"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
<< <i>20% of all the silver produced in human history was destroyed
The elemental silver was not destroyed by industry, any more than it was produced by mining.
Rather, it was separated out of ore mixtures and/or silver compounds, and purified. Then, it was used in applications which mixed it in alloys and/or formed silver compounds with other elements.
The silver still exists in the waste and it can be re-mined and re-purified, and the processes by which this can be accomplished would become more economically feasable at higher spot prices.
Luckily, however, there is huge investor demand for silver coins and bars, many more of which are manufactured every single day, and most get stored. They will be of practical use later, and much easier for industry to bid away from investors than it would be to re-refine most of the silver waste. That waste will be the "ore" of the far far future, probably long past our time. >>
Of course.
But, most of the silver is simply unrecoverable. Even at far higher prices it's not going to be recovered anymore than the Great Pyramids so-called valley temple is going to see the light of day after being buried under Cairo for decades. The artefacts here are worth far more than the little silver that could be dug up under a modern day golf course covering a garbage dump.
Perhaps with $100 silver we'd recover 5 or 10% of the wasted silver but it will be at a very high cost.
Clad, I'm glad you started this thread...I think. Quite an education on the history of silver as a precious metal, most of which I had never heard before. My thanks to all who contributed opinions and articles. I would love to hear someone's concise summary of all of this, which means capturing the key components of 150 years of price manipulation of silver. As I understand it, in oversimplified form, what gov'ts colluded to do 150 years ago to artificially keep the silver price low so they could profit from gold arbitrage, the investment houses are doing now so they can profit from issuing stock certificates in silver funds which have little or no physical silver backing. The housing bubble was a "fairness" bubble which artificially increased demand by qualifying the unqualified to satisfy the supposed "equality" demands of the "less fortunate." That was an entitlement program of its own, but which also profited the big hitters (who always profit) at the expense of the middle class (ho-hum). The silver bubble doesn't have an "entitlement" aspect to it that I can see. It is more of an artificial avoidance of supply/demand dynamics which profit the big hitters at the expense of the middle and lower classes simply because it allows the sale of worthless documents to the uniformed who trust the system. Not sure what else is involved now? If the price of silver were allowed to "float" to some hypothetical "true value", what do you think that price would be in today's market?
Markets (governments) can remain irrational longer than an investor can remain solvent.
The goal was never to keep the price of silver at $4 or gold at $252. The goal was to manage their price rise over the past 10 yrs so that TPTB could play the whipsaws and keep as many J6P's out of the trade as possible. In this light, they did their job. Silver only got out of hand once, during the first 4 months of 2011.
The Japanese electronic recycling is a start. But a small one. Last I checked the US still landfilled about 85% of its waste. It's not cheap to go back into old land fills and pull that stuff back out. Essentially, we've been throwing away about 85% of the industrial silver produced. There are far less environmental compliance issues with pulling silver out of rock vs. pulling it out of landfills. The landfills constructed over the past 20-25 yrs are at least of a higher technical quality to know what you're dealing with. The stuff that was buried before that is a wild card when standards and compliance were quite loose.
If the goal of the manipulators was to keep a lid on silver's price they did a very poor job.
There is no shortage of silver ...its not a plentiful metal like copper but its not platinum either.
Every year 700 million ounces are mined.
With that in mind, silver ought to be a great candidate as a monetary medium but I doubt that will ever be the case again as long as there are important industrial and medical uses for it.
Q: Are You Printing Money? Bernanke: Not Literally
If the goal of the manipulators was to keep a lid on silver's price they did a very poor job.
There is no shortage of silver ...its not a plentiful metal like copper but its not platinum either.
Every year 700 million ounces are mined.
With that in mind, silver ought to be a great candidate as a monetary medium but I doubt that will ever be the case again as long as there are important industrial and medical uses for it. >>
Silver is already a monetary medium, with some qualities superior, and other qualities inferior, as other monetary mediums such as gold, platinum, copper, steel, all the other hard andd soft commodities including energy and food, bonds, stocks, insurance and annuity products and monetary media.
It is not actual money; it must always be sold for physical cash, a representation such as a check, or electronic money transfer to be spent on goods and services. (Insert the exception here that proves the rule: you know a shopkeeper or roofer or mechanic who will accept silver bullion in payment. Great, he's literally one in a million) Imo day to day currency in everyday widespread use will never again be precious metal, or have intrinsic value close to face, ever again, at least in the lifetime of anybody reading this.
<< <i>The real problem with silver manipulationText >>
is a no brainer. All markets are "manipulated" in one way or the other. However, the few that subscribe to and believe in conspiracy theories, tend to without actual solid facts, blow the "manipulation" out of context.
"Bongo drive 1984 Lincoln that looks like old coin dug from ground."
"The company will build a 2,400-square-meter factory on its Hibiki manufacturing site in Wakamatsu Ward to recover metals, including gold, silver, copper and palladium from about 400 tons of electronic devices annually."
In just a little more than 16,250 years they'll have processed a pile of junk about the same weight as the Great pyramid. If they can ex- tract all the metal it will stack up less than an inch high.
Sure, other plants will be built and there are already massive plants in Africa which extract gold and ruin people's health but in the here and now the recovered metal is not very large but the increased num- ber and quantities are substantial and threatening to grow much faster.
They will never be able to recover the metals from the electronics in use and the total amount of electronics grows by leaps and bounds every year.
<< <i>Clad, I'm glad you started this thread...I think. Quite an education on the history of silver as a precious metal, most of which I had never heard before. My thanks to all who contributed opinions and articles. I would love to hear someone's concise summary of all of this, which means capturing the key components of 150 years of price manipulation of silver. As I understand it, in oversimplified form, what gov'ts colluded to do 150 years ago to artificially keep the silver price low so they could profit from gold arbitrage, the investment houses are doing now so they can profit from issuing stock certificates in silver funds which have little or no physical silver backing. The housing bubble was a "fairness" bubble which artificially increased demand by qualifying the unqualified to satisfy the supposed "equality" demands of the "less fortunate." That was an entitlement program of its own, but which also profited the big hitters (who always profit) at the expense of the middle class (ho-hum). The silver bubble doesn't have an "entitlement" aspect to it that I can see. It is more of an artificial avoidance of supply/demand dynamics which profit the big hitters at the expense of the middle and lower classes simply because it allows the sale of worthless documents to the uniformed who trust the system. Not sure what else is involved now? If the price of silver were allowed to "float" to some hypothetical "true value", what do you think that price would be in today's market? >>
I don't have abny answers.
All I know is that much of the silver people think they own will evaporate if the price goes sharply higher because it's not real. Just like the silver at MF Global or the stainless steel manufacturers who believed they owned nickel when the fraud gets too advanced there's an empty bag. You can't continually take more out of a warehouse or a bag than you put in. You can give people fancy receipts and charge them an annual dusting fee but it doesn't make a piece of paper eq- uivalent to a bar of silver or nickel.
Now days stainless steel rusts but if people's confidence in the money rusts there will be hell to pay. There simply isn't as much silver as there is paper. Just as there's no substitute for confidence in the money there is no substitute for silver in the economy. We can make stainless that rusts but we can't make electronics without silver that works.
<< <i>You can give people fancy receipts and charge them an annual dusting fee but it doesn't make a piece of paper eq- uivalent to a bar of silver or nickel. >>
Love that line. And thank you for the reply. This question is for anyone here. If the silver price has been kept artificially low for many years, and demand has increased over mining capacity, then the "true" value of silver must be greater than the present $33-34 oz price. I think we would all agree with this when it is stated as a hypothetical postulate (even if you don't believe silver price is manipulated any more than any other commodity). Given the hypothetical, to what degree, in percentage terms, would you guess that real silver is short of the "dusted receipts"? 10%? 50%? Or, if you prefer, in dollar terms, would you guess the true price is above or below $50? $75? $100?
Markets (governments) can remain irrational longer than an investor can remain solvent.
If one can go out and buy or sell actual silver all day long at $33-35 an ounce, then that's the current "true value" of it. Hypotheticals are fun, but try it with anything else in a market.. "hey, the True Value of this stock is double the current market price! Buy my house for it's True Value, which I estimate is 50% higher than the appraisal!" it just doesn't work. The True Value will be higher, when it actually IS higher.
All I know is that much of the silver people think they own will evaporate if the price goes sharply higher because it's not real. >>
Huh? Like it evaporated when the price of silver went from $5 to $10? or from $5 to $20? >>
It has to go high enough to bankrupt the forces holding the price down.
Of course this applies to all markets but it's different in silver because a large percentage of the total "supply" doesn't really exist. When someone goes long silver they tend to end up with a promise to pay and they might even get charged an annual fee to dust the silver that doesn't exist. Much of the silver "owned" by the big silver users isn't real silver. They tend to use "just in time" delivery like most industry and use paper to protect themselves. They can't operate their factory with paper. No one will pay off on the paper if they are bank- rupt.
This just doesn't go on in other markets and all it would take to unwind the whole thing is for a few users to want real metal before the warehouses actually go empty. The nickel ware- houses went empty and there were real world consequences because that's where we ult- imately all live. Contracts were voided and stainless steel isn't. It is occurs in silver it will have massive consequences because not only will it impact industry severely but it will also impact peoples' assessment of money.
Sure, there's plenty of silver even in comparison to the paper but much of the silver in existence is tied up in things that can't be readily destroyed or are not readily available for sale. Who's going to be the first to melt an 1804 dollar for its metal content? What country will melt its mu- seum pieces?
Perhaps the price that will break the shorts can't be achieved but the bottom line will always be that you can't consume more than you produce and you can't cheat mother nature. Silver demand will continue to increase no matter what and under most of the most likely scenarios silver productiuon will not increase substantially until there is a technological breakthrough in materials or energy production. There's simply nothing in the foreseeable future to cause a dis- continuance of the trends and this means more and more shorts to hold the price in check un- til the entire system snaps.
Nickel was nothing compared to the fallout from a silver default.
All I know is that much of the silver people think they own will evaporate if the price goes sharply higher because it's not real. >>
Huh? Like it evaporated when the price of silver went from $5 to $10? or from $5 to $20? >>
It has to go high enough to bankrupt the forces holding the price down.
Of course this applies to all markets but it's different in silver because a large percentage of the total "supply" doesn't really exist. When someone goes long silver they tend to end up with a promise to pay and they might even get charged an annual fee to dust the silver that doesn't exist. Much of the silver "owned" by the big silver users isn't real silver. They tend to use "just in time" delivery like most industry and use paper to protect themselves. They can't operate their factory with paper. No one will pay off on the paper if they are bank- rupt.
