Silver Price Manipulation Explained
joefro
Posts: 1,872 ✭✭
This was posted on another forum I frequent. I found it to be very educational so I thought I'd share it here as well.
Ted Butler on Silver Price Manipulation
Ted, you’re widely recognized as the foremost expert on manipulation in the silver futures market. How do you define manipulation, and how are the main players benefiting from that?
Manipulation is another way of saying someone controls and dominates the market by means of an excessively large position. So, just by holding such a large concentrated position, the manipulation is largely explained. In real terms, whenever a single entity or a few entities come to dominate a market, all sorts of alarms should be sounded. This is at the heart of U.S. antitrust law. It is no different under commodity law.
Price manipulation is the most serious market crime possible under commodity law. In fact, there is a simple and effective and time-proven antidote to manipulation that has existed for almost a century, and that solution is speculative position limits. Currently, the Commodities Futures Trading Commission (CFTC) is attempting to institute position limits in silver, but the big banks are fighting it tooth and nail.
As far as any benefits the manipulators may reap, it varies with each entity. But if you dominate and control a market by means of a large concentrated position, you can put the price wherever you desire at times, and that’s exactly what the silver manipulators do regularly. This explains why we have such wicked sell-offs in silver; because the big shorts pull all sorts of dirty market tricks to send the price lower.
Could you tell us when and how you got started researching this matter?
It started around 1985, when a brokerage client asked me to explain how silver could remain so low in price (in the single digits) when the world was consuming more metal than was being produced. I accepted the intellectual challenge, and it took me more than a year to figure out that the paper short positions on the COMEX were so large as to constitute an almost unlimited supply. It was this paper supply that was depressing the price.
Who are the main players in this manipulation scheme? On average, what percentage of COMEX silver contracts are “controlled” by these main players?
Under U.S. commodity law, the names of individual traders are kept confidential. However, it is no secret that the commercial traders are the big shorts. It is also no secret that these big commercial shorts are mostly money center banks and financial institutions. Based upon government data and correspondence, the largest such short almost certainly is JPMorgan Chase & Co. (NYSE:JPM), who inherited their big silver short position from Bear Stearns when JPM took over that firm in 2008.
Together, the eight largest commercial silver shorts on the COMEX generally account for 50% to 60% of the entire net COMEX silver market, with JPMorgan alone holding around 25% or more of the entire market. I would hold that those percentages of concentration and control constitute manipulation, in and of themselves. By the way, there is no comparable concentration on the long side; only the short side of silver.
What exactly are the dominant players doing to manipulate the price?
The current exact mechanism they use to suddenly rig the price lower is High Frequency Trading (HFT). This is the placing of sell orders in great quantities by computer programs that suddenly appear as legitimate orders, but are really mostly “spoofs,” or orders entered and canceled immediately (in the fractions of a second). When the sell orders first appear, they spook others into selling as they give the appearance of great selling about to hit the market. Instead, it is all a bluff, intended only to scare others into selling, as the vast majority of these original sell orders are never executed, nor were they ever intended to be executed. They were designed for one purpose only – to scare others into selling.
Through HFT, the commercials are able to push prices suddenly lower on very little actual volume. But once prices are put lower, the outside selling (from those who are frightened by the drop in prices) hits the market. It is that outside selling from technical traders that the commercials then buy. In a nutshell that’s the HFT scam in silver. It is important to grasp the fact that the actual selling (and commercial buying) takes place AFTER the price drops. Most people think great selling is what causes the price to decline, but that’s not true. The great selling only comes in after the price has been put lower, which is the purpose behind HFT in silver.
What impact, if any, has the arrival of silver ETFs had on the silver price, manipulated or otherwise?
A giant impact. The introduction of the big silver ETF in 2006 is probably the single biggest reason behind the climb in silver prices from the $7 area the year before. Investors have purchased close to 600 million ounces of silver in all the silver ETFs over the past six years. Without that buying, I doubt we would have made it over the $10 mark. While silver is still manipulated due to the concentrated short position on the COMEX, the introduction and success of the various silver ETFs has impacted the price tremendously. That should continue.
Eric Sprott has indicated that 143 times the amount of silver is traded in the paper markets versus mine supply. What implications does this have for facilitating silver price manipulation?
There are two distinct forces exerting artificial control of the price of silver. One is the concentration on the short side of the COMEX. The other is the ascension of the mindless and destructive computer trading of HFT. This was behind the “flash crash” in the stock market on May 6, 2010.
The difference in HFT is how the regulators react to it. When it occurred in the stock market, the regulators, the SEC and CFTC, rushed to make sure such meltdowns didn’t recur in the stock market. Instead, the HFT practitioners were given free rein to disrupt the silver market. All the big sell-offs in silver are related to HFT to aid those holding large short positions.
