our mutual concern — an impending economic collapse.   My reply was that these physical metals were being held by me OUTSIDE the banking system, first, as insurance as opposed to an investment purpose and, additionally, the my idea was to hoard metals deliberately out of the reach of those who could  steal or rehypothecate it precisely to prevent it’s use to prolong and aggravate their criminal interference with true price discovery.  When he poo-poo’d this, that’s when I realized who I was dealing with.  :)  He seemed very intent on keeping as much gold and silver IN THE MARKETS trading as possible…. that said, Keith did tell me that neither gold nor silver would be the moonshot ride to riches everyone was anticipating.  My response to him at the time was precisely what I said in my reply here, which appears a couple comments below this one and, in fact, the genesis of my one-dimensional reply to Keith’s article itself..  I simply told him that my hoarding was insurance that would not need to be used for as long as the Fed and the Government were able to continue to rig markets, create artificial paper supply, and yank every market around in pursuit of a political agenda of delay and continuity of government before the plug was finally pulled.

    • Sovereign Economist … “A couple years ago, I sat with him over many hours”
       
      I’ve never met the man, but from before he’d achieved his degree (admirable, I’ll concede) we’ve been trading numerous thoughts, impressions and opinions on our economic views in a variety of forums. He strikes me as sincere enough, though (IMHO) misguided in some of his core premises, while glossing over good, cogent challenges to them with sheer presumptive dogma. That propensity coupled with what I (among others more notable than myself) glean to be a driving aspiration toward ‘recognition’, leaves me a little uneasy as to where that compulsion is steering him.

    • Yes, I’m a hoarder and from my buying of silver, the physical market is starting to run dry. 100/500oz bars are increasingly limited in supply and the monster 1000oz bricks on Kitco were sold within a matter of days. Still awaiting replenishment. Even their 100oz .9999 have all been sold out here in Hong Kong. Also Bank of China silver bars here have not been available for over 6 months.
      At $12, gold would need to break way below where it is now and if it doesn’t which I don’t see it happening due to investigative and PHYSICAL supply/demand in the East. All along the above is just talking about the paper market and what the various speculators are doing. Fact is, we hoarders are taking advantage of these silly games to cost average as much as we can. Also, once Russia/China is able to secure the holy grail natgas/oil deal, COMEX won’t matter much as the shift would be pretty much on with Yuan/Ruble/Gold/Silver/Copper/alternative ccy. Don’t forget, where GOLD goes SILVER follows, not the otherway round. Even if it does materialize, I only see empty physical vaults of silver being brought up en mass by us hoarders. I doubt India will sit pretty, they will just go ballistic in physical demand.
      At the end of the day, SILVER follows GOLD and HOARDERS follow COMEX to further HOARD. THX YOU VERY MUCH FOR THE CHEAP metal.

    • @Starnnick
       
      I concur. So tiring to read these “Silver to Zero” stories. This story line is old now. Yes, we all know the price could go down and we also know it could go up but in my opinion, these “down” stories are taking center stage lately…..almost like it is scripted that way…..oooops, did I just say that? Yes, scripted! This is another cog in the mind game machine being put forth by the manipulators as far as I’m concerned, to shake out the remainder of strong hands. Well these hands are not buying the story.  

    • @PatFields
       
      “Respectfully, I submit that viewing anything real through the phantasmagorical kaleidoscope of banknote credit ‘pricing’ is a complete waste of one’s efforts.”
       
      Oh, really?  Then how does one acquire or sell gold and silver these days?   The fact is, we buy or sell our gold and silver via paper banknotes.  That is what we receive when selling and that is what we have received as a consequence of gainful employment, lottery winnings, inheritance, gifts, or investment income… virtually all of which comes to us as paper banknotes.  One need not appreciate the current reality of the paper banknote scheme to know that it IS what we have at the moment, much as many of us would prefer a bi- or tri-metallic money standard.  While that is a worthy goal in this life, until it becomes reality, we must deal with that which IS whether or not we happen to like it… respectfully, of course.  :-)
       
      Government says (through its credit scam) that the silver-gold ratio is 65:1 … God (or Nature, if one wishes) proves the ratio to be 9:1. Choose whom to believe; they stand in defiance of each other.”