Sure, there's plenty of silver even in comparison to the paper but much of the silver in existence is tied up in things that can't be readily destroyed or are not readily available for sale. Who's going to be the first to melt an 1804 dollar for its metal content? What country will melt its mu- seum pieces? . >>
Can't say I follow you completely. No one is holding down the prices. In fact, it'd be the miner's advantage if the price kept going higher. In terms of the SLV trust that trades on the exchange, the trust holds 313,722,526.500 oz. of silver at JPMorgan.It's inspected annually. Also, ever year silver mining continues and meets demand. Most of the mined silver goes to create silver coins.
"Poets are the unacknowledged legislators of the world." PBShelley
<< <i>Can't say I follow you completely. No one is holding down the prices. In fact, it'd be the miner's advantage if the price kept going higher. In terms of the SLV trust that trades on the exchange, the trust holds 313,722,526.500 oz. of silver at JPMorgan.It's inspected annually. Also, ever year silver mining continues and meets demand. Most of the mined silver goes to create silver coins. >>
313 million ounces of silver is insignificant compared to the amount of paper that's out there. Some of the people owning shorts believe the price will go down and this is a legitimate reason to short a commodity. But much of the real demand for silver is being supplied by paper. Say you believe silver is going far higher so you buy 20 100 ounce bars and store them in a warehouse. This is real and legitimate demand as well. But the supply of this silver isn't real because the supposed seller and holder of this metal who charges you an abnnual fee to store the metal doesn't actually have the silver. This entity believes silver is overvalued so to profit on the future price de- creases plans to buy silver when you demand your's. Indeed, the entity simply plans to pay off the silver it doesn't have at the new lower price making a profit. The same thing occurs on a much more massive scale in the rigged futures markets. There are larger entities who try to push the price up and down while extracting profits by sel- ling massive amounts of silver which also don't really exist. Those with real demand and legitimate reasons for that demand such as needing silver to keep their factories running or those believing the ingenuity of man will continue to stress supplies into the foreseeable future are buying these promises to provide silver.
This would all be perfectly rational except for the fact that the silver being sold doesn't actually exist and would depend on future mining to be made good. The economy does not work this way and neither does mother nature. In the real world when people come to believe the books are cooked they want out. All these people who will want out are longs and when they demand their property the silver doesn't exist. Investors won't want to wait for new mining and factories can't wait for new mining. The price soars and the issuers of the paper go belly up. Since the silver isn't real and has been de- stroyed by greed and waste some factories will actually have to shut down. A factory can't run on paper in the concrete world.
I continue to hope that the powers that be stop this process before it becomes too de- structive but each time silver goes up more paper is issued to stop it.
You can't fool mother nature. There must be a reckoning if the markets want higher prices and there are artificial contrivances to prevent them.
The financiers all seem to have the mistaken belief that they can just allow this to blow up in their faces exactly as they allowed nickel to blow up. They are gravely mistaken because nickel isn't money in millions upon millions of people's minds and silver is. They can ruin stainless steel by using less nickel but you will ruin a factory if you try to take the silver out of it. They are playing a very serious game with trying to inflate the econ- omy without inflating the metals while also using paper to suppress silver demand.
Bottom line; the shorts are short, the longs are short, and the warehouses are short. Everytime the prices moves higher there are more shorts. This is like giving dynamite to children in an inflationary enviroment with silver consumption increasing.
<< <i>In fact, it'd be the miner's advantage if the price kept going higher. >>
In the bizarro world we live in many of the miners have sold future production so are effectively short. This is part of the reason that dramatically higher prices aren't leading to dramatically increased supply; the miners sold their production in the past at lower prices so aren't reaping the profits to expand pro- duction.
Some miners even buy shorts because they expect lower prices but this is more common in gold and not as common as it used to be, I believe.
Percyb states there are 313,722,526.500 oz on hand as verified annually by some watchdog group. CNBC's market page shows 325,500,000 shares available of iShares of Silver Trust (SLV). If I understand Cladking correctly, he suggests that many more than 325,500,000 shares have been issued and/or sold short. Worse, he states that as the price of silver rises, the brokerage firm (Morgan Stanley?) which holds shorts must issue still more shares (not backed by existing physical silver) which acts to dilute the value of all shares, thus behaving as an artificial "freeze" on the price of silver. If all owners of iShares of SLV call for the physical silver tomorrow (a "run" on taking delivery of the physical silver) there would be a shortage of "X" number of physical ounces of silver and the demand would force the price of an ounce much higher. Anyone holding the obligation to sell at a lower price ( a short) would have to pay full market price to supply the silver to a buyer at a much lower price thus losing money on each transaction. If the price disparity is great enough, Morgan Stanley would default.
I hope I have that right, I am asking more than stating, just trying to understand all this. In some ways it is like a "freeze", in other ways, like a ponzi. Very complex stuff!
Markets (governments) can remain irrational longer than an investor can remain solvent.
<< <i>Can't say I follow you completely. No one is holding down the prices. In fact, it'd be the miner's advantage if the price kept going higher. In terms of the SLV trust that trades on the exchange, the trust holds 313,722,526.500 oz. of silver at JPMorgan.It's inspected annually. Also, ever year silver mining continues and meets demand. Most of the mined silver goes to create silver coins. >>
313 million ounces of silver is insignificant compared to the amount of paper that's out there. . >>
What paper?
Not sure what you're referencing. SLV has silver in trust at JPM. The silver contracts that trade on the commodity exchange are covered as well.
"Poets are the unacknowledged legislators of the world." PBShelley
<< <i>Percyb states there are 313,722,526.500 oz on hand as verified annually by some watchdog group. CNBC's market page shows 325,500,000 shares available of iShares of Silver Trust (SLV). If I understand Cladking correctly, he suggests that many more than 325,500,000 shares have been issued and/or sold short. If all owners of iShares of SLV call for the physical silver tomorrow >>
A couple of things. You can't sell short more shares than are available. Also, you can't take delivery of SLV.
"Poets are the unacknowledged legislators of the world." PBShelley
PercyB, thank you for the corrections. Not SLV, different market. Listening to Sprott at the link below, I guess the "commercial paper" Cladking is referring to is more related to the "leased" metals (about which I know nothing). This is far more complicated (and interrelated with other assets) than I thought. In any event, Cladking's post sounds a lot like the essence of what Sprott is saying. Sprott says he doesn't believe there is enough physical silver to meet the requirements of the commercial paper already sold; that demand for silver (and gold) exceeds production; that production is too difficult to increase and a major shift in silver price is imminent as a result.
<< <i>Percyb states there are 313,722,526.500 oz on hand as verified annually by some watchdog group. CNBC's market page shows 325,500,000 shares available of iShares of Silver Trust (SLV). If I understand Cladking correctly, he suggests that many more than 325,500,000 shares have been issued and/or sold short. Worse, he states that as the price of silver rises, the brokerage firm (Morgan Stanley?) which holds shorts must issue still more shares (not backed by existing physical silver) which acts to dilute the value of all shares, thus behaving as an artificial "freeze" on the price of silver. If all owners of iShares of SLV call for the physical silver tomorrow (a "run" on taking delivery of the physical silver) there would be a shortage of "X" number of physical ounces of silver and the demand would force the price of an ounce much higher. Anyone holding the obligation to sell at a lower price ( a short) would have to pay full market price to supply the silver to a buyer at a much lower price thus losing money on each transaction. If the price disparity is great enough, Morgan Stanley would default.
I hope I have that right, I am asking more than stating, just trying to understand all this. In some ways it is like a "freeze", in other ways, like a ponzi. Very complex stuff! >>
Yes. This is essentially what I believe is the reality.
However it's not the ETF's that are short far more silver than they own but the players on the futures markets.
The ETF's appear to be basically fair but some of the silver they have on hand could be encumbered. I'm not suggesting it is, merely that there are vast amounts of paper out there and the world's only known significant supply is the 313 million ounces in the ETF warehouse. It's simply not impossible that this silver is for show and it, too, would evaporate if the system collapses.
The short sellers are on the futures markets and Chicago commodities exchange.
I've seen estimates as high as 700,000,000 ounces of short paper. In a very real way much of the silver people believe they own is really paper that will fail if the man- ipulation fails. This paper is used to support just in time delivery by some large users. They want to have a steady supply at a steady price so they buy the paper to lock in a price but the paper is only as good as the issuer and no issuer can possibly scrape up even a small fraction of 700 million ounces without causing the price to go so high as to bankrupt him. We are living hand to mouth with artificially low silver prices that profit those leading the manipulation. When they can't get enough metal anywhere in the world to fullfill the contracts then the entire system will implode. It will have re- percussions beyond just the silver market because the exploding price of silver will push gold sharply higher and undermine confidence in the dollar/ bonds.
If government doesn't then go after the manipulators there will shock waves through- out the financial system. There's a quadrillion dollars worth of derivatives out there. There will be shock waves in any case when the manipulation fails. It will be critical that it be confined to the commodities and especially metals.
<< <i>Can anyone post a chart of what happened to the price of Nickel when inventories went too low and it nearly defaulted on deliveries.
Be careful what you ask for Cladking ....without the price discovery provided by "paper" you might actually get to see what Silver is worth.
Without an ever increasing demand for investment silver supplies would actually be in a very large surplus. >>
I'm sure you're right that there is plenty of silver. But "plenty" can be a funny word. We are going to have crippling shortages in the future if significant new supply doesn't come on board in the next cou- ple decades but at this time we're almost awash in silver. By this I mean new production and industr- ial demand are nearly in balance plus we have at least some 5 billion ounces in above ground supplies.
The problem is essentially one of perception and inertia. The total amount of silver in the world barely exceeds the total amount of gold yet silver is critical to human advancement and no large supplies ex- ist anywhere. Much of the silver is tied up in valuable artefacts and many of these can not be destroyed. Despite the continuing consumption, "scarcity", and importance of silver it is barely more valuable than gold making it an attractive investment. As the investment demand increases the stresses on supplies are exaserbated.
People believe that silver's worth a small fraction of gold so many sell when the price gets up to a point they can make a good profit which pushes the supply higher and is a self fullfilling prophesy on price. But we're now at a point that the sellers have already sold off the bulk of what they have so increases at this point will not be met with greater supply except for paper. This is setting up a sudden run on the market which appears to be at hand. The timing is set by countless factors and my estimate is based largely on anecdotal and other evidence. It is largely the continued easing caused by excessive government spend- ing that is likely to trigger it but there are many forces pushing in various directions.
Can't say I follow you completely. No one is holding down the prices. In fact, it'd be the miner's advantage if the price kept going higher. In terms of the SLV trust that trades on the exchange, the trust holds 313,722,526.500 oz. of silver at JPMorgan. It's inspected annually. Also, ever year silver mining continues and meets demand. Most of the mined silver goes to create silver coins.
I don't believe there's any documentation to prove that SLV inventories are 100% physically inventoried/audited annually. There's nothing in the prospectus that suggests such a strict standard has to be maintained. The auditors that come in to sign off on the inventories use statements from the custodians and sub-custodians who claim the metal is there. The auditors don't actually go out and count. It's more like a paper audit based on "best practices." Those practices may not be very good. JPMorgan has nothing to do with the audits as they farm out all the work to other custodians and sub-custodians. This keeps them from getting their hands dirty and not being liable in the event of fraud or loss. The prospectus reads that no one is liable for fraud or losses...except the shareholders....lol. Run Forrest, run!
