Silver Has Only Three Futures

Sure, there will be a few sellers who might decide to sell ten ounces of silver to buy a new car…

By Robert (Bobin) Zee of EddietheMechanic

Silver has only three futures. One, obviously, is to stay the present course and reap the consequences of unrelenting and alleged persistent price manipulation and suppression by bullion banks and futures trading organizations. These organizations are referred to as The Cartel by a popular silver commentator. The second potential future is to cease price manipulation and suppression by the aforementioned cartel, thus allowing true price discovery in the marketplace. That is simply not going to happen. The third future is to allow, cause, or otherwise introduce a disruptive force in the marketplace, thus paving the way for exponential demand resulting in an exponential price increase.

In the first scenario, staying the present course, bullion banks and futures trading organizations will continue trading silver and gold with their sophisticated algorithms. Following this course, expect the price of silver to be in the $30.00 range come 2022. Nothing drastic will happen. Predictions, however, will be made for $50.00 silver and, at the same time, the contrarians claiming silver will drop to 12.00 per ounce. Neither is likely to happen. History has proven this.

In the second scenario, cease price manipulation and suppression by bullion banks and futures trading organizations, true price discovery will be realized. This cannot be allowed to happen by the powers at be simply because doing so will reveal the true value of all fiat currencies. Should price suppression ever cease at some point, a great influx of investors will be found investing in gold and silver. Those holding any significant amount of bullion will become rich overnight, “overnight”, in this case, being within a few months. A likely sequella to this scenario is the return, to some degree, of backing currencies with gold and silver. Russia, China, and other large holders of bullion, would be the likely backers of this policy.

The third scenario, which already has several instances demonstrating proof the concept, is to introduce a disruptive force into the silver marketplace. One instance of proof of concept was executed by the Hunt brothers in late 1979 and early 1980. In an attempt to corner the silver market, the price rose from $6.08 per ounce to $49.45, roughly an increase of 700 percent. The Hunt brothers downfall is that they purchased silver on margin. Hiking margin requirements, as proven in the past, is a quick and easy way for the Cartel to manipulate the price.

Another demonstration of proof of concept of the third scenario was demonstrated within the last year by the Reddit group wallstreetbets. Resulting from the efforts of this group, the term Meme Stocks was later coined. It is clear to the even the casual observer that the efforts of wallstreetbets and those tweeting or posting suggestions to purchase these meme stocks has disrupted Wall Street. In fact, several brokerage houses were angered by the fact that they lost significant (read: billions) amounts of money over Gamestop, Bed Bath and Beyond, AMC, and a few others. But, that would be their problem, not mine.

But, how would a disruptive force be introduced into the silver market? One answer is for everyone who wants true price discovery to go out and buy silver bullion. That is probably not going to happen on a large scale basis as, if it were feasible, it would have happened by now. This is a waiting game that, quite frankly, is never going to end. Another answer is the wide scale development of silver-based rechargeable batteries for use in electric vehicles. Unfortunately, such a battery would be a very expensive option and, should it, or any other industrial use for that matter, drive the price of silver up, a less expensive alternative would be sought.

A better answer would be for a large group, such as wallstreetbets, to invest in the Sprott Physical Silver Trust (PSLV). The concept has already been proven by the Hunt Brothers, wallstreetbets, and the recent meme stock craze. The Sprott Physical Silver Trust, an exchange traded physical bullion fund, obtains physical silver to back any shares offered. Unlike other similar financial instruments, the Sprott Trust has the silver to back the shares offered. Thousands (or millions) of people purchasing large numbers of shares of PSLV would cause the Sprott Trust to obtain more physical silver to back any offering. This will eventually be a problem. At some point, physical silver will become impossible to obtain at any price. Sure, there will be a few sellers, like me, who might decide to sell ten ounces of silver to buy a new car. You can fill in the rest of the blanks.