       
      Indeed… and the 65:1 ratio, faulty as its derivation is, is the current reality.  That is approximately what we would pay or receive when converting one metal into the other.  None of my comments on this can be construed as “I agree with this” or “I like this” but rather as “I recognize this to be true at the moment”.  If I could go anywhere and trade 9 ozs. of silver for 1 oz. of gold, I WOULD be all over it!  lol
       

  1. The whole premise for moving to the physical gold and physical silver was built on the idea that the fiat dollar would collapse.  When, as, and if, that actually happens, then all this other yakkin’ and flitting around the edges of the collapse for a trading profit will evaporate.  Until then, life goes on.

    • @Sovereign Economist
       
      “The whole premise for moving to the physical gold and physical silver was built on the idea that the fiat dollar would collapse.”
       
      Well, that is ONE reason.  While it is a very good reason to own physical PMs, other reasons include their use as an inflation hedge and as a way of moving one’s wealth outside the banking system.  The barrage of fiat printing that is now occurring virtually guarantees that there will be serious inflation, if not hyper-inflation, at some point.  One result of this could be a significant devaluation of the USD, such as has been seen recently in both Venezuela and Argentina, and which also occurred in the US in 1934 when gold was repriced from $20.67 per oz. to $35 per oz.  While that will impact the wealth of every single person holding USD, it will not significantly affect those holding gold and silver outside the banking system.  Another would be another banking failure where, like Cyprus, the depositors are robbed to pay for the mistakes of the banks where they have their currency on deposit.  How depositors EVER got defined as “unsecured creditors” is utterly mind-numbing and something that only a shyster-lawyer or a bankster could devise.  It is not the depositors who are “unsecured”, it is the derivatives and other un-real crap in which the bank has invested that is not secured.  These can disappear in a flash, as if they never were… because they don’t really exist except as bankster concepts.  Yes, I know that you know all this but my reply is mostly for others who may not.  :-)
       

    • @Ed_B
      As I explained in my post reply to Pat above, my comment was a direct reply to Keith, reiterated once again, after my original conversation with the man himself.
       
      “…How depositors EVER got defined as “unsecured creditors” is utterly mind-numbing and something that only a shyster-lawyer or a bankster could devise…”
      Actually you can thank Congress for this little ditty… although surely with a ha tip  for the lobbying assist from the bankers… essentially the major opening for this was implemented in the Bankruptcy reform act of 2004 or 2005.  Up until then, client funds in securities and commodity brokerage houses were segregated and considered untouchable and sacrosanct prior to this act, but the change was effected at the behest of the bankers who wanted derivative exposure to have senior creditor status in any bankruptcy proceedings for ALL types of financial firms. while subordinating all other debt to the coverage of this derivative exposure.  The second part of this lederdemain would be a key element of Dodd-Frank, a couple years later, where a firm like MF Global would now be (and was) pulled into bankruptcy as a non-brokerage firm, as opposed to, and distinct from, a ‘brokerage firm’ with customer accounts…  I’m a little fuzzy on the actual distinction there now, as it’s been 6 or 7 years since I covered this on my shows, but it was considered very unexpected to the creditors of MFG that the MFG bankruptcy did not treat the firm as a securites firm where customer-held segregated funds would subordinate EVERY OTHER claim, including preferred bond holdings…. instead it was handled as a non-customer firm where derivative were given senior status in the settlement process.

    • @Sovereign Economist
       
      As I explained in my post reply to Pat above, my comment was a direct reply to Keith, reiterated once again, after my original conversation with the man himself.”

      Sorry.  I thought that this was an SD conversation.  My bad, as they say.
       
      “Actually you can thank Congress for this little ditty… although surely with a ha tip  for the lobbying assist from the bankers… essentially the major opening for this was implemented in the Bankruptcy reform act of 2004 or 2005.”
       
      Regardless of source, it is still one of the ALL TIME DUMB IDEAS!  What a surprise it would have been to these banksters and law-makers had everyone in the country gone to their banks and brokers and removed their money from the grasp of this idiotic notion.  Not that we all could, of course, but an attempt at it might have caused them to rethink this approach.  While unlikely, it is possible.
       

  2. US Treasury credit units, so-called Federal Reserve ‘Dollar’, are valued to their holders as Treasury can manage (among the gullible and corrupt) or decree, so the Treasurer can bid as low as … zero … on anything he desires to. Treasury has Property Right to make such a decision, acting forcefully on it through its Exchange Stabilization Fund. If virtually no one is tendering physical silver within (the self-interested) Treasury’s desired range, it may as well bid zero, as it will likely STILL not get meaningful quantities of real silver in return.