The simple and undeniable fact is that the commercials are always big buyers whenever gold and silver sell off sharply. These commercials trick others into selling after prices have been deliberately pushed lower. Because the commercials are always the big buyers on every big sell-off, that proves they are rigging the price, as it is not possible for them to always be the buyers on these pre-arranged sell-offs.
What, if any, reasons can you think of that would explain why so much more paper silver is traded than physical silver?
Investors who hold physical silver don’t buy and sell often; they hold. Only paper silver holders, because they only put up a fraction of the full value as margin, can be regularly tricked into selling their paper contracts on price declines. The big commercial shorts know this and that’s what the game is all about – taking paper long traders to the cleaners.
Also, there is more paper traded than real silver because there is a very limited amount of real silver and an infinite supply of paper silver. It’s important to know the difference and that difference is what makes physical silver superior to any paper alternative.
If one day large numbers of silver futures contract holders choose to take physical delivery, would that overwhelm the physical market? Who would be the party/parties on the hook at that point, and could they default, or how could this be resolved if there’s insufficient physical silver to fill those contracts? What do you think that would do to the silver price?
Absolutely, large demands for physical delivery could overwhelm any market, including silver. The key is who would be demanding delivery. If it was a large single entity, then I suppose the regulators could cry foul and claim an attempt to manipulate prices higher. It would be much better if things continued as they have to date, where great numbers of smaller investors grab a piece of the physical silver market.
The shorts would be on the hook in that event and there is a risk, but not a guarantee, of a default. Default or not, if there is insufficient silver to meet demand, then the price must explode to cool off demand and bring sellers into the market. That’s the way the law of supply and demand works.
I’ve read more suspicious activity just recently took place, on February 29th, in the silver futures market. My understanding is that large commercial traders, using high-frequency trading, manage to influence the price to their advantage. Can you explain what’s really going on?
You’ve described it perfectly. The key ingredient, which many people miss, is that the large commercial traders don’t sell heavily on such big down days. They just pretend to sell, by rigging prices sharply lower in order to scare and induce others into selling, in order for the commercials to buy. Everyone thinks the commercials are selling on these big down days, but in reality they are buying every contract they can trick others into selling. That’s at the heart of this scam.
The proof of this is in government data, specifically the Commitment of Traders Report (COT), published by the CFTC weekly. These reports show that on every big down move, the commercials are always the big net buyers. This provides the reason and rationale for the sell-offs, namely, they are pre-planned events intended to allow the commercials the opportunity of buying whatever they can trick others into selling. If there’s another reason that fits the documented facts, I haven’t heard it.
The CFTC is aware of the concentrated positions in the silver market, thanks in large part to your efforts to point out the problems and irregularities. Commissioner Bart Chilton has made a number of statements acknowledging undue influence on the silver price by a small number of players. There is a lawsuit pending against JPMorgan in this matter. All of this has been going on for years, with no resolution. What’s your best guess as to why that is?
I’ve narrowed it down to either the government is allowing and encouraging JPMorgan to manipulate the market, which the majority who write to me claim, or the CFTC is not able to take JPMorgan to task for some reason other than complicity. I think the CFTC is afraid of JPMorgan on a legal and insufficient resource basis. I recently wrote an article asking if JPMorgan was stupid for being so heavily short silver, although I don’t think so. I think JPMorgan is just as much trapped in this big short position and is desperate.
The bottom line is that the motivation for why JPMorgan is so heavily short and why the CFTC is not moving against it is less important than the fact that the concentrated short position actually exists. Concentration is tantamount to manipulation. The CFTC has never brought a case of manipulation without a concentration existing. Why the CFTC doesn’t apply the same measurement in silver is something they refuse to answer, even though they have been asked thousands of times.
What’s your long-term outlook on the price of silver, and what events or milestones would help it along? What advice do you have for investors regarding silver?
The main advice I would offer is not to misinterpret the facts in front of us. First and foremost, there is a manipulation in effect in silver, but that manipulation must be viewed cold and hard. The manipulation has caused silver to be priced much cheaper than it would be otherwise. That makes it a better buy. The silver manipulation also will end one day, as all manipulations throughout history have ended. Given the nature of these things, the price of silver will be much higher when the manipulation ends. Therefore, the manipulation is giving silver investors a double-barrelled bonanza. One, a cheap price to buy at than would otherwise be the case and, two, a much higher price to sell at once the manipulation is ended. That circumstance does not exist in any other investment, to my knowledge.
