Tuesday, November 20, 2012

Silver, Rock, Paper, Scissors

Silver Bars
Silver, rock, paper, scissors, the Silver Futures market is like a game for the very few making hugh profits from the silver price manipulation.  The silver futures being traded is far in excess of any actual silver and, compared to gold the silver long term price is going to be ’staggering’ according to Silver Analyst Ted Butler.
Silver is currently being bought up just as fast as it can be dug out of the ground yet cannot keep up with the ‘amount’ of silver futures being frantically traded on the COMEX. All this paper silver and not a pair of scissors in sight.
Just recently, the Royal Canadian Mint launched its own ETF-type silver product, and bought 3 million ounces and Sprott, it seems, has added to his silver ETF with a purchase of around 7.5 million ounces. That together adds up to the total monthly available supply of 1000 ounce bars. This should cause the price of silver to rise but no. How come?
According to Jim Sinclair, noted Silver specialist and Chairman and CEO of Tanzanian Royalty Exploration Corporation, “Most commentators and participants in gold shares are under the assumption that the short interest is made of thousands of hedge funds, from the smallest to the largest. That is totally incorrect.”
“The short in gold shares is very concentrated in just a few large hedge funds with a few hangers on. This is why when there is no fundamental reason for selling they are manipulated against the gold price improvement, just like today. This is to play with your emotion.”
And Ted Butler has also noted on more than one occasion of the high short positions held by JP Morgan along with a couple of others on the COMEX.
Bart Chilton, a member of the U.S. Commodity Futures Trading Commission, in an interview with Lauren Lyster on Russia Today's "Capital Account" program, commented he had received warnings from followers of the market that ‘the price would be pounded imminently often had come true and so could not be ignored.’ He also said that high-frequency trading must be urgently regulated before it causes another "flash crash" in the markets.
But while the manipulation of the silver price continues, a point will be reached where big short position holds could well be overwhelmed if the market perceives a shortage is about to take place.  Something that Butler agrees with. He believes that such events as the big Royal Canadian Mint and Sprott purchases together  with a increase in investor demand could well change market sentiment with the result the  ‘perceived physical shortage will ultimately trump any paper manipulation.’
In fact, Butler reckons that it really won't take very much to tip the balance between silver surplus and shortage at all.
So where does that leave the poor silver investor?  Well in this game of silver, rock, paper, scissors, the best hand is the silver hand. Silver has value. Rock has little value and paper silver has none at all. With real silver, you can store value and you can exchange it. It is worth more than paper money and more than paper silver. The silver futures market is like a mountain built with a deck of cards.  There is no foundation to hold it up and eventually it will fold and come crashing down, and those who bought and own real silver will be ones in front. No scissors needed.

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