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
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19
More Stock Market Weakness Ahead - 12th Aug 19
Global Central Banks Move To Keep The Party Rolling Onward - 12th Aug 19
All Eyes On Copper - 12th Aug 19
History of Yield Curve Inversions and Gold - 12th Aug 19
Precious Metals Soar on Falling Yields, Currency Turmoil - 12th Aug 19
Why GraphQL? The Benefits Explained - 12th Aug 19
Is the Stock Market Making a V-shaped Recovery? - 11th Aug 19
Precious Metals and Stocks VIX Are About To Pull A “Crazy Ivan” - 11th Aug 19
Social Media Civil War - 11th Aug 19
Gold and the Bond Yield Continuum - 11th Aug 19
Traders: Which Markets Should You Trade? - 11th Aug 19

Market Oracle FREE Newsletter

The No 1 Gold Stock for 2019

Silver Market Manipulation - Then and Now

Commodities / Gold and Silver 2013 Apr 26, 2013 - 01:54 PM GMT

By: Dr_Jeff_Lewis

Commodities

The recent price drop in silver was severe, but not exactly like silver’s Black Thursday in 1980. It was different this time, but some aspects of the decline seemed the same.

This time, a different demand character prevailed. Also, the overall level of market awareness and underlying sentiment was stronger.


Awareness of the persistent value of precious metals is growing, though mainstream sentiment is chronically low and therefore true investment interest still seems a galaxy away.

What has Changed?

All government stock piles of silver have been drawn down and this is directly related to the silver users’ once powerful lobby.

Another key factor was the great easy money credit expansion. This suckered so many people (and governments) into accumulating debt levels that they could not really afford or into slaving away at their jobs to service the debt.

Furthermore, slow, steady and often unnoticeable inflation has eaten away at the purchasing power of paper currencies, while the authorities have subsidized one asset bubble after another.  All of this has created the illusion of prosperity via paper millionaires and housing barons. 

Also, the silver market is dominated by the largest naked concentrated short position ever seen. This situation has developed over decades and has evolved to control the price and trading structure.  By gaming, the big speculative traders have juiced on easy money in their desperate search for yields that seem increasingly harder to achieve by investment alone.

Market Manipulation - Then and Now

Remember why the price of silver dropped so sharply in 1980.  At that time, the Hunt brothers were trying to corner the silver market, but they were forced out of their dominant long positions and were later prosecuted for their actions.

Then, the shorts were the exchange board members and the silver users, but this time, no one quite understands why the market fell so sharply.  Also, the market regulators are involved in the opposite ways to how they should be.

Today’s silver market, like most commodity markets, sees trading dominated by concentrated short sellers who often move the market at will to profit from their influence.  Their manipulation of the silver market is ongoing and pervasive, and this situation has resulted in chronically low pricing for silver.

These large, deep pocked shorts are typically fleecing the weak longs and profiting from their weakness by buying in the longs’ positions when they finally choke. Nevertheless, people who prefer to take ownership of silver are a diverse and growing group.

What has Changed Economically?

The economic backdrop to this latest decline in the silver market is a worldwide balance sheet blow out and a virtually zero interest rate policy or ZIRP.

Debt burdened governments have seemed increasingly eager to participate in the “race to debase”, as their countries’ paper currencies fall in unison.  Only their notable decline against the precious metals shows how essentially worthless these paper currencies really are.

If interest rates rose by only small amount, the interest payments on many countries’ national debts would easily eclipse their tax revenue.

Furthermore, employment participation has fallen to multi-decade lows, and waves of baby boomer retirees have been exiting the workforce.   

What Remains Basically the Same?

The key factor that has remained the same is that governments always run deficits, and then borrow to print money so that they can fund the difference. This is one reason that you can read so many articles about currency debasement today.

Governments also get first dibs on cheap credit via their debtor relationship with privately owned Central Banks. 

Over time, this situation has resulted in massive sovereign debt burdens since legislators have very little incentive to cut government spending, which is typically unpopular with their electorate. Furthermore, politicians continue to promise more popular programs to help them get elected.  

As the Greek sovereign debt crisis has shown the world, there is a limit to how far this overspending can go before investors lose confidence.  That limit is now fast approaching for numerous other nations, thereby making owning hard assets like silver seem increasingly attractive, especially at today’s bargain prices.

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 © 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

© 2005-2019 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