    Illogical bids, completely divorced from any semblance to rational supply-demand parameters, will be an obvious calculated attempt to loot the silver-savings of the elderly who depend on those savings, literally, for their lives. Such an attempt would also thoroughly negate all ‘veracity’ of the monopoly ‘exchanges’, flipping the banknote-silver value ratio determination into the ‘private sector’ … perhaps permanently, going forward … as that will likely devolve into the sole arena for availability.

    Personally, I would interpret that scenario as a death-shudder of those monopoly ‘exchanges’.

    Paper Rots, Coin Does Not.

  3. Another useless bit of information. It doesn’t matter how the “market” speculates, the market is the casino that I am trying to exit the front door of. Why should I give a crap about what the speculative market is going to do now, or in the future?
     
    Big picture stuff tells me that when a country owes more than it can finance as in the UK, US and the whole of Europe, then the term “not worth the paper its printed on” comes to mind.
     
    So, in my not so humble opinion, this article is about as useful as tits on a bull.
     
    We can flap our gums, morning, noon and night about this. Yes in nominative terms silver is likely to reach lower prices in the future than they are presently, so what? they are also going to reach higher prices, yet again, so what? If your looking to make paper money out of this, then good luck to you. If like me your deluded by casino politics, and casino banking, then pick your commodity, and run with it. Any non perishable commodity bought today over the long term of say 20 years will be more valuable in the future. Fact.
     
    I would go into the points of my theory, but its too complicated, basically it involves population growth, green energy, food shortages, and land prices going up. I don’t include energy in my model as its too complicated to work out, and I have a sneaky suspicion there will be an invention in the next 10 years that will “suddenly” save us.
     
    I stick to my guns, gold is range bound for a while at $1215 to $1315. Silver, who knows, if the casino is getting frisky again with offering free chips at the roulette wheel, silver could plummet, but I think its just going to go the way of gold and be range bound between $19 to $25.
     

  4. Why wouldn’t they crash it to $0 and give it away for free??? Idiots. It’s a certain instant suicide for the Cabal if they crash it to $12, because everybody’s gonna be buying truckloads of physical. I’m certainly gonna!

    • If it goes to $12 we will likely be paying between $5-$8 dollar premiums for the physical stuff. There is no way the dealers are going to let their stock go for a low-ball, obviously manipulated price. After all they do have a business to run and they need to keep the lights on and pay their employees. They won’t be able to do that giving away their product.
       
      What annoys me most about these kinds of articles is that theoretically silver “could” go to any price couldn’t it? This guy picks the magic number of $12 in this instance but why not $10, $9, $8 or even $5? And let’s say it does get to $12 where “could” it go after that? How about to $1? This is just another silver bashing article at the end of the day. That said, the author is right that silver “could” go to $12. It also “could” go to $100 couldn’t it?

    • This is such a small market that market action could get extremely erratic if it wanted. If it crashes to $12, most likely everyone will treading water in a sea of deflation (more so). Silver is still asset to many and likely to be treated as one in the event of a market downfall. However, it has a history of currency in its DNA (though it hasn’t been used in that manner in quite some time). I’m betting some will come to that eventual realization.
       
      Of course if the private sector is purposely starved of liquidity and credit expansion (like the powers at be is doing now) using the deflation it created as tool, then its rather difficult to generate a buying frenzy into PM. Most of the US is living paycheck to paycheck already. Its rather difficult to campaign for an investment on wealth preservation when there is nothing to preserve. On the other spectrum, how can the upper 0.01% transparently invest into PM without sparking a hyperinflation frenzy (which is no interest to them at all). In the mean time we stagnate until an unforeseen sentinel event creates chaos with human psychology grasping towards the basics (PM). Until then, the dollar is in the very fortunate position of being in a world with equally crappy/abused currencies. 

  5. If I had wings I could fly.
    Another piece of totally useless conjecture.
    Why even bother with this this nonsense.
    Silver is headed up in the long run period.The manipulation will continue to work until it no longer can period.In the short run the synthetic market can take it anywhere..$1 $5 who cares!
     