Lastly, the best approach is to put cash on the table and pay in full for whatever silver you buy; no borrowing or margin. This enables you to stay with it for the long term and ride out the inevitable price volatility. And adjust your thinking to the long term as well. It’s somewhat fascinating and intellectually irresistible to follow silver on a day-to-day basis once you learn the facts, but the big payday is down the road, so keep your perspective there. The long play is the best play.
***
Of course, I’d like to thank Ted for helping us to uncover what is going on in the silver market.
Even state politicians are catching on. South Carolina’s state legislature requested a report from the treasurer on the advisability of investing in gold and silver.
In response, State Treasurer Curtis M. Loftis, Jr. prepared a six-page report indicating among other things that:
“Similar to other commodities, the value of gold and silver is determined by supply and demand, as well as speculation. The Federal Reserve, The London Bullion Market Association, JP Morgan Chase, and HSBC Holdings have practiced fractional-reserve banking and engaged in naked short selling causing artificial price suppression.”
But what’s most important to retain from this captivating discussion is what you need to do as an investor.
As Ted reminds us, the ongoing manipulation has caused the price of silver to be unsustainably low.
Like the forces of nature, eventually the market will rectify this imbalance, bringing the price of silver in line with its proper supply and demand fundamentals.
As Eric Sprott has said: “…this decade will be the decade of silver.”
With that in mind, my advice is simple: Get silver now. Here’s how.
And for more outside-the-box thinking on the entire precious metals sector be sure to visit Ted’s website: www.butlerresearch.com.
Ted Butler on Silver Price Manipulation
Ted, you’re widely recognized as the foremost expert on manipulation in the silver futures market. How do you define manipulation, and how are the main players benefiting from that?
Manipulation is another way of saying someone controls and dominates the market by means of an excessively large position. So, just by holding such a large concentrated position, the manipulation is largely explained. In real terms, whenever a single entity or a few entities come to dominate a market, all sorts of alarms should be sounded. This is at the heart of U.S. antitrust law. It is no different under commodity law.
Price manipulation is the most serious market crime possible under commodity law. In fact, there is a simple and effective and time-proven antidote to manipulation that has existed for almost a century, and that solution is speculative position limits. Currently, the Commodities Futures Trading Commission (CFTC) is attempting to institute position limits in silver, but the big banks are fighting it tooth and nail.
As far as any benefits the manipulators may reap, it varies with each entity. But if you dominate and control a market by means of a large concentrated position, you can put the price wherever you desire at times, and that’s exactly what the silver manipulators do regularly. This explains why we have such wicked sell-offs in silver; because the big shorts pull all sorts of dirty market tricks to send the price lower.
Could you tell us when and how you got started researching this matter?
It started around 1985, when a brokerage client asked me to explain how silver could remain so low in price (in the single digits) when the world was consuming more metal than was being produced. I accepted the intellectual challenge, and it took me more than a year to figure out that the paper short positions on the COMEX were so large as to constitute an almost unlimited supply. It was this paper supply that was depressing the price.
Who are the main players in this manipulation scheme? On average, what percentage of COMEX silver contracts are “controlled” by these main players?
Under U.S. commodity law, the names of individual traders are kept confidential. However, it is no secret that the commercial traders are the big shorts. It is also no secret that these big commercial shorts are mostly money center banks and financial institutions. Based upon government data and correspondence, the largest such short almost certainly is JPMorgan Chase & Co. (NYSE:JPM), who inherited their big silver short position from Bear Stearns when JPM took over that firm in 2008.
Together, the eight largest commercial silver shorts on the COMEX generally account for 50% to 60% of the entire net COMEX silver market, with JPMorgan alone holding around 25% or more of the entire market. I would hold that those percentages of concentration and control constitute manipulation, in and of themselves. By the way, there is no comparable concentration on the long side; only the short side of silver.
What exactly are the dominant players doing to manipulate the price?
The current exact mechanism they use to suddenly rig the price lower is High Frequency Trading (HFT). This is the placing of sell orders in great quantities by computer programs that suddenly appear as legitimate orders, but are really mostly “spoofs,” or orders entered and canceled immediately (in the fractions of a second). When the sell orders first appear, they spook others into selling as they give the appearance of great selling about to hit the market. Instead, it is all a bluff, intended only to scare others into selling, as the vast majority of these original sell orders are never executed, nor were they ever intended to be executed. They were designed for one purpose only – to scare others into selling.
Through HFT, the commercials are able to push prices suddenly lower on very little actual volume. But once prices are put lower, the outside selling (from those who are frightened by the drop in prices) hits the market. It is that outside selling from technical traders that the commercials then buy. In a nutshell that’s the HFT scam in silver. It is important to grasp the fact that the actual selling (and commercial buying) takes place AFTER the price drops. Most people think great selling is what causes the price to decline, but that’s not true. The great selling only comes in after the price has been put lower, which is the purpose behind HFT in silver.
