Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19
Gold Price Gann Angle Update - 10th July 19
Crude Oil Prices and the 2019 Hurricane Season - 10th July 19
Can Gold Recover from Friday’s Strong Payrolls Hit? - 10th July 19
Netflix’s Worst Nightmare Has Come True - 10th July 19
LIMITLESS - Improving Cognitive Function and Fighting Brain Ageing Right Now! - 10th July 19
US Dollar Strength Will Drive Markets Higher - 10th July 19
Government-Pumped Student Loan Bubble Sets Up Next Financial Crisis - 10th July 19
Stock Market SPX 3000 Dream is Pushed Away: Pullback of 5-10% is Coming - 10th July 19
July 2019 GBPUSD Market Update and Outlook - 10th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Silver Prices in the Event of a Comex Default

Commodities / Gold and Silver 2013 Jan 04, 2013 - 10:39 AM GMT

By: Dr_Jeff_Lewis

Commodities

If and when the Comex silver market implodes, so should the paper market for silver. Nevertheless, can this happen and will it happen? 

Also, if a Comex default does occur, what are the likely scenarios and aftermath that will impact silver traders and the price of silver? The following sections explore the increasingly likely possibility of a Comex default in further detail.


Inability to Deliver Physical Silver

Perhaps the most likely scenario of a Comex “default” would involve the inability to deliver physical silver into its futures contracts due to a pronounced and protracted physical metal shortage.

In this case, those holding paper certificates instead of actual physical silver will probably be settled at the cash value of their position once the physical delivery problem finally comes to a head.

At this point, trading in silver futures on the Comex will probably also be halted temporarily while the market figures out the real price of physical silver.

Pricing Implications of a Comex Default

Of course, a Comex default of this type means that you will not be able to buy silver from the usual markets until the dust settles. Also, when said dust has finally found a resting place, silver will undoubtedly be priced much higher.

That is because the price of silver will be based on the actual amount of silver metal in circulation, rather than on the inflated amount of silver paper that has suddenly been turned into paper money instead.

Some of the silver pricing figures proposed are difficult to believe outside of a full dollar collapse (on the order of $500+/ounce), but seeing the price of silver more than double from where it is today would be trivial in a Comex default scenario.

Indeed, if silver’s price were only adjusted to the historical 17:1 pricing ratio with gold, then silver would be trading at roughly $100/ounce, which is basically triple the current price.

A Comex Default Would Help Discover the True Price of Silver

On a global basis, the value of money shrinks when compared to the actual value of silver metal. The discovered price of silver after a Comex default would therefore rise, but the key is that the result would be a more accurate and un-manipulated price based on the higher intrinsic value of physical silver. This is what the silver market currently lacks.

As silver analyst, Ted Butler, has pointed out for decades, by virtue of concentration, the paper metals futures market and OTC derivatives are currently being used to actively manipulate and interfere with the price discovery mechanism of silver and gold for profit, with the covert goal of suppressing precious metal price increases in U.S. Dollar terms.

Nevertheless, silver is much more strongly manipulated via this mechanism, so the presumption is that when actual price discovery happens, the market will see silver's price rise significantly. This is why long-term silver investors say that silver is on sale.

If and when a Comex default does happen, traders will also probably see at least one major bullion bank (J.P. Morgan Chase) require some sort of extraordinary support, which might be done covertly to avoid exposing the manipulators acting behind the scenes.

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

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 © 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.

Dr. Jeff Lewis Archive

© 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

6 Critical Money Making Rules