313 MILL ounces is trivial compared to the otc silver derivative contracts that JPM & Co. hold against the silver market. Last I checked it was on the order of $100 BILL. notional. That equates to around 3 BILL ounces of silver being leveraged....or 10X the quantity supposedly held by SLV. During July 2008 JPM & Co. held $203 BILL in otc silver derivatives with silver at around $18-$19 per ounce. That worked out to be around 10-11 BILL ounces leveraged or about 14 yrs of world silver production. This is where the real leverage is applied to the silver market. It's also how JPM and Co. pushed silver right off the cliff towards $9 in July-August 2008.
<< <i> Can't say I follow you completely. No one is holding down the prices. In fact, it'd be the miner's advantage if the price kept going higher. In terms of the SLV trust that trades on the exchange, the trust holds 313,722,526.500 oz. of silver at JPMorgan. It's inspected annually. Also, ever year silver mining continues and meets demand. Most of the mined silver goes to create silver coins.
I don't believe there's any documentation to prove that SLV inventories are 100% physically inventoried/audited annually. There's nothing in the prospectus that suggests such a strict standard has to be maintained. The auditors that come in to sign off on the inventories use statements from the custodians and sub-custodians who claim the metal is there. The auditors don't actually go out and count. It's more like a paper audit based on "best practices." Those practices may not be very good. JPMorgan has nothing to do with the audits as they farm out all the work to other custodians and sub-custodians. This keeps them from getting their hands dirty and not being liable in the event of fraud or loss. The prospectus reads that no one is liable for fraud or losses...except the shareholders....lol. Run Forrest, run!
313 MILL ounces is trivial compared to the otc silver derivative contracts that JPM & Co. hold against the silver market. Last I checked it was on the order of $100 BILL. notional. That equates to around 3 BILL ounces of silver being leveraged....or 10X the quantity supposedly held by SLV. During July 2008 JPM & Co. held $203 BILL in otc silver derivatives with silver at around $18-$19 per ounce. That worked out to be around 10-11 BILL ounces leveraged or about 14 yrs of world silver production. This is where the real leverage is applied to the silver market. >>
Wow! Thanks for the input. Those numbers are far higher than I'd been led to believe.
<< <i>Wow! Thanks for the input. Those numbers are far higher than I'd been led to believe. >>
When the CFTC went sniffing around JPM's short positions in fall 2010 I think they decided not to leverage up the silver derivatives like that again. The means to stop the silver run in spring 2011 was to instead kill it with numerous margin increases. Worked like a charm. With Dodd-Frank looming out there JPM might not be so quick to double up silver derivatives again like they did in summer 2008. For now, they have to be content to short the equivalent of 4 yrs of world silver production....lol. Poor guys!
The gold bullion otc derivatives are on the order of $450 BILL notional last I looked or about 2.5 - 3 years of world gold production. These are so opaque that it's way too late to know what's going on by the time a report comes out months later. In the first half of 2011 the top 6 banks added $100 TRILL notional in otc interest rate contracts to their pile. That had a huge effect on pushing down interest rates in the first half of 2011. And that was also a factor in pushing silver and gold higher in 2011.
<< <i> Can't say I follow you completely. No one is holding down the prices. In fact, it'd be the miner's advantage if the price kept going higher. In terms of the SLV trust that trades on the exchange, the trust holds 313,722,526.500 oz. of silver at JPMorgan. It's inspected annually. Also, ever year silver mining continues and meets demand. Most of the mined silver goes to create silver coins.
I don't believe there's any documentation to prove that SLV inventories are 100% physically inventoried/audited annually. There's nothing in the prospectus that suggests such a strict standard has to be maintained. The auditors that come in to sign off on the inventories use statements from the custodians and sub-custodians who claim the metal is there. The auditors don't actually go out and count. It's more like a paper audit based on "best practices." Those practices may not be very good. JPMorgan has nothing to do with the audits as they farm out all the work to other custodians and sub-custodians. This keeps them from getting their hands dirty and not being liable in the event of fraud or loss. . >>
I'm not sure why you don't believe there's documentation. Read the prospectus. The US audits JPMorgan. There are laws the trust and JPM must adhere to. You can't be serious when you say that JPMorgan "farms out all the work." Their name is on the audit. Their hands are not dirty. On top of all of that, JPMorgan has more darn capital than the dollar amount of all of that silver that backs up SLV. I might suggest that the dollar is being manipulated, not the price of silver. Helicopter Ben keeps the interest rates low and prints $$ and buys treasuries. That's manipulation. I'd be more scared of a run on the dollar than waste time worrying about silver prices. JMO.
"Poets are the unacknowledged legislators of the world." PBShelley
As you know I am NOT a big manipulation fan, but if I was I would be in 100% agreement with perryb in that I believe there is a massive global effort by the worlds central banks to supress the dollar.
It strikes me that we may be discussing which card will fall next in the fiat world of propped-up values. Real estate tumbled first. Maybe PMs will be next, of those, maybe we see it in silver markets first. Using the word "manipulation" gives the discussion a pejorative tone which creates unnecessary resistance . Some of what is happening is no doubt a legitimate attempt to keep stability in global commerce and social structure. Our troubles seems to enter by either of two doors. First, and foremost, when anyone attempts to "distribute wealth" without regard to effort ( or, in other words, attempts to legislatively move the poor up to the middle class). Secondly, it occurs when speculators begin to take advantage. The philosophical fallacy of legislated income equality simply cannot be accommodated by markets. No matter what window dressing one puts on it, these initiatives fail if for no other reason than the disincentives to effort that they create, not to mention the opportunities for speculation which must invariably follow.
Markets (governments) can remain irrational longer than an investor can remain solvent.
The last time I read the SLV prospectus, there was no apparent chain of custody nor were there any specified accounting or auditing procedures discussed for verification of what physical was ever going to be held. There was however, mention of several pass-throughs and sleight-of-hand disclaimer language that led me to conclude that there is no guarantee of anything. Maybe it's been changed since then, but I doubt it.
percyb, do you know that FASB dropped all of their standards on valuation of derivative mortgage debt, and I assume for any other type of debt that JPM might happen to have on their books? You also must have read about some of the problems that involve naked shorting of Comex silver and CFTC's refusal to actually investigate it. And you do know about MF Global and their ties to JPMs silver positions, and how the bankruptcy judge has turned legal precedent on its head and screwed individual holders of segregated accounts while allowing Jon Corzine to blatantly claim no responsibility for outright theft of client funds?
Go ahead, trust them. I don't, nor will I.
Q: Are You Printing Money? Bernanke: Not Literally
<< <i>The last time I read the SLV prospectus, there was no apparent chain of custody nor were there any specified accounting or auditing procedures discussed for verification of what physical was ever going to be held. There was however, mention of several pass-throughs and sleight-of-hand disclaimer language that led me to conclude that there is no guarantee of anything. Maybe it's been changed since then, but I doubt it.
percyb, do you know that FASB dropped all of their standards on valuation of derivative mortgage debt, and I assume for any other type of debt that JPM might happen to have on their books? You also must have read about some of the problems that involve naked shorting of Comex silver and CFTC's refusal to actually investigate it. And you do know about MF Global and their ties to JPMs silver positions, and how the bankruptcy judge has turned legal precedent on its head and screwed individual holders of segregated accounts while allowing Jon Corzine to blatantly claim no responsibility for outright theft of client funds?
Go ahead, trust them. I don't, nor will I. >>
The last time I read the prospectus I came up with the same conclusion. But, maybe they added in more consumer protection since then. My recollection of the prospectus is that is states that JPM can't physically audit the sub-custodians so who cares how many documents JPM signs stating that metal is there. This basically gives them plausible deniability when SHTF.
I've yet to see anyone present a case of a legitimate and true physical audit of SLV. This is not the case when dealing with Sprott, CTF, GTU, and other similar silver/gold ETF's. And why in the heck would JPM even want to audit their custodians? In no way does JPM have "clean" hands in all this. But like FMGlobal and Corzine, they won't be held responsible. And what JPM doesn't have is the money to pay out their $100 BILL notional in silver derivatives should/if they eventually fail. And if SLV has holes in it, the easiest place to paper this over is via the future's and and otc derivative's markets. I don't know what rules or laws apply to silver ETF's. All I know is that the govts dislike silver and gold and consider anything the big banks do to keep the people from investing/profiting in them is patriotic. Rather than prosecuting banks for violating security's laws, they will pin medals on them. Silver and gold prices cannot be left to free markets to determine their value. It's up to the banks and govt to "manage" the price rises along the way so that things don't get too out of hand too quickly, and that the banks be able to profit by their "patriotism."
Let me see, I'm going to believe JPM's signed audit documents when they've been a major player in $100 BILL in silver otc derivatives? Didn't Corzine sign SOx documents every month while he was CEO of MFGlobal? Paper audit trails and other signed documents are only as good as the people, regulators, and govts standing behind them. Any bankers go to jail yet for any of the financial fraud instituted since 2006? They prosecuted over 10,000 of them during the S&L crisis of the 1980's for only a few $Billion in fraud. This time it was trillions.
percyb, do you know that FASB dropped all of their standards on valuation of derivative mortgage debt, and I assume for any other type of debt that JPM might happen to have on their books? You also must have read about some of the problems that involve naked shorting of Comex silver and CFTC's refusal to actually investigate it. And you do know about MF Global and their ties to JPMs silver positions, and how the bankruptcy judge has turned legal precedent on its head and screwed individual holders of segregated accounts while allowing Jon Corzine to blatantly claim no responsibility for outright theft of client funds?
Go ahead, trust them. I don't, nor will I. >>
JPM stores the silver, that's all I am saying. The silver in storage covers the SLV contracts. Every year there is an audit. You can't say there isn't.
There may be differences with the CFTC, but when silver gets called or put, someone takes or delivers real silver.
Finally, the price of silver is not being manipulated. I think the proper perspective is to look at how the US dollar is being purposefully debased. It is being purposefully debased so that our exports might increase. How is it debased? It's debased by printing billions and billions of more dollars....this is what the Fed is doing. When the dollar is debased, the price of everything in terms of dollars goes up. It's not rocket science.
"Poets are the unacknowledged legislators of the world." PBShelley
So, is it the case that paper silver futures and options contracts actually manipulate silver prices higher than they would be in a cash market, because much of the investment demand is for paper derivatives which are easy to get in and out of, because very few traders actually want to take physical delivery of millions of ounces of silver metal which is difficult-to-move, store, and protect ? And if holders of paper actually did take delivery, then the actual market price would be lower because then they would have to get rid of so much actual silver because they can't afford to carry it on the books and in they physical world because of its risk and illiquidity in bulk form?