What impact, if any, has the arrival of silver ETFs had on the silver price, manipulated or otherwise?
A giant impact. The introduction of the big silver ETF in 2006 is probably the single biggest reason behind the climb in silver prices from the $7 area the year before. Investors have purchased close to 600 million ounces of silver in all the silver ETFs over the past six years. Without that buying, I doubt we would have made it over the $10 mark. While silver is still manipulated due to the concentrated short position on the COMEX, the introduction and success of the various silver ETFs has impacted the price tremendously. That should continue.
Eric Sprott has indicated that 143 times the amount of silver is traded in the paper markets versus mine supply. What implications does this have for facilitating silver price manipulation?
There are two distinct forces exerting artificial control of the price of silver. One is the concentration on the short side of the COMEX. The other is the ascension of the mindless and destructive computer trading of HFT. This was behind the “flash crash” in the stock market on May 6, 2010.
The difference in HFT is how the regulators react to it. When it occurred in the stock market, the regulators, the SEC and CFTC, rushed to make sure such meltdowns didn’t recur in the stock market. Instead, the HFT practitioners were given free rein to disrupt the silver market. All the big sell-offs in silver are related to HFT to aid those holding large short positions.
The simple and undeniable fact is that the commercials are always big buyers whenever gold and silver sell off sharply. These commercials trick others into selling after prices have been deliberately pushed lower. Because the commercials are always the big buyers on every big sell-off, that proves they are rigging the price, as it is not possible for them to always be the buyers on these pre-arranged sell-offs.
What, if any, reasons can you think of that would explain why so much more paper silver is traded than physical silver?
Investors who hold physical silver don’t buy and sell often; they hold. Only paper silver holders, because they only put up a fraction of the full value as margin, can be regularly tricked into selling their paper contracts on price declines. The big commercial shorts know this and that’s what the game is all about – taking paper long traders to the cleaners.
Also, there is more paper traded than real silver because there is a very limited amount of real silver and an infinite supply of paper silver. It’s important to know the difference and that difference is what makes physical silver superior to any paper alternative.
If one day large numbers of silver futures contract holders choose to take physical delivery, would that overwhelm the physical market? Who would be the party/parties on the hook at that point, and could they default, or how could this be resolved if there’s insufficient physical silver to fill those contracts? What do you think that would do to the silver price?
Absolutely, large demands for physical delivery could overwhelm any market, including silver. The key is who would be demanding delivery. If it was a large single entity, then I suppose the regulators could cry foul and claim an attempt to manipulate prices higher. It would be much better if things continued as they have to date, where great numbers of smaller investors grab a piece of the physical silver market.
The shorts would be on the hook in that event and there is a risk, but not a guarantee, of a default. Default or not, if there is insufficient silver to meet demand, then the price must explode to cool off demand and bring sellers into the market. That’s the way the law of supply and demand works.
I’ve read more suspicious activity just recently took place, on February 29th, in the silver futures market. My understanding is that large commercial traders, using high-frequency trading, manage to influence the price to their advantage. Can you explain what’s really going on?
You’ve described it perfectly. The key ingredient, which many people miss, is that the large commercial traders don’t sell heavily on such big down days. They just pretend to sell, by rigging prices sharply lower in order to scare and induce others into selling, in order for the commercials to buy. Everyone thinks the commercials are selling on these big down days, but in reality they are buying every contract they can trick others into selling. That’s at the heart of this scam.
The proof of this is in government data, specifically the Commitment of Traders Report (COT), published by the CFTC weekly. These reports show that on every big down move, the commercials are always the big net buyers. This provides the reason and rationale for the sell-offs, namely, they are pre-planned events intended to allow the commercials the opportunity of buying whatever they can trick others into selling. If there’s another reason that fits the documented facts, I haven’t heard it.
The CFTC is aware of the concentrated positions in the silver market, thanks in large part to your efforts to point out the problems and irregularities. Commissioner Bart Chilton has made a number of statements acknowledging undue influence on the silver price by a small number of players. There is a lawsuit pending against JPMorgan in this matter. All of this has been going on for years, with no resolution. What’s your best guess as to why that is?
I’ve narrowed it down to either the government is allowing and encouraging JPMorgan to manipulate the market, which the majority who write to me claim, or the CFTC is not able to take JPMorgan to task for some reason other than complicity. I think the CFTC is afraid of JPMorgan on a legal and insufficient resource basis. I recently wrote an article asking if JPMorgan was stupid for being so heavily short silver, although I don’t think so. I think JPMorgan is just as much trapped in this big short position and is desperate.