     

  6. Great read guys was highly impressed by the questions and answers. It seems to me if we take the metal out of the market place then the future markets will collapse as the Weiner say’s. Isn’t this what we want? Heck I will be happy to get $12.00 cheap Silver but I don’t see it happening. If the futures go down to $12 then the premiums for physical is going to go up very high IMO and that will undoubtedly finish the futures market.
    Does that make sense? Lol Keep Stacking

    • Charlie, I don’t think this target will be touched because the Exchange Stabilization Fund (aka: JP Morgan) uses HFT’s to hunt down and whack the sell stops of the longs … just in case. Then they leave a little ‘slack on the leash’ to draw in a few more delusional paper-boy longs … rinse and repeat.

    • Pat,
       
      I take it your talking strictly paper silver, not real silver? The price of real silver rarely moves as much as the ETF product. Maybe £2 -£3. With this physical buffer in the physical market, does it matter what the paper price will be? ETF prices don’t take into account of production costs, shipping, Sellers markup etc. Worst of all paper silver does not take into account of when a physical silver Seller has bought and when he is selling. Marginal costs are everything for the physical wholesale market. It just doesn’t move as swiftly, no matter how hard the LBMA try to wag the dog.

    • WaitingForSilver … “The price of real silver rarely moves as much as the ETF product”
       
      I was referring to paper silver ‘Futures’, yes, but inferring nothing of Exchange Traded Funds (ETFs).

      Perhaps you’re (pardonably) confusing my mention of the Exchange Stabilization Fund (ESF) with the ETFs. The ESF is a secretive, independent, unanswerable arm of the US Treasury which has, since the 1930s, had free rein to interfere in any market, domestic or foreign, to influence the political aims of the Washington, DC city-state, most likely co-ordinating with your own City of London acting through it’s Bank of England (somewhat more overtly).

    • I fully understand what you said Pat, and as you know, the ETF market is the paper silver price. The London market hasn’t been required to be complicant in the price fixing since the ETF market was created. The LBMA has become irrelevant to the price fixing. So I don’t believe London is part of the Fed’s game.
       
      There is no remit for the UK government/ BOE Ltd.  to support the Dollar at all, but there is a remit for the World Bank, and the IMF. I think you should be looking there Pat, not across the pond. If only we had gone the route of SDR instead of the Dollar, maybe we wouldn’t be in the shit that we are currently in, but no, America had to be top dog.

    • WaitingForSilver … “There is no remit for the UK government/ BOE Ltd.  to support the Dollar at all”
       
      I contend they have … on ground that all banknotes, regardless of variety in ink, pictures or type fonts are an integrated monolith. They’re all created in the same manner … loan … and depend on new borrowing to prevent deflation. Similarly, they all depend on shoveling their local inflation off into other regions to allay price effects, diminishing export trade prospects. I’ve been pondering this for many, many years and that’s how it all sizes up for me. The appearance of ‘different’ banknotes is a crafty illusion. So, I conclude that all these governments are playing parts in a financial ‘symphony’, of sorts … with a rotating ‘conductor’ as new ‘venues’ are agreed by all to ‘perform’ in. Right now it’s looking like China is the new ‘house’. All in all though, the contracting ‘impresario’ is always those same old families of ‘elites’ running the show.

  7. Keep stacking it’s a huge scam because all it will take is someone to step in and buy a huge amount of physical silver and lock it up and can you say blast off. It’s all a scam to get the cheapest silver they can once they are loaded we will see the price skyrocket. 

  8. My hunch is the smart gold guys who WERE hedging in gold (and want physical if something bad happens) think that they are more likely to get Phyzz silver delivered than Phyzz gold when the SHTF.  They just rolled out of gold and into silver because Phyzz silver is better than paper gold any day!!! 

  9. Sovereign Economist.  Depositors have no more vote as to what becomes of their funds placed in a bank as sheep, cattle and pigs get to vote what part of their corpus can be retained when the farmer comes calling.
     The Constitutional Congress Farmers, as opposed to the Framers,  vote an ‘all body experience’ when it comes to their constituency.  Constituency is now defined as the ‘ranch’  See how rancher Bundy is being treated by the Praetorians from the BLM.
     Pig farmers talk about using everything but oink when carving up their charges.  Congress has now figured out how to cull the oink as well.

  10. @gogetter1132 and @Marchas45 correctly point out that IF silver does indeed drop down to $12/oz then the premiums will go up.  The premium could easily reach $6/oz for Physical.
     