As I say, you can trust JPM with not issuing their physical silver to multiple accounts and you can trust them not to hold massive naked short positions that they use to sh*tcan existing stop orders whenever they want to drive the price down, and you can deny that they and Goldman Sachs frontrun their own "muppet" clients, and you can try to ignore that their HFT algorithm programs and direct connections & proximity to the exchange aren't used to search out and destroy orders placed in good faith by every other market participant for their own skimming operations...............................you can ignore all that if you want..................................but in my view these problems have been well documented in addition to the things I mentioned in the previous post.
No, it's really not rocket science that the Fed is debasing the currency, but that's a separate issue on top of the corruption in the markets and regulatory system.
And yes, if the silver is really in SLV and not "loaned" or overcommitted in multiple fractional reserve schemes by the trustee (JPM in this instance), then it really depends on what happens to the silver after it is taken out. Yes, demand for physical increased (and the price went up) when the fund was created, but if private hands are taking possession of physical metal that is coming out of the fund - it's no longer the same situation.
In my opinion, the fund was established as a competing instrument vs. physical in order to aid in price manipulation. Removing physical silver from the fund doesn't make the silver any less desireable, but it does insure that it is real silver at the moment of physical transfer. Demand for physical indicates higher prices, not lower.
Q: Are You Printing Money? Bernanke: Not Literally
Every year there is an audit. You can't say there isn't.
Do you have access to the signed audit by a Certified Public Accounting firm? Me neither.
And after the esteemed accounting firm Arthur Anderson certified Enron so diligently, I'm not sure that it means much anyway - especially after FASB caved on what's acceptable on firm balance sheets at full value (or whatever other value they feel makes them look legit.
The financial industry is corrupt, and the accounting profession lost all credibility in 2009 - they threw it down the toilet all by themselves. End of story.
Q: Are You Printing Money? Bernanke: Not Literally
JPM doesn't necessarily store the silver. Maybe some of it, certainly not all of it. The sub-custodians that JPM has hired store silver as well. JPM receives a piece of paper from those guys stating all the silver is there. JPM then shows that paper to the auditor, "see, all the silver is there." Audit complete. The prospectus clearly states that the primary custodian (JPM) doesn't have to vault all the silver. They can appoint other custodians and sub-custodians to vault additional metal. And they do not have to allow the primary custodian on the premises to review their operations, let alone see the metal. Yes, there is an audit done every year. But what good is that if the 3rd party auditors are not verifying each bar or at least a large random % of such? Rather, I suspect they review paper documents from the custodians and sub-custodians from an office high above Wall Street. It's an audit....just not one that I would want to invest in.
This is taken from GLD (HSBC custodian) but it's probably the same verbage for SLV: “the Trustee may have no right to visit the premises of any subcustodian for the purposes of examining the Trust’s gold bars or any records maintained by the subcustodian, and no subcustodian will be obligated to cooperate in any review the Trustee may wish to conduct of the facilities, procedures, records or creditworthiness of such subcustodian.” Why the heck would such a clause be in the prospectus?
Audits don't show if there are duplicate claims on the same bar of silver from other sources around the world. There are also clauses in the prospectus that allow ETF shares to be counted as bullion (ie provided that all elements of a bona fide EFP pursuant to Exchange Rule 104.36 are satisfied). There are more loop holes in these ETF's than one can count. These custodians and probably JPM as well were involved in the Libor rigging scandal. You think they would pass up the opportunity to play with gold and silver prices/inventories? If I were one of the owners of the FED and the CEO's of the big banks were not doing all in their power to rig the metal/currency markets....I'd replace them with someone who would.
“Neither the Securities and Exchange Commission (SEC) nor any state securities commission has approved or disapproved of the securities offered in this prospectus, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.”
“The trust is not an investment company registered under the Investment Company Act of 1940. The trust is not a commodity pool for purposes of the Commodity Exchange Act, and its sponsor is not subject to regulation by the Commodity Futures Trading Commission as a commodity pool operator, or a commodity trading advisor.
“As an owner of iShares, you will not have the protections normally associated with ownership of shares in an investment company registered under the Investment Company Act of 1940, or the protections afforded by the Commodity Exchange Act of 1936.”
“Accordingly, the bulk of the trust’s silver holdings is represented by physical silver.”
“the Custodian has agreed that it will hold all of the Trust’s gold bars in its own London vault premises except when the gold bars have been allocated in a vault other than the Custodian’s London vault premises.”
“The purpose of this Notice is to confirm that the Exchange would accept gold-backed exchange-traded funds (‘ETF’) shares as the physical commodity component for an EFP transaction involving COMEX gold futures contracts, provided that all elements of a bona fide EFP pursuant to Exchange Rule 104.36 are satisfied.”
What's the definition of "bulk?" 50.1%? I believe that SLV's silver is vaulted overseas as well. That brings into question which law and/or regulations takes precedence....British or US? And does it really matter since location or possession is nine tenths of the law. Based on the above statements it would appear that the CFTC and SEC have recused themselves from regulation of SLV and GLD while leaving it up to JPM/HSBC to "do the right thing."
I'm still waiting to see the verbiage from the prospectus that gives percyb so much confidence that SLV won't leave shareholders holding the bag.
There aren't even allocated accounts in SLV.
The US audits JPMorgan.
The US audits JPM? Which agency audits SLV? What am I missing here? Please elaborate - if you know something that I missed, I'd really like to get all of the facts.
Q: Are You Printing Money? Bernanke: Not Literally
<< <i>So, is it the case that paper silver futures and options contracts actually manipulate silver prices higher than they would be in a cash market, because much of the investment demand is for paper derivatives which are easy to get in and out of, because very few traders actually want to take physical delivery of millions of ounces of silver metal which is difficult-to-move, store, and protect ? And if holders of paper actually did take delivery, then the actual market price would be lower because then they would have to get rid of so much actual silver because they can't afford to carry it on the books and in they physical world because of its risk and illiquidity in bulk form? >>
Let me try this again.
There's only a few billion ounces of silver in the world readily available for sale. Indeed, at any given time it's more like a few hundred million ounces because most people won't rush to sell their silverware even if there were a huge spike in price. Meanwhile billions of ounces of gold are sitting in huge vaults under armed gaurd that could be sold at any time it was advantageous to the owner. And there are hundreds of million ounces sitting in safty deposit boxes and smaller vaults like coin shops and jewelry stores that could be sold on a moment's notice.
I don't know what gold is worth but my only effect on the price is when I buy or sell and I'm doing neither at these levels. But silver is obviously scarcer AND more valuable than gold. It has a low- er price because it has a lower price. It has a lower price because in most places and times it comes from the earth in a 12 to 1 ratio to gold so it is percieved as being common. You walk in- to a coin shop and see cases full of silver and not gold. You never find a gold coin mixed in with a roll of quarters. It is perception that sets the price of everything and it accomplishes this by being the net vector sum total of every individuals decisions on buying and selling. Normally there are numerous forces beyond just perception holding prices in check, or more accurately, part of the perception that sets prices are caused by the purchase price or the last price an item was sold. At this time there was very little silver bought at higher levels and the bulk of it is in short term holds rather than very long term since obviously the physical longs got out when it got back to $50 recent- ly. So ask yourself, why is a scarcer and more valuable commodity than gold selling for a fraction of the price and the only answer is inertia and 4,000,000,000 ounces of paper and God knows how much metal owned by multiple entities.
Whoever is manipulating these prices can only maintain it so long as the perception persists that silver is worth a fraction of gold. This CAN'T continue indefinitely because the world is already living hand to mouth with silver supplies while consumption is beginning a parabolic increase and product- ion is barely inching higher. Any interruption in the status quo, any change of perception caused by shortages or failure of the shorts to deliver and suddenly everything changes. Everyone will immed- iately desire to own physical metal and the physical doesn't exist. Factories require a steady flow of silver but that silver won't be coming in because there will be a massive buying panic with the factory owners leading it. The shorts will be bankrupt. The little silver actually on the market can disappear overnight. Sellers will be few and far between because no one has bought at any price over $70 who are alive today. There's no perception of breaking even; there's no resistance.
Obviously there are other ways the future can unfold including a severe depression that would force massive selling of silver and a much lower price. But you have to look at the prevailing conditions when you predict the future and at the current time we live in a world of stagnant silver production, increased consumption, and on the threshold of a recovery with significant inflation. To choke off silver prices is to choke off the recovery. Meanwhile the only thing standing between us and a far higher price is the status quo. It's the erroneous perception that silver is far more common than gold. It would be more common than gold if not for three decades (if not much longer) of price suppression which has enriched a few while silver was being bulldozed into garbage dumps.
It looks as though we may well be on verge of a new perspective. But even if we aren't you can be sure that it will happen or there will be a huge population decline. I never bet on disasters.
"At the moment, every dollar move upwards in the silver price costs the shorts nearly half a billion dollars. And there is no way it can be covered, because the cash silver simply does not exist."
<< <i> Every year there is an audit. You can't say there isn't. >>
After working for one of the "Big 4" accounting firms (will not say which), I can tell you that an audit of inventory is a joke. Having performed many of these myself (not for SLV but for other large/global firms etc), I would not rely on these "audits" that ALL of the metal is present. Cycle/inventory counts test the controls in place, verify (based on random sampling) that the selected inventory is present etc. By no means would I depend on these audits. Just imo.
<< <i>All the gold ever minted in man's history would roughly be 5.3 billion ounces.
Keep in mind that last year alone nearly one billion ounces of silver were mined.
Its not inertia or the status quo ...its REALITY that keeps silver at a 50 times cheaper than gold. >>
From about 1985 to 2010 there was more silver consumption each year than production. There is much less silver in the world than there was in 1985 and probably less than in 1965.
More importantly there is less silver that can be brought to market right now than there is gold. It is inertia.
My contention isn't that silver should be priced as much as gold, merely that the price difference isn't justified in the real world and can't be maintained if current trends continue.
<< <i>All the gold ever minted in man's history would roughly be 5.3 billion ounces.
Keep in mind that last year alone nearly one billion ounces of silver were mined.
Its not inertia or the status quo ...its REALITY that keeps silver at a 50 times cheaper than gold. >>
The reality is that silver is used up and gold isn't. Estimates have placed all the silver ever mined to be about 50 BILL ounces....the vast majority of it gone or at least far too difficult or costly to recycle.
<< <i>Have to love these statements in the prospectus"
“Neither the Securities and Exchange Commission (SEC) nor any state securities commission has approved or disapproved of the securities offered in this prospectus, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.”
“The trust is not an investment company registered under the Investment Company Act of 1940. The trust is not a commodity pool for purposes of the Commodity Exchange Act, and its sponsor is not subject to regulation by the Commodity Futures Trading Commission as a commodity pool operator, or a commodity trading advisor.