The bottom line is that the motivation for why JPMorgan is so heavily short and why the CFTC is not moving against it is less important than the fact that the concentrated short position actually exists. Concentration is tantamount to manipulation. The CFTC has never brought a case of manipulation without a concentration existing. Why the CFTC doesn’t apply the same measurement in silver is something they refuse to answer, even though they have been asked thousands of times.
What’s your long-term outlook on the price of silver, and what events or milestones would help it along? What advice do you have for investors regarding silver?
The main advice I would offer is not to misinterpret the facts in front of us. First and foremost, there is a manipulation in effect in silver, but that manipulation must be viewed cold and hard. The manipulation has caused silver to be priced much cheaper than it would be otherwise. That makes it a better buy. The silver manipulation also will end one day, as all manipulations throughout history have ended. Given the nature of these things, the price of silver will be much higher when the manipulation ends. Therefore, the manipulation is giving silver investors a double-barrelled bonanza. One, a cheap price to buy at than would otherwise be the case and, two, a much higher price to sell at once the manipulation is ended. That circumstance does not exist in any other investment, to my knowledge.
Lastly, the best approach is to put cash on the table and pay in full for whatever silver you buy; no borrowing or margin. This enables you to stay with it for the long term and ride out the inevitable price volatility. And adjust your thinking to the long term as well. It’s somewhat fascinating and intellectually irresistible to follow silver on a day-to-day basis once you learn the facts, but the big payday is down the road, so keep your perspective there. The long play is the best play.
***
Of course, I’d like to thank Ted for helping us to uncover what is going on in the silver market.
Even state politicians are catching on. South Carolina’s state legislature requested a report from the treasurer on the advisability of investing in gold and silver.
In response, State Treasurer Curtis M. Loftis, Jr. prepared a six-page report indicating among other things that:
“Similar to other commodities, the value of gold and silver is determined by supply and demand, as well as speculation. The Federal Reserve, The London Bullion Market Association, JP Morgan Chase, and HSBC Holdings have practiced fractional-reserve banking and engaged in naked short selling causing artificial price suppression.”
But what’s most important to retain from this captivating discussion is what you need to do as an investor.
As Ted reminds us, the ongoing manipulation has caused the price of silver to be unsustainably low.
Like the forces of nature, eventually the market will rectify this imbalance, bringing the price of silver in line with its proper supply and demand fundamentals.
As Eric Sprott has said: “…this decade will be the decade of silver.”
With that in mind, my advice is simple: Get silver now. Here’s how.
And for more outside-the-box thinking on the entire precious metals sector be sure to visit Ted’s website: www.butlerresearch.com.
Lincoln Cent & Libertad Collector
1
Comments
My side of the camp says "Great Post."
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
CFTC sure didn't have that problem in 1980 when they prohibited Bunker and Lamar Hunt from taking delivery and adding more contracts to their positions, in addition to raising their margin requirements - all at the same time.
If CFTC is so toothless now, what's changed?
Good post!
I knew it would happen.
<< <i>If CFTC is so toothless now, what's changed? >>
The banksters now have skin in the game - big time. And most of us know that they bankroll the politicians.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Things may be getting interesting.
I knew it would happen.
What's harder to believe that with all the public info. about it that people still choose not believe it's happening. jmho.
Why would anyone or any firm want to lose all that money? If "they" really wanted to destroy the silver market why hasn't any firm taken it to near zero? Silver is a tiny market with only a billion ounces a year of physical demand. Any big firm with a few spare billions that they don't care about could use derivatives to get to 100x or 1000x leverage and destroy the market for physical, or at least ruin the big ETFs (SLV, AGQ, USLV) and sour bullish speculator demand for a decade. If such big players are actually nefariously manipulating the price, why haven't these things come to pass? Again, maybe I am dense, but these theories don't make any sense after I put on the hat of the master manipulator, and focus on what steps I would take to take down the market if I had those vast resources.
I'll repeat my theory, that the big boys do manipulate silver. However, they focus on the short term and pick their spots and play both sides when it suits them. In general, it is easier and there is more money to be made on the bullish side. "They" probably made money hand over fist on the run to $49. When that JPM video hit Youtube (buy an ounce of silver to stick it to JP Morgan), it was probably JPM operatives actively promoting it, because they were LONG. Big money wants to make money. Why would they care if silver goes up or down, as long as they make money?
