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Silver Prices When the Traffic Lights are Blue Today

Commodities / Gold and Silver 2013 Mar 08, 2013 - 02:03 PM GMT

By: Dr_Jeff_Lewis

Commodities

The view of the silver market from ten thousand feet away shows what is really going on behind the scenes.  The manipulation of the market by deep pocket bullion banks with a hugely concentrated combined naked short position has become increasingly evident.  

Furthermore, their market spoofing practices that involve dropping their bids to give the indication of a weak market and then quietly buying back their short positions for a profit are well known.


Silver Market Regulation Remains Ineffective

Despite these highly questionable practices, the more realistic silver traders and investors also know that the CFTC’s purported investigation into the manipulation of the silver market will never resolve successfully because the regulators have already been captured by the manipulators.

Most silver market observers — even some of the most influential and bullish members of the analyst community — simply refuse to acknowledge this absolute key to understanding how silver trades and is priced.

Economic Data Effects and Explanations

So, what is the observed effect on perception and the surreal world of market pricing that keeps the price of precious metals artificially suppressed?

First of all, when good economic data comes out, stocks tend to rise and precious metals typically decline. The explanation for this reaction is asset rotation because a better economy means there is less need among investors to own "safe haven" assets like the precious metals.

Nevertheless, when bad economic data comes out, stocks tend to fall but precious metals also decline. The apparent explanation for this is that a worsening economy means more margin calls and greater cash needs that result in the liquidation of precious metal holdings.

Then, when so-so economic data is released, dividend stocks and bonds tend to go up, but precious metal prices again drop. This is explained by the idea that precious metals do not pay a dividend.

Quantitative Easing Effects and Explanations

Quantitative easing, or money printing as it is sometimes called, should ideally dilute the value of a paper currency and therefore increase the value of commodities like the precious metals when expressed in the paper currency.

Nevertheless, when more quantitative easing is announced, precious metal prices fall. This is explained by investors forgoing owning the precious metals when stocks are now expected to outperform.  Another explanation is that a QE program signals that deflation is coming, so there would be no need to own precious metals as an inflation hedge.

On the other hand, when no new QE appears to be forthcoming, precious metals also decline. Supposedly, this happens because the paper currency’s value will not be further diluted by more money printing.

Given the prevalence of such explanations, it sometimes seems that silver simply cannot win the game of perception.  Nevertheless, what is really going on is that the price of paper silver is being talked, explained and pushed down so that the smart money can buy the physical metal at an artificially low price.

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

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