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US Mint Turning Artificial Silver Prices Into Profits?

Commodities / Gold and Silver 2012 May 25, 2012 - 01:13 PM GMT

By: Dr_Jeff_Lewis

Commodities  The paper precious metals market seems more and more like merely a leveraged, computer-driven poker game manipulated by the biggest players with the deepest pockets, mainly the bullion banks, (governments by extension) and hedge funds.


The aim of this paper futures market manipulation, exhaustively documented by GATA and especially Ted Butler, seems to be to keep physical metal prices artificially suppressed in order to scare smaller investors out of their physical metal holdings. This allows the larger players to accumulate physical metal at lower prices and profit by covering their short positions.

Another goal (more recently advocated by Jim Sinclair) may be to dampen the volatility of precious metal price increases, although not the ultimate ascent.

Physical Silver Minted Into Coins by Governments

Interestingly, the bullion banks (and the governments that back them) that are selling gold and silver futures contracts that they control delivery into, seem quite happy to print or electronically generate more and more fiat currency to pay for any potential losses they incur.

One other motivation behind these governments’ covert and manipulative intervention in the precious metals market to keep prices low could be the fact that they require substantial amounts of the physical metals themselves in order to mint coins. Last year, the U.S. Mint’s Silver Eagle program consumed more silver metal than it produced domestically.

The governments then sell these coins to investors at a premium over the actual value of the precious metal contained within them. These coins are then typically held for long term investment purposes, and so they are removed from the available pool of physical metal for extended periods of time.

The high coin premium or spread charged by the government mints and their authorized retailers tends to remain fairly consistent. Nevertheless, retail demand tends to increase as the paper price of the metal declines, and hence so does the profitability of this minting business that rises along with the overall volume of coins sold.

By Dr. Jeff Lewis

    "In addition to running a busy medical practice, Dr. Jeffrey Lewis is the editor and publisher

    of www.silver-coin-investor.com where he provides practical information for precious metals investors".

    For more articles like this, and to stay updated on the most important economic, financial, political and market events related to silver and precious metals, visit www.silver-coin-investor.com, subscribe to our E-Course completely FREE of charge.

    Copyright © 2012 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.


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