<< <i>Why would they care if silver goes up or down, as long as they make money? >>
They only care that their shorts take it down and true market forces bring it back up. They make money every time they short; they start the ball rolling with their massive shorts, bail out at a lower price and come back for a replay after the price goes back up. They know the short will artificially and temporarily lower the price. They also know they have the blessings of the agencies (politicians) tasked with being their watchdogs. It's a money maker for them any way that you look at it.
The small paper trader that follows their lead can make money.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Yup, they done a good job at keepin the po' mans gold down. LOL
My prediction is coming true---the longer PMs trade sideways the more conspiracy theories we're goona hear. Oh, joy.
The real conspiracy was sucking all the J6Ps into this crap at $49. Just like sorry folk who bought PCLN the last few days at $750. BTW--what a beautiful bearish engulfing candle. Suckers aint gonna know what hit 'em.
AAPL/CMG/LULU/MNST are next, warning was given last week.
Knowledge is the enemy of fear
<< <i>My prediction is coming true---the longer PMs trade sideways the more conspiracy theories we're goona hear. Oh, joy. >>
There really is only one "conspiracy theory" when it comes to silver price control and it has been well argued by some of the most respected names in the industry. Those that hear the message can position themselves accordingly at the right times and benefit. Those that keep their fingers in their ears should avoid the silver market entirely.
<< <i>The real conspiracy was sucking all the J6Ps into this crap at $49. >>
some of them were my buyers and they had their fingers in their ears.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
An old phrase comes to mind. "You can lead a horse to water, but you can't make him drink."
Kirby questions that if JPM's Comex silver short position is just a reflection of their clients' trading positions then why don't their $76 TRILL derivs position
show the same thing? Less than 1% of all otc derivatives reported to the OCC have an end-user (ie a non-TBTF-bank). Fwiw, after JPM inherited the Bear Stearns
silver shorts and derivatives in 2008, they proceeded to double up on the otc silver derivs in July (from $90 BILL to $190 BILL). That was the final push needed to send
silver into a tailspin from July-October 2008. One has to wonder who were those "customers" that needed to short 12 yrs of world silver production at that exact time....lol.
At least we found out through this "price discovery" mechanism what price silver would end up at if miners increased their silver production instantly by 12X and then dumped it all
on the world market all at once.
JPM could well be overall long physical gold and silver and are trading short for TPTB....and very profitably I might add. Sinclair has stated numerous times that the
big trading banks will come out on top at the end of the PMs bull market. While I guess they could have chosen to short silver or gold to $0 that would have undoubtedly
massively disrupted the gold and silver markets world wide....and eventually force the CFTC to actually act against them for once. But carrying "only" a 25% silver short position still
somehow passes the CFTC smell test.
Good info to remember and great observations, rr - although I would think that dumping 12 yrs' worth of silver onto the market would drive the price even lower due to panic selling.
If this trend continues, we will all be carrying physical silver with negative dollar valuations. "Sir, how much do you want to take this bar of silver off my hands?" Sheesh.
I knew it would happen.
<< <i>
Good info to remember and great observations, rr - although I would think that dumping 12 yrs' worth of silver onto the market would drive the price even lower due to panic selling.
If this trend continues, we will all be carrying physical silver with negative dollar valuations. "Sir, how much do you want to take this bar of silver off my hands?" Sheesh. >>
True. Had 2008's experiment really been accomplished with 12 yrs of physical metal (9 BILL ounces) the price would have certainly fallen a lot further than where the paper price ended
in October 2008 (ie around $8.50/oz). It probably would have fallen to under $3-4/oz. But since it was leveraged paper silver being sold in 12 yr quantity, the price "only" fell 60%.
Jason Hommel dug through BIS deriv reports back in 2009-2010 and found some irregularities. In one case the silver deriv's notional amount was changed from $203 BILL to $93 BILL
without any reason why. You can see this on table 22a on the BIS semi-annual reports for that time period. Jason also notes that the huge position held in June/July 2008 amounted to 19+ yrs of silver production. Guess I underestimated that by a few years....lol. It is possible that the hit to silver in June 2009 resulted in halving their deriv's position much the same way it did from July 2008 to Dec. 2008 ($190 BILL to $96 BILL). If that's the case then why did it take so long to report the proper number?
I don’t agree. Manipulating the price of silver lower only dampens speculative demand. On the other hand, it actually increases demand for physical silver by industrial users and hard-money investors, thus forcing the price right back up.
If silver has been “much cheaper” than it should be for the past several years, then physical silver should also be much scarcer than it would otherwise have been. This is because lower prices encourage consumption of more silver ounces by industrial users and investors, along with less recovery and recycling. This scarcity by itself should lead to higher prices in the short to medium term, thus neutralizing and possibly reversing the effects of manipulation.
