Best of the Week
Most Popular
1.RED ALERT: Paris Terror Attacks - What to Expect Next - STRATFOR
2.Paris Terror Attacks, Death Pangs of a Dying Religion, and Impact on BrExit EU Referendum - Nadeem_Walayat
3.Paris Terror Attacks, Islamic State Attempting to Spark Civil War in France - Nadeem_Walayat
4.Three Shocking Charts That Prove Gold Price Rally Is Coming - Sean Brodrick
5.Stock Market Nifty-Fifty Becomes Fab-Five; Return of the 'Four Horseman' - Mike_Shedlock
6.Africa Population Explosion - Why Europe's Migrant Crisis is Going to Get A Lot Worse - Video - Nadeem_Walayat
7.Gold Mining Stocks May Be The Buy Of The Century - Jeff_Berwick
8.Grandmaster Putin Beats Uncle Sam at His Own Game - Mike_Whitney
9.BRICS? No, CRISIS - Raymond_Matison
10.UK Housing Market Affordability, House Prices Momentum and Trend Forecast - Nadeem_Walayat
Last 5 days
Will Turkey Drag NATO into War With Russia in Syria? - 25th Nov 15
George Osborne’s Autumn Statement and Spending Review Full Text - 25th Nov 15
Will Fresh QE From ECB Boost Gold? - 25th Nov 15
Sheffield, Yorkshire and Humberside House Prices Forecast 2016-2018 - 25th Nov 15
Investors Watch Out For The Auto Industry… - 24th Nov 15
BEA Revises 3rd Quarter 2015 US GDP Economic Growth Upward to 2.07% - 24th Nov 15
Stock Market Supports Are Being Broken - 24th Nov 15
Is Gold Price on the Verge of a Breakout? - 24th Nov 15
Fed’s Tarullo: U.S. Interest Rates Liftoff Should Wait for Signs of Inflation - 24th Nov 15
Silver Price, COT, US Dollar Updates and More - 24th Nov 15
UK Regional House Prices Analysis - Video - 23rd Nov 15
Crude Oil Swinging For The Fences - A 20 to 1 Option Play - 23rd Nov 15
US Dollar, CRB, Oil, Gas, Copper and Gold - The Chartology of Deflation - 23rd Nov 15
UK Regional House Prices, Cheapest and Most Expensive Property Markets - 23rd Nov 15
Stock Market Rally Losing Momentum? - 23rd Nov 15
Will Gold Price Drop Below $1000 Soon? - 23rd Nov 15
Gold and Silver Sector Big Green Light and Low Risk Entry Setup... - 23rd Nov 15
Limits to Economic Growth - Challenge and Choices - 22nd Nov 15
Long Dollar Trade and Current Copper Price Below Cost of Production - 22nd Nov 15
UK Housing Market House Prices Affordability Crisis - Video - 21st Nov 15
The Fed Has Set the Stage for a Stock Market Crash - 21st Nov 15
Stock Market Primary V Wave Continues - 21st Nov 15
Gold And Silver - Value Of Knowing The Trend - 21st Nov 15
UK Footsie Bulls Set To Foot The Bill - 21st Nov 15
UK Housing Market Affordability, House Prices Momentum and Trend Forecast - 21st Nov 15
GDX Gold Miners’ Strong Q3 Results - 20th Nov 15
End of Schengen, Stock Market’s Technical Strength Grows - 20th Nov 15
Justice for All and The Curious Case of Zambia - 20th Nov 15
Paris, Sharm el-Sheikh, and the Resurrection of Old Europe - 20th Nov 15
Silver Prices and The Management of Perception - 20th Nov 15
Stock Market Nifty-Fifty Becomes Fab-Five; Return of the 'Four Horseman' - 20th Nov 15
Waiting for Goldot Again - 20th Nov 15
Michael Curran Goes Down-Market Shopping for Gold Stock Winners - 20th Nov 15
Why Isn’t This Incredibly Bearish Bond Market Development Making the News? - 19th Nov 15
SPX Appears to have Stopped its Rally - 19th Nov 15
The Great Fall Of China Started At Least 4 Years Ago - 19th Nov 15
Using Elliott Waves: As Simple As A-B-C - 19th Nov 15
Has Deflation Been Ddefeated? - 19th Nov 15
Dow Jones Stock Market Index is Not Going to Crash - 19th Nov 15

