An article worth a read IMO.
Mesquite
Posts: 4,075 ✭✭✭
Mesquite
Posts: 4,075 ✭✭✭
Mesquite
Posts: 4,075 ✭✭✭
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It's been widely publisized lately that Comex would not be able to cover their paper sales and the whole scam would come crashing down
if a large percentage of folks that have invested with them demanded their silver in physical.
Is this article statement below true? It states that fineprint would allow for cash payments instead of physical silver.
" For years I have watched as each time silver runs up, certain people start spreading rumors that silver is in such shortage that there will be a run on Comex. The only problem with the rumor is that it can't possibly happen. There cannot be a run on Comex. I repeat, there cannot be a run on Comex.
Part of the reason for the rumor is that most investors confuse the purpose of the exchanges. The purpose of the exchanges is not to exchange commodities. The purpose of the exchanges is to determine price. But certainly the possibility of a run on an exchange is possible so early on the exchanges adopted rules that called for cash settlement if necessary."
Click on this link to see my ebay listings.
–John Adams, 1826
the way it has.
The incredible race around the globe to gather gold and silver by countries
and their population. Along with some rather large institutions
While the race to the bottom in the values in fiat currency is still taking place.
A large portion of the planet is in the midst of revolt at one level or another
Major in the Middle East, still at the heavy protest stage in Europe, and the
beginning of the protest stages in the U.S.
Those in power are still laying gas on the ground (Reasons for Revolt) in Europe an the U.S.
all it is going to take is a spark. Tunisia started with one person and one act of
revolt to set the whole Country on fire followed closely by the rest of the Middle East.
The gathering storm to replace the U.S. Dollar as the Default Currency of the world.
Legislation in more than one State here in the United States to make Gold and Silver
legal tender for debt, passing and being signed into law.
The growing separation between the price between Paper Silver and Physical Silver
That is just a few reasons
Intent and reality are sometimes quite different. The silver exchanges have ceased being price determinants years ago. If 3-4 banks hold vast majority of the short contracts, that's not price discovery, but price obfuscation. The CFTC apparently condones it. Minor and necessary hedging as done by legitmate interests such as silver miners is far overshadowed by manipulative interests. One only has to look at the $130 BILL in otc silver derivatives to see that. What price discovery are they leading to by shorting 3 yrs of world production? When the Bear Stearns derivatives were maxed out with JPMorgue's in July 2008, they accounted for 12 yrs of world production. Yup, pure price discovery.
The article by Taylor is interesting suggesting that above ground silver supplies is at least 10 billion ounces. If that's truly the case then why are the 100,000 ounces on the
Comex so critical as they only make up 1% of known supplies? When Buffet went out and picked up 120 MILL ounces back in the 1990's that created quite a stir. Rather astounding
that trying to accumulate 100 MILL ounces of silver creates such a problem when it's potentially <1% of known world supplies. When Sprott was out looking for 21 MILL ounces of
silver for his new ETF he had a difficult time finding it. It took many months to find that supply. Something, somewhere is not right in all this. Don't know where Moriarity gets his
facts but current world mining production shows silver to gold in a 8-1 ratio. That's the reality. It's not 16-1 or 31-1. One can make all the estimates they want about how much silver
is in the crust, but the mining production numbers are the facts, nothing else. Sorry, but Wikipedia 26-1 crust estimates aren't a better source than the actual production numbers.
Until that ratio starts heading north, the price of silver should continue towards that 9-1 ratio from the current ratio of 32-1. Even using Wiki's own production numbers one gets a
ratio of 8.2 - 1. So regardless of "earth crust estimates" it's what we're actually able to mine and bring up that counts. Until miners figure out how to economically mine silver in the
estimated 26-1 Wiki silver to gold crust estimates, we'll just have to "live" with the 8.2-1 ratio that is currently employed.
Let's assume there are 20 BILL ounces of silver above ground. At current prices that's about $1 TRILL. Still a rather small amount in a world awash in hundreds of trillions of dollars in
debt, fiat currencies, and paper promises. Rather small in comparison to the current above ground total gold value of $7.7 TRILL. Even that ratio is close to 8.2-1 and nowhere near
the >16-1 or 26-1 or 64-1 that Moriarity would suggest it should be. Wonder why he ignored the obvious production ratios since they are what really matter? The author's other facts
about parabolic peaks and market nuances all make sense. But if there were 10-20 BILL ounces of silver coin, bars, and jewelry out there, why haven't those billions of ounces come
to market in the past 5 years as silver doubled in price and headed over $10 per ounce? Then $20, $30, $40 ounce? The market should literally be swamped with art bars, commems,
silver coins, etc. ultimately turning the price sharply downward. It doesn't appear to be, even after 6-7 yrs of strongly rising prices. Gold's 5 BILL ounces of above ground supply should
give some clue to all this. That's a huge number. But it has had little effect in preventing gold from increasing in price 6X over the past 10 yrs. If the gold is out there, it's not coming
to the market in droves to depress prices. So no surprise silver is behaving similarly. If all the silver mined were still available (45 BILL oz) then it would give a silver to gold ratio of
9-1. Assuming people consider silver money, that would imply a projected $167/oz price of silver at current gold prices. If the supply is only half of that (22.5 BILL) then the price could
be $335/oz for a monetary metal. The ratio of 9-1 seems to show up quite often around here. Ratio's of 16-1, 26-1, 32-1, 64-1, etc. don't seem to make as much sense today. Silver
has indeed gone parabolic in the short term. But until gold (and a shopping list of other commodities) do the same, don't expect silver to experience a January 1980 crash scenario by itself. The current springboard in silver's price is indicative of the additional supression it has received over the past 10 yrs, much more than any other precious metal.
roadrunner
Great Read and Very Informative
Thank You