    The flip side of the coin is that - despite the high premium - IF silver hits $12/oz, there will be multiple ‘Out of Stock‘ banners on every silver website on the Internet, and those who jump on the bus late will have to settle for Frosty-the-Snowman 1-oz silver rounds and weird silver foreign coins if they want to buy silver.

    • Mammoth  I concur on your statement silver could drop to $12 and for a basic reason.  The premiums would be astronomical. As Pat Fields says, pricing gold and silver in the currency scheme is ridiculous.  What vital commodities you can buy with your silver is what will count, not what it’s priced in FRNS.  The thing that could precipitate a flash crash on precious metals is what I’ve called the ‘fear factor liquidation event’ that is caused by a huge crash in equities, bonds and derivatives
      If recent history is a guide, when silver went from $17 to $8 an ounce during the 2008 crash, this could bring silver to $12, but only temporarily.  From the $8 mark, silver went quickly to $49.  That seminal event may need to be repeated for us to see the prices retain their former reasonable levels.

  11. A quick PS as to shortages  When the flash crash of gold and silver was manufactured April 2013, the time of the $400 drop in gold price and something close to $10 in silver, the big mine in Utah collapsed and all sorts of speculation was going on, I called my silver dealers in the Northern NV area.  They were down to their last 100-1000 ounces in total inventory and could not get silver for their customers or stocking.  They were pissed about this   Their businesses shut down for a while.  Some refused to sell their deep stacks at a lost of $5 an ounce too boot.  It took a while for them to get back to where they had any inventory, much less anything that could be delivered in 24 hours.  4-6 week waits were commonplace.   The same conditions existed for ammo, but without the price drops experienced by PMs.  Silver, gold and ammo are correspondingly cheap today

    • AGXIIK, when this happens and folks are scrambling to buy silver, this is when the Inner Trader comes out in folks like us who were prudent enough to stack while prices were low and silver was available.  This will be the time to trade some of your silver for other items you need – and at a very favorable rate.
       
      I need to go through my stacks and sort out all the holed halves, dented dollars, mangled mercurys, dateless standing liberty quarters, and barber ‘smoothies,’ so that when demand spikes I can dump those rejects on a desperate buyer.

  12. Silver at 12 Hoarders like me would sell off other assets  or max out credit limits ,beg ,borrow ect to get in at that price I love it bring it on ! the lower the PRICE the LESSER the SUPPLY then there is NO SILVER to sell, unless you buy it from the HOARDERS…….. 

  13. The paper price is becoming less and less relevant. If you go to EBay right now various dealers is selling 2014 Eagles and Maples for between $26-29/ounce and people are steadily buying them. I’m not sure why they are selling them at such a high premium right now and I wonder why the buyers are willing to pay that much. But in any case that shows me that folks are more than willing to pay that large premium for the real thing. So at $12 silver you will certainly see dealers selling at $20 for sure. 
     
    I learned the hard way that if you are trying to play in the paper markets you are more than likely going to lose. So buy the physical stuff, be patient and relax. 
     

    • @gogetter1132
       
      “I learned the hard way that if you are trying to play in the paper markets you are more than likely going to lose.”
       
      You will if you don’t know what you are doing.  If you don’t know how to play poker, don’t sit down to play for money with some guys who do.  lol
       

  14. There is something seriously wrong with the COMEX if speculators can run the price of silver to $12/oz bcuz that would shut down every silver mine on the planet. Was excited to read India imported 220M ounces of silver in 2013, 26% of the 2013 silver mine production. One way to shut down the COMEX which definitely needs to be done, COMEX shut down, would be to implement Mexico’s Slim’s idea for silver coins. BRICS coin as many silver coins as India imported silver 2013, 200M ounces each. This would completely buy up the entire silver mine annual production. Allowing the silver coins to b converted into that country’s currency would insure the coins sell to Peeps like hot cakes. When the country’s currency falls say 20% increase the exchange rate for the newly minted silver coins to reflect the higher buying power. Would not b long before the Rword Fed parasites COMEX scam would be history. Yea. Yea.

    • @Anon123
       
      Other than to meet the requirements of signed contracts, I don’t know why ALL of the miners don’t sell their products to Asia.  Asians appreciate PMs and are happy to buy them.  So do Arabs, for the most part.  PMs are migrating to Asia and to the ME because of this.  So, why not just cut out the middlemen and sell directly?
       

Leave a Reply