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Cornering the Silver Market is Impossible at Current Prices

Commodities / Gold and Silver 2011 Apr 22, 2011 - 12:19 PM GMT

By: Submissions

Commodities

Best Financial Markets Analysis ArticleSilverDoctors write : Rumors of a corner of silver in process have been swirling overnight.

A cornering of silver by a billionaire is in process? Really? Here’s the definition of Cornering of the Market from Wikipedia, “In finance, to corner the market is to purchase enough of a particular stock, commodity, or other asset to allow the price to be manipulated, by analogy to the general business jargon where a company described as having "cornered the market" has a very high market share. The one attempting to corner a market hopes to gain control of enough of the supply of the commodity to be able to set the price for it.”


Anybody who is just now trying to corner the market is late to the ball game! Just look at Silver American Eagle Sales over the last 5 years.

(in ounces/number of coins)
2007- 9,887,000
2008- 19,583,500
2009- 28,766,500
2010- 34,662,500
2011- 14,530,000
Total- 107,427,500

And based on yesterday’s report of COMEX registered silver bullion dropping by 13% overnight , COMEX available silver for May delivery has dropped from 41 million to 35.8 million ounces. This is a decline of 5,287,142 ounces of silver overnight! A big drop to say the least; but even if those 5 million ounces went to one buyer, what percentage of the bullion market would they now control if we only looked at just the past 5 years of American Silver Eagle Bullion sales? The true number is much smaller but we are just looking at a simplistic approach, we are not factoring in…

1. Extrapolated out since 1986 when bullion coins became available from the US Mint
2. If we considered all other types of bullion (Maples, rounds, Comex bars, etc, junk bags, the list goes on)
3. If we considered all other mint sales and direct mine or refinery sales from all across the world

If one individual removed 5,287,142 ounces last night from the Comex registered supplies and they were converted to American Eagles they would control 4.9% of the Silver American Bullion Sales since 2007. Now, I wish I controlled 4.9%, but is that really enough to manipulate prices of the entire silver market? State Street Corporation (who?) holds 4% of JP Morgan…nobody is accusing them of cornering the market of JP Morgan shares! The Hunt brothers accumulated PHYSICAL SILVER FOR YEARS IN ORDER TO COME ANYWHERE NEAR CORNERING THE SILVER MARKET!

Now for the REAL STORY.

There has been a silver shortage for years. Manipulated prices by the big banks have just expedited the process through suppressing prices (aka JP mentioned above….wonder why their stock is only trading at 9.94 Price to Earnings even when they pay a dividend of over 2%, but that’s a story for a different day!).

1. JP Morgan’s current silver short contract obligations are 3.3 billion ounces. (There is only 600 to 900 million ounces of above ground silver in existence by some estimates which would be equal to shorting 4 times the amount of silver physically available)
2. According to the USGS, at current consumption rates, there are 16 years of silver supplies left or 12.8 billion ounces.
3. 127 billion in silver OTC derivatives as of June 2010, as reported by the Bank of International Settlements (BIS). Houston…we have a problem!!

In conclusion, the only ones who are currently in the process of cornering the silver market are the individual silver bugs reading sites like silverdoctors. Now, could a billionaire come along and attempt to put a billion dollars into physical silver and launch the price 5-fold overnight?
Sure, but this wouldn’t be a true market corner, as THERE ARE NOT ENOUGH PHYSICAL SILVER OUNCES AVAILABLE ANYWHERE NEAR CURRENT PRICES TO CORNER THE SILVER MARKET! Almost all the available silver is held by little investors like us and our readers who will not release their grip on silver until VASTLY HIGHER PRICES!

If all this information sounds new to you…complete your homework and read your background articles on the silver market at SilverDoctors.com.

The COMEX will default in the near future, at which time silver’s price will return to fair market value. What you should be doing now is buying physical silver; the opportunity of a lifetime won’t exist much longer.

SilverDoctors

SilverDoctors specializes in precious metals commentary and trading, found at
www.Silverdoctors.com

© 2011 Copyright SilverDoctors - 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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