Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
BREWING FINANCIAL CRISIS 2.0 Suggests RECESSION 2022 - 28th Jan 22
Financial Stocks Sector ETF XLF $37.50 Continues To Present Opportunities - 28th Jan 22
Stock Market Rushing Headlong - 28th Jan 22
The right way to play Climate Change Investing (not green energy stocks) - 28th Jan 22
Why Most Investors LOST Money by Investing in ARK FUNDS - 27th Jan 22
The “play-to-earn” trend taking the crypto world by storm - 27th Jan 22
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Premiums Play a Role in Indicating Silver Manipulation

Commodities / Gold and Silver 2010 Apr 07, 2010 - 04:44 PM GMT

By: Dr_Jeff_Lewis

Commodities

Silver investors should remember to always pay attention to the per ounce premium they pay to receive physical metals.  While premiums are important as a barometer of the actual silver you're obtaining per dollar, premiums also play a very important role in gauging current market manipulation. 


Why Premiums Imply Manipulation

There is possibly no other commodity that is as fundamentally fungible as metals.  Unlike corn, soybeans, beef and pork bellies, metals are identical, whether they are produced in the breadbasket of America or in the slums of the third world.  Other natural commodities, like beef or corn bushels, can vary in quality, in taste and visual appeal.  Beef raised in the European Union, where cases of mad cow disease have been plenty, carries additional risk than beef cattle raised in America.  While the end product may be similar, they are not always as fungible as you might hear from an end user, or the consumer. 

With all that said, the smallest premiums should be found in commodities that are more identical from area to area, and a greater premium is paid for commodities that aren't so similar.  However, premiums work differently in the case of the commodities markets.  Pork bellies, which can vary greatly in quality, especially to the diner and butcher, are traded with thin premiums.  Silver, on the other hand, carries a larger premium over the marketplace despite being universally the same.

The Workings of the Silver Premium

It is true that much of the silver premium exists to protect the individual broker from the risk of a lower silver price between the time they buy silver rounds and the time they sell them.  In addition, the premium helps cover overhead costs, including storage, security and personnel to manage silver holdings.  However, these costs are also borne by investors through the futures markets in other commodities that are not as easy to store or manage as small one ounce rounds of silver.  So why is there such a big difference?

People Don't Trust the Futures Markets

Simply put, those who are buying silver as an investment are rather untrusting of the futures market to protect their wealth, and the premium implies that investors value having silver in their possession over having it in a vault thousands of miles away.  Having silver in your own hands assures that you are the actual owner, and that the money you paid to purchase the silver is actually represented by real, tangible metals.

Premiums Are on the Rise

Following allegations by a whistle blower that the futures markets are being manipulated by investment banks and brokers, premiums for physical metals have begun to rise, despite little changes in market volatility.  There is no better dataset to test this theory than the last few months of trading.  After falling from $17 in January to $15 in February and bouncing back to $17 in March, premiums in March and January should be similar.  Of course, they are not. 

As the CTFC probes into the allegations, silver investors once satisfied with paper ownership are now demanding physicals, and as a result, the price of silver traded off the markets is rising.  Many silver rounds are now selling for a full $1.19 over spot, far greater than the price of $.79 over spot in January.  For this spread to grow shows only one fact: the silver markets are being manipulated on the market, and investors are taking notice in mass. 

By Dr. Jeff Lewis

Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com and Hard-Money-Newsletter-Review.com

Copyright © 2010 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in