My Adolph A. Weinman signature
A giant impact. The introduction of the big silver ETF in 2006 is probably the single biggest reason behind the climb in silver prices from the $7 area the year before. Investors have purchased close to 600 million ounces of silver in all the silver ETFs over the past six years. Without that buying, I doubt we would have made it over the $10 mark. While silver is still manipulated due to the concentrated short position on the COMEX, the introduction and success of the various silver ETFs has impacted the price tremendously. That should continue
So if silver couldnt make it over $10 on its own, when what really are its fundamentals?
Knowledge is the enemy of fear
<< <i>What impact, if any, has the arrival of silver ETFs had on the silver price, manipulated or otherwise?
A giant impact. The introduction of the big silver ETF in 2006 is probably the single biggest reason behind the climb in silver prices from the $7 area the year before. Investors have purchased close to 600 million ounces of silver in all the silver ETFs over the past six years. Without that buying, I doubt we would have made it over the $10 mark. While silver is still manipulated due to the concentrated short position on the COMEX, the introduction and success of the various silver ETFs has impacted the price tremendously. That should continue
So if silver couldnt make it over $10 on its own, when what really are its fundamentals? >>
There's a reasonable possibility that a good chunk (or all) of the silver that funded the SLV startup came out of Buffet's 120 MILL ounces that he sold in 2005/2006. Buffet helped push the price of silver up a few dollars in the 1990's by accumulating that silver. If it was handed over to SLV in a few month period it really shouldn't have helped push prices up. Note that silver prices collapsed shortly after SLV hit the streets in April 2006. Welcome to the silver market silver newbies...lol. Prices languished into late summer 2007. From Oct 2008 to the 2011 peak slv inventory increased 2.75X to 11,000 tonnes. Today it has about 9600 tonnes in inventory or about 5 months of world production. One concern about SLV is how much of that silver is fully unencumbered? One of the reasons I like the silver bull case is because the big banks feel a need to carry up to a $203 BILL notional position in otc silver derivatives (19 yrs of world supply). Whatever the reason is, I want to be on the other end of that bet. That's a fundamental imo. Same as it is that a couple of big banks feel the need to hold 25-40% of the total Comex silver short contrary to CFTC regulations. If there's a need to permanently short it so badly, can't hurt to be long. Silver made it to $49/oz despite those $203 BILL in notional short bets and a fat JPM Comex short position. It's never been about keeping it from rising...but managing that rise (via planned spurts both up and down). When Sinclair
first discussed that there were $100-$200 TRILL in otc derivatives back in 2002, I wanted in on that bet as well (ie gold). As crazy as that number was, it would ultimately reach >$1 Quad.
If there were a little more transparency in all the facts and fundamentals, we'd be much better equipped to decipher's potential or lack thereof. Are you listening OOC, BIS, CME, CFTC?
And you know my position on derivatives.
Knowledge is the enemy of fear
It's obvious that the idea is to scare people away from silver. Couple the unjustifiable derivative creations and the inexplicable short positions with flash trading and chronic lack of enforcement by CFTC - and you have the ability to hurt market participants at will. Like roadrunner says, "Welcome to the silver market silver newbies...lol." If you aren't serious, you're gone.
People will now point to $49.00 and say, "that was the peak. Another 32 years until the next one." Don't be fooled.
I knew it would happen.
A rigged game
JPM shorts silver (with COMEX contracts) and has not lost a bet in over nine years.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Yup.
I find in interesting that Ted thinks silver isn't worth more than $10 and that he said to be prepared for a very long holding period. At least he got that right. Now if he only understood how markets work....
Knowledge is the enemy of fear
The silver producers never lose. Why? Because they are the sellers, thus locking in a price for their production. And since they trade through JPM, et al, it gives the appearance that JPM is the actual owner of the shorts. We've been through this 100 times yet the PM bugs continue to propagate misinformation, which they do for their own nefarious reasons.
Knowledge is the enemy of fear
People will now point to $49.00 and say, "that was the peak. Another 32 years until the next one." Don't be fooled.
Only 26 now.
Knowledge is the enemy of fear
If silver's only worth $10/oz., why is it trading at $16.68?
I knew it would happen.
Fabrication, shipping, handling, and numismatic premium, all paid for by collectors to the middlemen.
Liberty: Parent of Science & Industry
A good thread to read again.... thanks for bumping it...Cheers, RickO
Fabrication, shipping, handling, and numismatic premium, all paid for by collectors to the middlemen.
If silver is trading at $16.68, then the fabrication, shipping, handling and numismatic premiums should ADD to the finished goods price, correct? That would be a number closer to $20 than to $10, I think.
I knew it would happen.