“As an owner of iShares, you will not have the protections normally associated with ownership of shares in an investment company registered under the Investment Company Act of 1940, or the protections afforded by the Commodity Exchange Act of 1936.”
“Accordingly, the bulk of the trust’s silver holdings is represented by physical silver.”
“the Custodian has agreed that it will hold all of the Trust’s gold bars in its own London vault premises except when the gold bars have been allocated in a vault other than the Custodian’s London vault premises.”
“The purpose of this Notice is to confirm that the Exchange would accept gold-backed exchange-traded funds (‘ETF’) shares as the physical commodity component for an EFP transaction involving COMEX gold futures contracts, provided that all elements of a bona fide EFP pursuant to Exchange Rule 104.36 are satisfied.”
What's the definition of "bulk?" 50.1%? I believe that SLV's silver is vaulted overseas as well. That brings into question which law and/or regulations takes precedence....British or US? And does it really matter since location or possession is nine tenths of the law. Based on the above statements it would appear that the CFTC and SEC have recused themselves from regulation of SLV and GLD while leaving it up to JPM/HSBC to "do the right thing." >>
Comments
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"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
<< <i>20% of all the silver produced in human history was destroyed
The elemental silver was not destroyed by industry, any more than it was produced by mining.
Rather, it was separated out of ore mixtures and/or silver compounds, and purified. Then, it was used in applications which mixed it in alloys and/or formed silver compounds with other elements.
The silver still exists in the waste and it can be re-mined and re-purified, and the processes by which this can be accomplished would become more economically feasable at higher spot prices.
Luckily, however, there is huge investor demand for silver coins and bars, many more of which are manufactured every single day, and most get stored. They will be of practical use later, and much easier for industry to bid away from investors than it would be to re-refine most of the silver waste. That waste will be the "ore" of the far far future, probably long past our time. >>
Of course.
But, most of the silver is simply unrecoverable. Even at far higher prices it's not going to be
recovered anymore than the Great Pyramids so-called valley temple is going to see the light
of day after being buried under Cairo for decades. The artefacts here are worth far more than
the little silver that could be dug up under a modern day golf course covering a garbage dump.
Perhaps with $100 silver we'd recover 5 or 10% of the wasted silver but it will be at a very high
cost.
I knew it would happen.
He has a good body of work out there , Here is a link to some of it.
fekete articles in PDF
The housing bubble was a "fairness" bubble which artificially increased demand by qualifying the unqualified to satisfy the supposed "equality" demands of the "less fortunate." That was an entitlement program of its own, but which also profited the big hitters (who always profit) at the expense of the middle class (ho-hum).
The silver bubble doesn't have an "entitlement" aspect to it that I can see. It is more of an artificial avoidance of supply/demand dynamics which profit the big hitters at the expense of the middle and lower classes simply because it allows the sale of worthless documents to the uniformed who trust the system. Not sure what else is involved now?
If the price of silver were allowed to "float" to some hypothetical "true value", what do you think that price would be in today's market?
If the goal of the manipulators was to keep a lid on silver's price they did a very poor job.
There is no shortage of silver ...its not a plentiful metal like copper but its not platinum either.
Every year 700 million ounces are mined.
it doesnt vanish into thin air
Groucho Marx
and keep as many J6P's out of the trade as possible. In this light, they did their job. Silver only got out of hand once, during the first 4 months of 2011.
The Japanese electronic recycling is a start. But a small one. Last I checked the US still landfilled about 85% of its waste. It's not cheap to go back into old land fills and
pull that stuff back out. Essentially, we've been throwing away about 85% of the industrial silver produced. There are far less environmental compliance issues with pulling
silver out of rock vs. pulling it out of landfills. The landfills constructed over the past 20-25 yrs are at least of a higher technical quality to know what you're dealing with. The stuff
that was buried before that is a wild card when standards and compliance were quite loose.
If the goal of the manipulators was to keep a lid on silver's price they did a very poor job.
There is no shortage of silver ...its not a plentiful metal like copper but its not platinum either.
Every year 700 million ounces are mined.
With that in mind, silver ought to be a great candidate as a monetary medium but I doubt that will ever be the case again as long as there are important industrial and medical uses for it.
I knew it would happen.
<< <i>Silver went from 5 bucks to 50 bucks ...
If the goal of the manipulators was to keep a lid on silver's price they did a very poor job.
There is no shortage of silver ...its not a plentiful metal like copper but its not platinum either.
Every year 700 million ounces are mined.
With that in mind, silver ought to be a great candidate as a monetary medium but I doubt that will ever be the case again as long as there are important industrial and medical uses for it. >>
Silver is already a monetary medium, with some qualities superior, and other qualities inferior, as other monetary mediums such as gold, platinum, copper, steel, all the other hard andd soft commodities including energy and food, bonds, stocks, insurance and annuity products and monetary media.
It is not actual money; it must always be sold for physical cash, a representation such as a check, or electronic money transfer to be spent on goods and services. (Insert the exception here that proves the rule: you know a shopkeeper or roofer or mechanic who will accept silver bullion in payment. Great, he's literally one in a million) Imo day to day currency in everyday widespread use will never again be precious metal, or have intrinsic value close to face, ever again, at least in the lifetime of anybody reading this.
Liberty: Parent of Science & Industry
<< <i>The real problem with silver manipulationText >>
is a no brainer. All markets are "manipulated" in one way or the other. However, the few that subscribe to and believe in conspiracy theories, tend to without actual solid facts, blow the "manipulation" out of context.
<< <i>Silver went from 5 bucks to 50 bucks ...
If the goal of the manipulators was to keep a lid on silver's price they did a very poor job.
There is no shortage of silver ...its not a plentiful metal like copper but its not platinum either.
Every year 700 million ounces are mined.
it doesnt vanish into thin air >>
"The company will build a 2,400-square-meter factory on its Hibiki manufacturing site in Wakamatsu Ward to recover metals, including gold, silver, copper and palladium from about 400 tons of electronic devices annually."
In just a little more than 16,250 years they'll have processed a pile
of junk about the same weight as the Great pyramid. If they can ex-
tract all the metal it will stack up less than an inch high.
Sure, other plants will be built and there are already massive plants
in Africa which extract gold and ruin people's health but in the here
and now the recovered metal is not very large but the increased num-
ber and quantities are substantial and threatening to grow much faster.
They will never be able to recover the metals from the electronics in
use and the total amount of electronics grows by leaps and bounds
every year.
<< <i>Clad, I'm glad you started this thread...I think. Quite an education on the history of silver as a precious metal, most of which I had never heard before. My thanks to all who contributed opinions and articles. I would love to hear someone's concise summary of all of this, which means capturing the key components of 150 years of price manipulation of silver. As I understand it, in oversimplified form, what gov'ts colluded to do 150 years ago to artificially keep the silver price low so they could profit from gold arbitrage, the investment houses are doing now so they can profit from issuing stock certificates in silver funds which have little or no physical silver backing.
The housing bubble was a "fairness" bubble which artificially increased demand by qualifying the unqualified to satisfy the supposed "equality" demands of the "less fortunate." That was an entitlement program of its own, but which also profited the big hitters (who always profit) at the expense of the middle class (ho-hum).
The silver bubble doesn't have an "entitlement" aspect to it that I can see. It is more of an artificial avoidance of supply/demand dynamics which profit the big hitters at the expense of the middle and lower classes simply because it allows the sale of worthless documents to the uniformed who trust the system. Not sure what else is involved now?
If the price of silver were allowed to "float" to some hypothetical "true value", what do you think that price would be in today's market? >>
I don't have abny answers.
All I know is that much of the silver people think they own will evaporate if the
price goes sharply higher because it's not real. Just like the silver at MF Global
or the stainless steel manufacturers who believed they owned nickel when the
fraud gets too advanced there's an empty bag. You can't continually take more
out of a warehouse or a bag than you put in. You can give people fancy receipts
and charge them an annual dusting fee but it doesn't make a piece of paper eq-
uivalent to a bar of silver or nickel.
Now days stainless steel rusts but if people's confidence in the money rusts there
will be hell to pay. There simply isn't as much silver as there is paper. Just as
there's no substitute for confidence in the money there is no substitute for silver
in the economy. We can make stainless that rusts but we can't make electronics
without silver that works.
<< <i>You can give people fancy receipts and charge them an annual dusting fee but it doesn't make a piece of paper eq- uivalent to a bar of silver or nickel. >>
Love that line. And thank you for the reply. This question is for anyone here.
If the silver price has been kept artificially low for many years, and demand has increased over mining capacity, then the "true" value of silver must be greater than the present $33-34 oz price. I think we would all agree with this when it is stated as a hypothetical postulate (even if you don't believe silver price is manipulated any more than any other commodity). Given the hypothetical, to what degree, in percentage terms, would you guess that real silver is short of the "dusted receipts"? 10%? 50%? Or, if you prefer, in dollar terms, would you guess the true price is above or below $50? $75? $100?
Hypotheticals are fun, but try it with anything else in a market.. "hey, the True Value of this stock is double the current market price! Buy my house for it's True Value, which I estimate is 50% higher than the appraisal!" it just doesn't work. The True Value will be higher, when it actually IS higher.
Liberty: Parent of Science & Industry
<< <i>
All I know is that much of the silver people think they own will evaporate if the
price goes sharply higher because it's not real. >>
Huh? Like it evaporated when the price of silver went from $5 to $10? or from $5 to $20?
<< <i>
<< <i>
All I know is that much of the silver people think they own will evaporate if the
price goes sharply higher because it's not real. >>
Huh? Like it evaporated when the price of silver went from $5 to $10? or from $5 to $20? >>
It has to go high enough to bankrupt the forces holding the price down.
Of course this applies to all markets but it's different in silver because a large percentage
of the total "supply" doesn't really exist. When someone goes long silver they tend to end
up with a promise to pay and they might even get charged an annual fee to dust the silver
that doesn't exist. Much of the silver "owned" by the big silver users isn't real silver. They
tend to use "just in time" delivery like most industry and use paper to protect themselves.
They can't operate their factory with paper. No one will pay off on the paper if they are bank-
rupt.
This just doesn't go on in other markets and all it would take to unwind the whole thing is for
a few users to want real metal before the warehouses actually go empty. The nickel ware-
houses went empty and there were real world consequences because that's where we ult-
imately all live. Contracts were voided and stainless steel isn't. It is occurs in silver it will have
massive consequences because not only will it impact industry severely but it will also impact
peoples' assessment of money.
Sure, there's plenty of silver even in comparison to the paper but much of the silver in existence
is tied up in things that can't be readily destroyed or are not readily available for sale. Who's
going to be the first to melt an 1804 dollar for its metal content? What country will melt its mu-
seum pieces?