Free Instant Analysis

Free Instant Technical Analysis

Market Oracle FREE Newsletter

Reasons to Get Excited About Japanese Stocks

The Price of Silver in the Age of Broken Promises

Commodities / Gold and Silver 2013 Jan 25, 2013 - 04:33 PM GMT

By: Dr_Jeff_Lewis


The price of silver remains at the mercy of the big banks that make of the majority of the short side at COMEX — which is still the primary paper pricing mechanism for silver.

Could silver prices go above $50 and beyond this year — and then perhaps retest $50 as a floor?

Concentration Matters

Remember that it is the concentration that matters most for the price of silver. It does not matter if those large silver short positions are hedged or if a long exists for every short, since that is a fundamental aspect of market driven pricing.

All that matters is that one or two entities hold the majority of that short position and therefore they can and do influence prices. This is the same story that has been told over and over by Ted Butler and GATA for decades.

For comparison purposes, and even when the concentration is calculated without removing swaps, the current level of short market concentration eclipses the amount of silver which the Hunt brothers held long so many years ago and were subsequently persecuted for.

Silver Tests Major Moving Averages

If these dominating banks decide to let silver prices run through the closely watched technical moving averages — which it looks like they might — they could achieve this simply by covering their short positions. Such buying would push the market considerably higher and signal numerous weak longs to enter.  The market could get to $50 in hurry. 

The price of silver has already broken above its 200 day moving average and is now trading just below its 100 day moving average.  A break above the 100 day MA would typically be considered a bullish technical signal.

Silver remains severely undervalued and has been cheap for decades. Nevertheless, silver has continued its managed retreat from its April 2011 high of $49.77, although it has repeatedly held its value in the $26 region.

If silver’s next move up through $35 is shorted the entire way up by the big bullion banks — which will be clearly documented by the COT report — then the market will probably remain within the relatively tight $26-$37.50 trading range that it has been stuck in since September of 2011.

Timing the Silver Rally is Difficult

It remains challenging to time any of the silver rally scenarios or guess about when macro issues will finally start to affect the market price of silver, but higher prices for silver do seem more likely than not over the medium and long term.
The silver market has one or two concentrated shorts trading against a heterogeneous group of longs in the world's primary silver pricing mechanism. This seems both irrational and illegal, and it creates price moves contrary to where technical indicators say the market should trade.

Silver investors can become aware of the macro set up, the precariousness of the U.S. Dollar Ponzi scheme, and the competitive currency devaluations occurring around the world. It seems that central banks must print to save themselves, and this factor will continue to fuel investment demand for silver, despite deflationary pressures.

Money printing will fuel demand, but there were two lines in front of many coin shops during silver’s dramatic run up in 1980, with plenty of people in each line — as equal numbers bought and equal numbers sold.
Silver’s short term price has become a result of the COMEX shenanigans, while long term demand results from basic monetary flaws in the paper currency used to measure silver’s value.

Currency Debasement War Brightens Silver’s Future

It remains possible that if and when the currency debasement war picks up, it could trigger a sharp upside blow off event in silver.  Furthermore, the path to this rally is fairly certain. World governments are on a race to debase their currencies, which are essentially debt tickets or promises to pay with no intrinsic value.

Filling the world with these broken paper promises destroys faith, erodes savings and undermines the overall economic structure. The bust seems inevitable at some point, but the challenge lies in predicting when that will occur.

This makes long term price of silver forecasting rather difficult - outside of measuring relative purchasing power.

Although paper price manipulation discourages silver investment and the convenience of holding paper derivatives beckons, when the music stops, nine tenths of the law is possession. Having physical metal under your control then becomes the ultimate wealth preserver.

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

By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of and

    Copyright © 2013 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

© 2005-2015 - 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

Biggest Debt Bomb in History