Ask Ted. He said it's only worth $10.
Knowledge is the enemy of fear
Incorrect. Silver is trading at it's current spot price as a result of supply and demand in the paper futures market where spot price is set. And, if physical possession is actually taken by the paper holders it as at the price of the contract when purchased.
Fabrication, shipping, handling (along with supply/demand for finished products) are what add to the premium over spot price.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Please point out where Ted says silver isn't worth more than $10. As far as knowing how markets work (especially the silver market) I believe he makes a much better case, based on his many years of experience in researching the silver market, of what's actually going on than you you do with just your personal opinion, in the face of contradicting evidence, that there is no price suppression.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
You failed to mention that as of the end of 2016 JPM itself held over 5.5 million ounces of physical silver. JPM, as always, is looking out for JPM.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Wow...5.5 million oz. Whoopity do. JPM generates revenues equal to that dollar volume about every 7 hours.
In the OP, Ted says he doubts silver would have even gotten over $10 if not for SLV. Imagine that, it took 600 million oz of demand in paper form to get silver moving. Thus, he believes physical demand for silver is less than $10.
As far as explaining the markets I'll let my "opinion" stand against anyone's research or experience.
It seems quite obvious that the PM bugs idolize JPM in that they are held to a godlike stature, their presence exaggerated.
Knowledge is the enemy of fear
Godlike? JPM is the financial dictator. ETFs have had a negative affect on PMs - just more derivatives in many cases.
As far as your years of opinion go, I'll stick with those that have years of research and hands on.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
May the gods grant your wishes.
I just wish these "experts" would write something that actually comes true.
Knowledge is the enemy of fear
Nothing to see here, move along.
http://www.zerohedge.com/news/2017-06-26/gold-crashes-someone-dumps-2-billion-fat-finger-blamed
The main problem, as I see it - is that when this kind of thing stops working in support of the dollar, they will clamp down on gold ownership in earnest.
I knew it would happen.
"They" sell it to "us" in every form and shape They can get Us to fall for, and even include fancy wood and velvet boxes and "certificates of authenticity"
Are They really ever gonna "clamp down" on such a gravy train?
What would the miners do with all the new metal?
Oh, there"s Manipulation all right, and We are the victims, buying into it. It's brilliant, because we're convinced we're Smart, funny huh?
Liberty: Parent of Science & Industry
It's not any worse than the people who pay me to do what I do, thinking that I'm somehow adding value to the equation. It's all a matter of perspective and value judgments, I think.
I knew it would happen.
Oh, there"s Manipulation all right, and We are the victims, buying into it. It's brilliant, because we're convinced we're Smart, funny huh?
Geckster has proof that he's smart.
So gold drops $18 and the conspiracists cry foul. Why didn't they cry when it dropped $50 the previous 2 weeks?
We are all only as smart as we are.
Knowledge is the enemy of fear
I think generally speaking anyone involved in a market that has the ability to manipulate the market will try to 100% of the time. Market participants will absolutely do whatever they can to move prices around to their benefit.
I'd be surprised to hear of a market that wasn't manipulated in some fashion.
How come they never fat-finger the buys, only the sells??
Doesn't fit the narrative.
Knowledge is the enemy of fear
JPM is like a drug cartel feeding on an addiction to greed, their own
The SEC and CFTC are 100% clueless and that is the issue with these "investments". They don't understand these "products" and have to rely on the "experts" of these firms who created derivatives and products to understand how they operate.
Then they sit blindfolded and quiet until something catastrophic occurs. They're pretty much a rubber stamp and will ooccadionally give out a small fine for aggregious and blatant behavior.
I've worked in the industry for a while and it was scary who was considered the "experts". The lawyers and legal teams are the ones who dream up these products and give actuaries the corridors to design these instruments and let them run with it. If you can't sleep one night, try reading a prospectus or offer memo... 1/2 the companies who offer these instruments can't even tell you what their prospectus states or how it operates outside of the 1-2 lawyers who created it.
When we would have market conduct exams with the SEC and other SRO's we would have to literally teach the auditors how our products worked at the beginning of the audit., haha.
Every market is manipulated and that will never change. "Caveat emptor"
_
@Wingsrule said:
How come they never fat-finger the buys, only the sells??
Doesn't fit the narrative.
_
Bunk! A fat-finger buying pattern never shows up in the chart behavior. The only narrative is what the bullion banks and faux regulators want you to hear.
I knew it would happen.
Or what the pm peddlers, doomsdayers, anarchists, and conspiracists want you to hear.
The truth is always in the middle
Knowledge is the enemy of fear
The biggest fallacy may be the idea that there is one "truth"
Liberty: Parent of Science & Industry