Perhaps the price that will break the shorts can't be achieved but the bottom line will always
be that you can't consume more than you produce and you can't cheat mother nature. Silver
demand will continue to increase no matter what and under most of the most likely scenarios
silver productiuon will not increase substantially until there is a technological breakthrough in
materials or energy production. There's simply nothing in the foreseeable future to cause a dis-
continuance of the trends and this means more and more shorts to hold the price in check un-
til the entire system snaps.
Nickel was nothing compared to the fallout from a silver default.
<< <i>
<< <i>
<< <i>
All I know is that much of the silver people think they own will evaporate if the
price goes sharply higher because it's not real. >>
Huh? Like it evaporated when the price of silver went from $5 to $10? or from $5 to $20? >>
It has to go high enough to bankrupt the forces holding the price down.
Of course this applies to all markets but it's different in silver because a large percentage
of the total "supply" doesn't really exist. When someone goes long silver they tend to end
up with a promise to pay and they might even get charged an annual fee to dust the silver
that doesn't exist. Much of the silver "owned" by the big silver users isn't real silver. They
tend to use "just in time" delivery like most industry and use paper to protect themselves.
They can't operate their factory with paper. No one will pay off on the paper if they are bank-
rupt.
Sure, there's plenty of silver even in comparison to the paper but much of the silver in existence
is tied up in things that can't be readily destroyed or are not readily available for sale. Who's
going to be the first to melt an 1804 dollar for its metal content? What country will melt its mu-
seum pieces?
. >>
Can't say I follow you completely. No one is holding down the prices. In fact, it'd be the miner's advantage
if the price kept going higher.
In terms of the SLV trust that trades on the exchange, the trust holds 313,722,526.500 oz. of silver
at JPMorgan.It's inspected annually.
Also, ever year silver mining continues and meets demand. Most of the mined silver goes
to create silver coins.
<< <i>Can't say I follow you completely. No one is holding down the prices. In fact, it'd be the miner's advantage
if the price kept going higher.
In terms of the SLV trust that trades on the exchange, the trust holds 313,722,526.500 oz. of silver
at JPMorgan.It's inspected annually.
Also, ever year silver mining continues and meets demand. Most of the mined silver goes
to create silver coins. >>
313 million ounces of silver is insignificant compared to the amount of paper that's
out there. Some of the people owning shorts believe the price will go down and this
is a legitimate reason to short a commodity. But much of the real demand for silver
is being supplied by paper. Say you believe silver is going far higher so you buy 20
100 ounce bars and store them in a warehouse. This is real and legitimate demand
as well. But the supply of this silver isn't real because the supposed seller and holder
of this metal who charges you an abnnual fee to store the metal doesn't actually have
the silver. This entity believes silver is overvalued so to profit on the future price de-
creases plans to buy silver when you demand your's. Indeed, the entity simply plans
to pay off the silver it doesn't have at the new lower price making a profit. The same
thing occurs on a much more massive scale in the rigged futures markets. There are
larger entities who try to push the price up and down while extracting profits by sel-
ling massive amounts of silver which also don't really exist. Those with real demand
and legitimate reasons for that demand such as needing silver to keep their factories
running or those believing the ingenuity of man will continue to stress supplies into
the foreseeable future are buying these promises to provide silver.
This would all be perfectly rational except for the fact that the silver being sold doesn't
actually exist and would depend on future mining to be made good. The economy does
not work this way and neither does mother nature. In the real world when people come
to believe the books are cooked they want out. All these people who will want out are
longs and when they demand their property the silver doesn't exist. Investors won't
want to wait for new mining and factories can't wait for new mining. The price soars
and the issuers of the paper go belly up. Since the silver isn't real and has been de-
stroyed by greed and waste some factories will actually have to shut down. A factory
can't run on paper in the concrete world.
I continue to hope that the powers that be stop this process before it becomes too de-
structive but each time silver goes up more paper is issued to stop it.
You can't fool mother nature. There must be a reckoning if the markets want higher prices
and there are artificial contrivances to prevent them.
The financiers all seem to have the mistaken belief that they can just allow this to blow
up in their faces exactly as they allowed nickel to blow up. They are gravely mistaken
because nickel isn't money in millions upon millions of people's minds and silver is. They
can ruin stainless steel by using less nickel but you will ruin a factory if you try to take
the silver out of it. They are playing a very serious game with trying to inflate the econ-
omy without inflating the metals while also using paper to suppress silver demand.
Bottom line; the shorts are short, the longs are short, and the warehouses are short.
Everytime the prices moves higher there are more shorts. This is like giving dynamite
to children in an inflationary enviroment with silver consumption increasing.
<< <i>In fact, it'd be the miner's advantage
if the price kept going higher. >>
In the bizarro world we live in many of the miners have sold future production so are effectively short.
This is part of the reason that dramatically higher prices aren't leading to dramatically increased supply;
the miners sold their production in the past at lower prices so aren't reaping the profits to expand pro-
duction.
Some miners even buy shorts because they expect lower prices but this is more common in gold and
not as common as it used to be, I believe.
If all owners of iShares of SLV call for the physical silver tomorrow (a "run" on taking delivery of the physical silver) there would be a shortage of "X" number of physical ounces of silver and the demand would force the price of an ounce much higher. Anyone holding the obligation to sell at a lower price ( a short) would have to pay full market price to supply the silver to a buyer at a much lower price thus losing money on each transaction. If the price disparity is great enough, Morgan Stanley would default.
I hope I have that right, I am asking more than stating, just trying to understand all this. In some ways it is like a "freeze", in other ways, like a ponzi. Very complex stuff!
<< <i>
<< <i>Can't say I follow you completely. No one is holding down the prices. In fact, it'd be the miner's advantage
if the price kept going higher.
In terms of the SLV trust that trades on the exchange, the trust holds 313,722,526.500 oz. of silver
at JPMorgan.It's inspected annually.
Also, ever year silver mining continues and meets demand. Most of the mined silver goes
to create silver coins. >>
313 million ounces of silver is insignificant compared to the amount of paper that's
out there. . >>
What paper?
Not sure what you're referencing. SLV has silver in trust at JPM.
The silver contracts that trade on the commodity exchange are covered as well.
<< <i>Percyb states there are 313,722,526.500 oz on hand as verified annually by some watchdog group. CNBC's market page shows 325,500,000 shares available of iShares of Silver Trust (SLV). If I understand Cladking correctly, he suggests that many more than 325,500,000 shares have been issued and/or sold short.
If all owners of iShares of SLV call for the physical silver tomorrow >>
A couple of things. You can't sell short more shares than are available.
Also, you can't take delivery of SLV.
Listening to Sprott at the link below, I guess the "commercial paper" Cladking is referring to is more related to the "leased" metals (about which I know nothing). This is far more complicated (and interrelated with other assets) than I thought. In any event, Cladking's post sounds a lot like the essence of what Sprott is saying. Sprott says he doesn't believe there is enough physical silver to meet the requirements of the commercial paper already sold; that demand for silver (and gold) exceeds production; that production is too difficult to increase and a major shift in silver price is imminent as a result.
Just saw this--
<< <i>Percyb states there are 313,722,526.500 oz on hand as verified annually by some watchdog group. CNBC's market page shows 325,500,000 shares available of iShares of Silver Trust (SLV). If I understand Cladking correctly, he suggests that many more than 325,500,000 shares have been issued and/or sold short. Worse, he states that as the price of silver rises, the brokerage firm (Morgan Stanley?) which holds shorts must issue still more shares (not backed by existing physical silver) which acts to dilute the value of all shares, thus behaving as an artificial "freeze" on the price of silver.
If all owners of iShares of SLV call for the physical silver tomorrow (a "run" on taking delivery of the physical silver) there would be a shortage of "X" number of physical ounces of silver and the demand would force the price of an ounce much higher. Anyone holding the obligation to sell at a lower price ( a short) would have to pay full market price to supply the silver to a buyer at a much lower price thus losing money on each transaction. If the price disparity is great enough, Morgan Stanley would default.
I hope I have that right, I am asking more than stating, just trying to understand all this. In some ways it is like a "freeze", in other ways, like a ponzi. Very complex stuff! >>
Yes. This is essentially what I believe is the reality.
However it's not the ETF's that are short far more silver than they own but the players on the futures markets.
The ETF's appear to be basically fair but some of the silver they have on hand could be encumbered. I'm not
suggesting it is, merely that there are vast amounts of paper out there and the world's only known significant
supply is the 313 million ounces in the ETF warehouse. It's simply not impossible that this silver is for show and
it, too, would evaporate if the system collapses.
Be careful what you ask for Cladking ....without the price discovery provided by "paper" you might actually get to see what Silver is worth.
Without an ever increasing demand for investment silver supplies would actually be in a very large surplus.
Groucho Marx
<< <i>What paper?
>>
The short sellers are on the futures markets and Chicago commodities exchange.
I've seen estimates as high as 700,000,000 ounces of short paper. In a very real
way much of the silver people believe they own is really paper that will fail if the man-
ipulation fails. This paper is used to support just in time delivery by some large users.
They want to have a steady supply at a steady price so they buy the paper to lock in
a price but the paper is only as good as the issuer and no issuer can possibly scrape
up even a small fraction of 700 million ounces without causing the price to go so high
as to bankrupt him. We are living hand to mouth with artificially low silver prices that
profit those leading the manipulation. When they can't get enough metal anywhere
in the world to fullfill the contracts then the entire system will implode. It will have re-
percussions beyond just the silver market because the exploding price of silver will
push gold sharply higher and undermine confidence in the dollar/ bonds.
If government doesn't then go after the manipulators there will shock waves through-
out the financial system. There's a quadrillion dollars worth of derivatives out there.
There will be shock waves in any case when the manipulation fails. It will be critical
that it be confined to the commodities and especially metals.
<< <i>Can anyone post a chart of what happened to the price of Nickel when inventories went too low and it nearly defaulted on deliveries.
Be careful what you ask for Cladking ....without the price discovery provided by "paper" you might actually get to see what Silver is worth.
Without an ever increasing demand for investment silver supplies would actually be in a very large surplus. >>
I'm sure you're right that there is plenty of silver. But "plenty" can be a funny word. We are going to
have crippling shortages in the future if significant new supply doesn't come on board in the next cou-
ple decades but at this time we're almost awash in silver. By this I mean new production and industr-
ial demand are nearly in balance plus we have at least some 5 billion ounces in above ground supplies.
The problem is essentially one of perception and inertia. The total amount of silver in the world barely
exceeds the total amount of gold yet silver is critical to human advancement and no large supplies ex-
ist anywhere. Much of the silver is tied up in valuable artefacts and many of these can not be destroyed.
Despite the continuing consumption, "scarcity", and importance of silver it is barely more valuable than
gold making it an attractive investment. As the investment demand increases the stresses on supplies
are exaserbated.
People believe that silver's worth a small fraction of gold so many sell when the price gets up to a point
they can make a good profit which pushes the supply higher and is a self fullfilling prophesy on price. But
we're now at a point that the sellers have already sold off the bulk of what they have so increases at this
point will not be met with greater supply except for paper. This is setting up a sudden run on the market
which appears to be at hand. The timing is set by countless factors and my estimate is based largely on
anecdotal and other evidence. It is largely the continued easing caused by excessive government spend-
ing that is likely to trigger it but there are many forces pushing in various directions.
if the price kept going higher. In terms of the SLV trust that trades on the exchange, the trust holds 313,722,526.500 oz. of silver
at JPMorgan. It's inspected annually. Also, ever year silver mining continues and meets demand. Most of the mined silver goes
to create silver coins.
I don't believe there's any documentation to prove that SLV inventories are 100% physically inventoried/audited annually. There's nothing in the prospectus that
suggests such a strict standard has to be maintained. The auditors that come in to sign off on the inventories use statements from the custodians and sub-custodians
who claim the metal is there. The auditors don't actually go out and count. It's more like a paper audit based on "best practices." Those practices may not be very good.
JPMorgan has nothing to do with the audits as they farm out all the work to other custodians and sub-custodians. This keeps them from getting their hands dirty and not
being liable in the event of fraud or loss. The prospectus reads that no one is liable for fraud or losses...except the shareholders....lol. Run Forrest, run!
313 MILL ounces is trivial compared to the otc silver derivative contracts that JPM & Co. hold against the silver market. Last I checked it was on the order of $100 BILL. notional.
That equates to around 3 BILL ounces of silver being leveraged....or 10X the quantity supposedly held by SLV. During July 2008 JPM & Co. held $203 BILL in otc silver
derivatives with silver at around $18-$19 per ounce. That worked out to be around 10-11 BILL ounces leveraged or about 14 yrs of world silver production. This is where the real
leverage is applied to the silver market. It's also how JPM and Co. pushed silver right off the cliff towards $9 in July-August 2008.
<< <i> Can't say I follow you completely. No one is holding down the prices. In fact, it'd be the miner's advantage
if the price kept going higher. In terms of the SLV trust that trades on the exchange, the trust holds 313,722,526.500 oz. of silver
at JPMorgan. It's inspected annually. Also, ever year silver mining continues and meets demand. Most of the mined silver goes
to create silver coins.
I don't believe there's any documentation to prove that SLV inventories are 100% physically inventoried/audited annually. There's nothing in the prospectus that
suggests such a strict standard has to be maintained. The auditors that come in to sign off on the inventories use statements from the custodians and sub-custodians
who claim the metal is there. The auditors don't actually go out and count. It's more like a paper audit based on "best practices." Those practices may not be very good.
JPMorgan has nothing to do with the audits as they farm out all the work to other custodians and sub-custodians. This keeps them from getting their hands dirty and not
being liable in the event of fraud or loss. The prospectus reads that no one is liable for fraud or losses...except the shareholders....lol. Run Forrest, run!
313 MILL ounces is trivial compared to the otc silver derivative contracts that JPM & Co. hold against the silver market. Last I checked it was on the order of $100 BILL. notional.
That equates to around 3 BILL ounces of silver being leveraged....or 10X the quantity supposedly held by SLV. During July 2008 JPM & Co. held $203 BILL in otc silver
derivatives with silver at around $18-$19 per ounce. That worked out to be around 10-11 BILL ounces leveraged or about 14 yrs of world silver production. This is where the real
leverage is applied to the silver market. >>
Wow! Thanks for the input. Those numbers are far higher than I'd been led to believe.
<< <i>Wow! Thanks for the input. Those numbers are far higher than I'd been led to believe. >>
When the CFTC went sniffing around JPM's short positions in fall 2010 I think they decided not to leverage up the silver derivatives like that again.
The means to stop the silver run in spring 2011 was to instead kill it with numerous margin increases. Worked like a charm. With Dodd-Frank looming out
there JPM might not be so quick to double up silver derivatives again like they did in summer 2008. For now, they have to be content to short the equivalent of
4 yrs of world silver production....lol. Poor guys!
The gold bullion otc derivatives are on the order of $450 BILL notional last I looked or about 2.5 - 3 years of world gold production. These are so opaque that it's way
too late to know what's going on by the time a report comes out months later. In the first half of 2011 the top 6 banks added $100 TRILL notional in otc interest rate contracts
to their pile. That had a huge effect on pushing down interest rates in the first half of 2011. And that was also a factor in pushing silver and gold higher in 2011.
<< <i> Can't say I follow you completely. No one is holding down the prices. In fact, it'd be the miner's advantage
if the price kept going higher. In terms of the SLV trust that trades on the exchange, the trust holds 313,722,526.500 oz. of silver
at JPMorgan. It's inspected annually. Also, ever year silver mining continues and meets demand. Most of the mined silver goes
to create silver coins.
I don't believe there's any documentation to prove that SLV inventories are 100% physically inventoried/audited annually. There's nothing in the prospectus that
suggests such a strict standard has to be maintained. The auditors that come in to sign off on the inventories use statements from the custodians and sub-custodians
who claim the metal is there. The auditors don't actually go out and count. It's more like a paper audit based on "best practices." Those practices may not be very good.
JPMorgan has nothing to do with the audits as they farm out all the work to other custodians and sub-custodians. This keeps them from getting their hands dirty and not
being liable in the event of fraud or loss. . >>
I'm not sure why you don't believe there's documentation. Read the prospectus. The US audits JPMorgan. There are laws the trust and JPM must adhere to. You can't be serious when you say that JPMorgan "farms out all the work." Their name is on the audit. Their hands are not dirty. On top of all of that, JPMorgan has more darn capital than the dollar amount of all of that silver that backs up SLV.
I might suggest that the dollar is being manipulated, not the price of silver. Helicopter Ben keeps the interest rates low and prints $$ and buys treasuries. That's manipulation. I'd be more scared of a run on the dollar than waste time worrying about silver prices. JMO.
Knowledge is the enemy of fear
percyb, do you know that FASB dropped all of their standards on valuation of derivative mortgage debt, and I assume for any other type of debt that JPM might happen to have on their books? You also must have read about some of the problems that involve naked shorting of Comex silver and CFTC's refusal to actually investigate it. And you do know about MF Global and their ties to JPMs silver positions, and how the bankruptcy judge has turned legal precedent on its head and screwed individual holders of segregated accounts while allowing Jon Corzine to blatantly claim no responsibility for outright theft of client funds?
Go ahead, trust them. I don't, nor will I.
I knew it would happen.
<< <i>The last time I read the SLV prospectus, there was no apparent chain of custody nor were there any specified accounting or auditing procedures discussed for verification of what physical was ever going to be held. There was however, mention of several pass-throughs and sleight-of-hand disclaimer language that led me to conclude that there is no guarantee of anything. Maybe it's been changed since then, but I doubt it.
percyb, do you know that FASB dropped all of their standards on valuation of derivative mortgage debt, and I assume for any other type of debt that JPM might happen to have on their books? You also must have read about some of the problems that involve naked shorting of Comex silver and CFTC's refusal to actually investigate it. And you do know about MF Global and their ties to JPMs silver positions, and how the bankruptcy judge has turned legal precedent on its head and screwed individual holders of segregated accounts while allowing Jon Corzine to blatantly claim no responsibility for outright theft of client funds?
Go ahead, trust them. I don't, nor will I. >>
The last time I read the prospectus I came up with the same conclusion. But, maybe they added in more consumer protection since then.
My recollection of the prospectus is that is states that JPM can't physically audit the sub-custodians so who cares how many documents JPM signs stating that metal is there.
This basically gives them plausible deniability when SHTF.
I've yet to see anyone present a case of a legitimate and true physical audit of SLV. This is not the case when dealing with Sprott, CTF, GTU, and other similar silver/gold ETF's.
And why in the heck would JPM even want to audit their custodians? In no way does JPM have "clean" hands in all this. But like FMGlobal and Corzine, they won't be held responsible.
And what JPM doesn't have is the money to pay out their $100 BILL notional in silver derivatives should/if they eventually fail. And if SLV has holes in it, the easiest place to paper this
over is via the future's and and otc derivative's markets. I don't know what rules or laws apply to silver ETF's. All I know is that the govts dislike silver and gold and consider anything
the big banks do to keep the people from investing/profiting in them is patriotic. Rather than prosecuting banks for violating security's laws, they will pin medals on them. Silver and
gold prices cannot be left to free markets to determine their value. It's up to the banks and govt to "manage" the price rises along the way so that things don't get too out of hand too
quickly, and that the banks be able to profit by their "patriotism."
Let me see, I'm going to believe JPM's signed audit documents when they've been a major player in $100 BILL in silver otc derivatives? Didn't Corzine sign SOx documents every month
while he was CEO of MFGlobal? Paper audit trails and other signed documents are only as good as the people, regulators, and govts standing behind them. Any bankers go to jail yet
for any of the financial fraud instituted since 2006? They prosecuted over 10,000 of them during the S&L crisis of the 1980's for only a few $Billion in fraud. This time it was trillions.
<< <i>
percyb, do you know that FASB dropped all of their standards on valuation of derivative mortgage debt, and I assume for any other type of debt that JPM might happen to have on their books? You also must have read about some of the problems that involve naked shorting of Comex silver and CFTC's refusal to actually investigate it. And you do know about MF Global and their ties to JPMs silver positions, and how the bankruptcy judge has turned legal precedent on its head and screwed individual holders of segregated accounts while allowing Jon Corzine to blatantly claim no responsibility for outright theft of client funds?
Go ahead, trust them. I don't, nor will I. >>
JPM stores the silver, that's all I am saying. The silver in storage covers the SLV contracts. Every year there is an audit. You can't say there isn't.
There may be differences with the CFTC, but when silver gets called or put, someone takes or delivers real silver.
Finally, the price of silver is not being manipulated. I think the proper perspective is to look at how the US dollar is
being purposefully debased. It is being purposefully debased so that our exports might increase. How is it debased?
It's debased by printing billions and billions of more dollars....this is what the Fed is doing.
When the dollar is debased, the price of everything in terms of dollars goes up. It's not rocket science.
Liberty: Parent of Science & Industry
No, it's really not rocket science that the Fed is debasing the currency, but that's a separate issue on top of the corruption in the markets and regulatory system.
And yes, if the silver is really in SLV and not "loaned" or overcommitted in multiple fractional reserve schemes by the trustee (JPM in this instance), then it really depends on what happens to the silver after it is taken out. Yes, demand for physical increased (and the price went up) when the fund was created, but if private hands are taking possession of physical metal that is coming out of the fund - it's no longer the same situation.
In my opinion, the fund was established as a competing instrument vs. physical in order to aid in price manipulation. Removing physical silver from the fund doesn't make the silver any less desireable, but it does insure that it is real silver at the moment of physical transfer. Demand for physical indicates higher prices, not lower.
I knew it would happen.
Do you have access to the signed audit by a Certified Public Accounting firm? Me neither.
And after the esteemed accounting firm Arthur Anderson certified Enron so diligently, I'm not sure that it means much anyway - especially after FASB caved on what's acceptable on firm balance sheets at full value (or whatever other value they feel makes them look legit.
The financial industry is corrupt, and the accounting profession lost all credibility in 2009 - they threw it down the toilet all by themselves. End of story.
I knew it would happen.
from those guys stating all the silver is there. JPM then shows that paper to the auditor, "see, all the silver is there." Audit complete. The prospectus clearly states that
the primary custodian (JPM) doesn't have to vault all the silver. They can appoint other custodians and sub-custodians to vault additional metal. And they do not have to
allow the primary custodian on the premises to review their operations, let alone see the metal. Yes, there is an audit done every year. But what good is that if the 3rd party
auditors are not verifying each bar or at least a large random % of such? Rather, I suspect they review paper documents from the custodians and sub-custodians from an office
high above Wall Street. It's an audit....just not one that I would want to invest in.
This is taken from GLD (HSBC custodian) but it's probably the same verbage for SLV: “the Trustee may have no right to visit the premises of any subcustodian for the purposes of examining the Trust’s gold bars or any records maintained by the subcustodian, and no subcustodian will be obligated to cooperate in any review the Trustee may wish to conduct of the facilities, procedures, records or creditworthiness of such subcustodian.” Why the heck would such a clause be in the prospectus?
Audits don't show if there are duplicate claims on the same bar of silver from other sources around the world. There are also clauses in the prospectus that allow ETF shares to be counted
as bullion (ie provided that all elements of a bona fide EFP pursuant to Exchange Rule 104.36 are satisfied). There are more loop holes in these ETF's than one can count. These custodians and probably JPM as well were involved in the Libor rigging scandal. You think they would pass up the opportunity to play with gold and silver prices/inventories? If I were one of the owners of the FED and the CEO's of the big banks were not doing all in their power to rig the metal/currency markets....I'd replace them with someone who would.
“Neither the Securities and Exchange Commission (SEC) nor any state securities commission has approved or disapproved of the securities offered in this prospectus, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.”
“The trust is not an investment company registered under the Investment Company Act of 1940. The trust is not a commodity pool for purposes of the Commodity Exchange Act, and its sponsor is not subject to regulation by the Commodity Futures Trading Commission as a commodity pool operator, or a commodity trading advisor.
“As an owner of iShares, you will not have the protections normally associated with ownership of shares in an investment company registered under the Investment Company Act of 1940, or the protections afforded by the Commodity Exchange Act of 1936.”
“Accordingly, the bulk of the trust’s silver holdings is represented by physical silver.”
“the Custodian has agreed that it will hold all of the Trust’s gold bars in its own London vault premises except when the gold bars have been allocated in a vault other than the Custodian’s London vault premises.”
“The purpose of this Notice is to confirm that the Exchange would accept gold-backed exchange-traded funds (‘ETF’) shares as the physical commodity component for an EFP transaction involving COMEX gold futures contracts, provided that all elements of a bona fide EFP pursuant to Exchange Rule 104.36 are satisfied.”
What's the definition of "bulk?" 50.1%?
I believe that SLV's silver is vaulted overseas as well. That brings into question which law and/or regulations takes precedence....British or US? And does it really matter since location
or possession is nine tenths of the law. Based on the above statements it would appear that the CFTC and SEC have recused themselves from regulation of SLV and GLD while leaving it
up to JPM/HSBC to "do the right thing."
There aren't even allocated accounts in SLV.
The US audits JPMorgan.
The US audits JPM? Which agency audits SLV? What am I missing here? Please elaborate - if you know something that I missed, I'd really like to get all of the facts.
I knew it would happen.
<< <i>So, is it the case that paper silver futures and options contracts actually manipulate silver prices higher than they would be in a cash market, because much of the investment demand is for paper derivatives which are easy to get in and out of, because very few traders actually want to take physical delivery of millions of ounces of silver metal which is difficult-to-move, store, and protect ? And if holders of paper actually did take delivery, then the actual market price would be lower because then they would have to get rid of so much actual silver because they can't afford to carry it on the books and in they physical world because of its risk and illiquidity in bulk form? >>
Let me try this again.
There's only a few billion ounces of silver in the world readily available for sale. Indeed, at any
given time it's more like a few hundred million ounces because most people won't rush to sell
their silverware even if there were a huge spike in price. Meanwhile billions of ounces of gold
are sitting in huge vaults under armed gaurd that could be sold at any time it was advantageous
to the owner. And there are hundreds of million ounces sitting in safty deposit boxes and smaller
vaults like coin shops and jewelry stores that could be sold on a moment's notice.
I don't know what gold is worth but my only effect on the price is when I buy or sell and I'm doing
neither at these levels. But silver is obviously scarcer AND more valuable than gold. It has a low-
er price because it has a lower price. It has a lower price because in most places and times it
comes from the earth in a 12 to 1 ratio to gold so it is percieved as being common. You walk in-
to a coin shop and see cases full of silver and not gold. You never find a gold coin mixed in with
a roll of quarters. It is perception that sets the price of everything and it accomplishes this by
being the net vector sum total of every individuals decisions on buying and selling. Normally there
are numerous forces beyond just perception holding prices in check, or more accurately, part of the
perception that sets prices are caused by the purchase price or the last price an item was sold. At
this time there was very little silver bought at higher levels and the bulk of it is in short term holds
rather than very long term since obviously the physical longs got out when it got back to $50 recent-
ly. So ask yourself, why is a scarcer and more valuable commodity than gold selling for a fraction of
the price and the only answer is inertia and 4,000,000,000 ounces of paper and God knows how much
metal owned by multiple entities.
Whoever is manipulating these prices can only maintain it so long as the perception persists that
silver is worth a fraction of gold. This CAN'T continue indefinitely because the world is already living
hand to mouth with silver supplies while consumption is beginning a parabolic increase and product-
ion is barely inching higher. Any interruption in the status quo, any change of perception caused by
shortages or failure of the shorts to deliver and suddenly everything changes. Everyone will immed-
iately desire to own physical metal and the physical doesn't exist. Factories require a steady flow of
silver but that silver won't be coming in because there will be a massive buying panic with the factory
owners leading it. The shorts will be bankrupt. The little silver actually on the market can disappear
overnight. Sellers will be few and far between because no one has bought at any price over $70 who
are alive today. There's no perception of breaking even; there's no resistance.
Obviously there are other ways the future can unfold including a severe depression that would force
massive selling of silver and a much lower price. But you have to look at the prevailing conditions when
you predict the future and at the current time we live in a world of stagnant silver production, increased
consumption, and on the threshold of a recovery with significant inflation. To choke off silver prices is
to choke off the recovery. Meanwhile the only thing standing between us and a far higher price is the
status quo. It's the erroneous perception that silver is far more common than gold. It would be more
common than gold if not for three decades (if not much longer) of price suppression which has enriched
a few while silver was being bulldozed into garbage dumps.
It looks as though we may well be on verge of a new perspective. But even if we aren't you can be sure
that it will happen or there will be a huge population decline. I never bet on disasters.
"At the moment, every dollar move upwards in the silver price costs the shorts nearly half a billion dollars. And there is no way it can be covered, because the cash silver simply does not exist."
Alisdair Macleod's opinion
Can someone help me understand this: "...cash silver migrates from West to East, confirmed by silver being constantly in backwardation."
Liberty: Parent of Science & Industry
Keep in mind that last year alone nearly one billion ounces of silver were mined.
Its not inertia or the status quo ...its REALITY that keeps silver at a 50 times cheaper than gold.
Groucho Marx
<< <i> Every year there is an audit. You can't say there isn't. >>
After working for one of the "Big 4" accounting firms (will not say which), I can tell you that an audit of inventory is a joke. Having performed many of these myself (not for SLV but for other large/global firms etc), I would not rely on these "audits" that ALL of the metal is present. Cycle/inventory counts test the controls in place, verify (based on random sampling) that the selected inventory is present etc. By no means would I depend on these audits. Just imo.
BST Transactions (as the seller): Collectall, GRANDAM, epcjimi1, wondercoin, jmski52, wheathoarder, jay1187, jdsueu, grote15, airplanenut, bigole
<< <i>All the gold ever minted in man's history would roughly be 5.3 billion ounces.
Keep in mind that last year alone nearly one billion ounces of silver were mined.
Its not inertia or the status quo ...its REALITY that keeps silver at a 50 times cheaper than gold. >>
From about 1985 to 2010 there was more silver consumption each year than production. There
is much less silver in the world than there was in 1985 and probably less than in 1965.
More importantly there is less silver that can be brought to market right now than there is gold.
It is inertia.
My contention isn't that silver should be priced as much as gold, merely that the price difference
isn't justified in the real world and can't be maintained if current trends continue.
<< <i>All the gold ever minted in man's history would roughly be 5.3 billion ounces.
Keep in mind that last year alone nearly one billion ounces of silver were mined.
Its not inertia or the status quo ...its REALITY that keeps silver at a 50 times cheaper than gold. >>
The reality is that silver is used up and gold isn't. Estimates have placed all the silver ever mined to be about 50 BILL ounces....the vast majority of it gone or at least
far too difficult or costly to recycle.
<< <i>Have to love these statements in the prospectus"
“Neither the Securities and Exchange Commission (SEC) nor any state securities commission has approved or disapproved of the securities offered in this prospectus, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.”
“The trust is not an investment company registered under the Investment Company Act of 1940. The trust is not a commodity pool for purposes of the Commodity Exchange Act, and its sponsor is not subject to regulation by the Commodity Futures Trading Commission as a commodity pool operator, or a commodity trading advisor.
“As an owner of iShares, you will not have the protections normally associated with ownership of shares in an investment company registered under the Investment Company Act of 1940, or the protections afforded by the Commodity Exchange Act of 1936.”
“Accordingly, the bulk of the trust’s silver holdings is represented by physical silver.”
“the Custodian has agreed that it will hold all of the Trust’s gold bars in its own London vault premises except when the gold bars have been allocated in a vault other than the Custodian’s London vault premises.”
“The purpose of this Notice is to confirm that the Exchange would accept gold-backed exchange-traded funds (‘ETF’) shares as the physical commodity component for an EFP transaction involving COMEX gold futures contracts, provided that all elements of a bona fide EFP pursuant to Exchange Rule 104.36 are satisfied.”
What's the definition of "bulk?" 50.1%?
I believe that SLV's silver is vaulted overseas as well. That brings into question which law and/or regulations takes precedence....British or US? And does it really matter since location
or possession is nine tenths of the law. Based on the above statements it would appear that the CFTC and SEC have recused themselves from regulation of SLV and GLD while leaving it
up to JPM/HSBC to "do the right thing." >>
You ever read a marriage contract?
Knowledge is the enemy of fear