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Old 12-07-2011, 08:32 AM   #1
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Is silver really that rare?

Just thinking about this one. If physical silver is so rare and the price so low (should be at 16:1 ratio to gold price), why doesn't a billionaire investor just start buying up supply especially in today's unpredictable times?

If the manipulation stories are correct, wouldn't even half a billion oz buy of physical silver totally cause the price to skyrocket? Wouldn't this be a sure fire can't miss investment opportunity? At worst, you converted your wealth into physical and at best, you will make ten times your money?

I read about the Hunt brothers attempt to corner the market. This would be different in that you are not trying to corner the market nor are you buying on margins.

The whole point of the post being, if silver really was being manipulated heavily, I can't see how someone would not be trying on the other end to make an astronomical fortune. My conclusion is the supply of silver (or the potential to increase production) is so great that it cannot be manipulated on the long side. I hope I'm wrong though.
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Old 12-07-2011, 08:41 AM   #2
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Who is to say that billionaires aren't? I am pretty sure many have been putting gold as part of their portfolios for years.
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Old 12-07-2011, 08:51 AM   #3
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I believe there are numerous high net worth individuals including Jim Rogers, Hugo Salinas Price, Kyle Bass, Eric Sprott, et. al. who are accumulating physical holdings. Sprott has repeatedly mentioned that it is difficult to buy physical silver in large quantities. They aren't trying to buy large quantities in coins or from retail dealers. They are trying to buy 100ozt bars in large quantities. This is one reason I've been trying to track the supply of 100ozt silver bars. I figure it might give some indication of the relative scarcity that Sprott alleges.
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Old 12-07-2011, 09:50 AM   #4
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Interesting pt Shelby. I do remember watching some old vegas documentary how some old vegas mogul bought like $30mm in silver and stored it buried in the desert and that was like 30 yrs ago.

The main knock on silver I hear is its more expensive and bulky to store. So if you have substantial wealth its just cheaper to store gold.

But yeah I hear you. Interesting pt.
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Old 12-07-2011, 09:57 AM   #5
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Actually, the story is that nearly all of the gold ever mined still exists in the form of bullion, coins or jewelry. Silver, on the other hand, is consumed, so there is significantly less of it around. silver is underpriced by several orders of magnitude relative to available supply. Very little exists in the form of bullion.
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Old 12-08-2011, 04:26 AM   #6
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The reason the Hunt brothers attempt to corner the market on silver failed is because someone that makes the rules found out about it. Then that person/persons/organization made new rules that killed the Hunts on newly needed margin calls on their silver futures, that they were already leveraged on. Then, like a Chuck Norris round house kick to the family jewels... They could not meet the new margin call, and it took MULTIPLE banks to loan them the money needed to settle, once they put their entire estate up for collateral. That, is why the Hunt brothers failed to corner the market in silver. The game is rigged, and if you try and do something that TPTB don't like or aren't included in, then you will lose.
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Old 12-08-2011, 01:52 PM   #7
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Adding to what PM Bug said about Sprott......Buying 1.5 billion for his PSLV ETF would certainly qualify for what you are talking about I would think.. I believe the talk was his last purchase of 580 million ( or so ) was one of the big factors in the spring push to 50 bucks. So imagine the price if he is able to actually raise that money and execute the buy.
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Old 12-08-2011, 01:56 PM   #8
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If he were smart, he would buy quietly, and buy everywhere but the US markets. If it were my money, I would buy directly from multiple producers and do so in small blocks. There's no point in pushing up the price if you don't have to.
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Old 12-09-2011, 12:26 AM   #9
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I know that I have posted this video else where on the forums but I think it will help explain some of the points on why silver is so rare.

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Old 12-09-2011, 06:13 AM   #10
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That video is from 2010 and mentioned investment in GLD:SLV at 7:1. Sprott recently said:
Quote :
I see people like Gold Money sell as many dollars of silver, as gold. When I see the US Mint sell as many dollars of silver as gold which by the way implies in both instances, 50 times more physical than gold. And when we did the IPO for Gold Trust we made $440 million. When we did the IPO for the Silver Trust we made $550 million...Well how can the price be 50:1 when the money is going in 1:1?
There is a lot of speculation that we are seeing the beginning signs of supply stress on the COMEX.
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Old 12-09-2011, 11:19 AM   #11
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SILVER is a funny critter that I just do not understand. If the fundamentals of silver were indeed so extreme (that is, silver being rarer than most people think), then I would have thought that those in the know would have started taking BIG amounts off the physical markets and that JPM (etc.) would have been blown away months ago...

*** My blog needs an article ¨The Case For Silver¨! ***

I am not expert enough to write that. And I am NOT trying to use such an article as a straw man to knock down and push gold. I WANT to know more about the case for silver (vs. other PMs). I have seen some comment6s at ZH that the gold to silver price could come down to a 1:1 ratio, the SAME price for silver as for gold. ANYONE here who wants to write a Guest Post on silver, fully attributed to the author, please PM me!

Last edited by DoChenRollingBearing; 12-09-2011 at 11:21 AM. Reason: ( vs. ), it´s always some durn thing...
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Old 12-09-2011, 04:41 PM   #12
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Hey DoChen, if you get that article, would you mind sharing it with us over here as well?! I'm interested to see the case presented.....and although I'm a silver enthusiast, is any one making a case against it? A comparison of sorts?
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Old 12-09-2011, 08:30 PM   #13
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Here is another graph of the gold/silver ratio, pointing out the periods where silver was viewed as money. Note the dashed line and comment at the end of the graph.

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Old 12-10-2011, 01:17 AM   #14
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Occam's Razor: Which scenario is more probable?

Silver, a highly useful metal, a store for wealth and is much more rare then gold, is being manipulated by banks and the governments, keeping the price down, even in today's turbulent times, even when it is touted to be a great investment option, even after Sprott announces a $1.5B physical buy? That's a lot of assumptions.

OR

Silver even being a highly useful metal and a store for wealth, does not raise in price because demand does not outstrip supply (or potential for supply)?

Anyway, this is just food for thought because I consider myself highly rational and consider buying silver today a no brainer. But if I accept the premises of my rational decision, then I must also accept that the improbable, the overarching conspiracy theory is probable. And I, being rational, tend to reject the overarching conspiracy theories. Hope everyone understands my logical process.
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Old 12-10-2011, 02:51 AM   #15
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Originally Posted by Shelby-villian View Post:
Anyway, this is just food for thought because I consider myself highly rational and consider buying silver today a no brainer. But if I accept the premises of my rational decision, then I must also accept that the improbable, the overarching conspiracy theory is probable. And I, being rational, tend to reject the overarching conspiracy theories. Hope everyone understands my logical process.
Your first option means that silver eventually skyrockets, while with your second option silver merely holds its nominal value as a mere store of wealth as the currency continues to inflate. I'll more than accept the first scenario, of course, as I also think it is the most probable given the apparent fundamentals, but I am literally banking on the second scenario. That is what makes it a no-brainer for me.

However, the fundamentals of manipulation may well be even simpler than most think, and even more in line with Occam's Razor. With an outright Ponzi scheme, like an inherently insolvent bank running on a Ponzi principle, you only need enough liquidity to maintain the illusion of solvency, so that nobody panics and dumps their paper.

A continuously mined supply of silver, especially if the price is allowed to go just high enough to make it profitable to mine, could make it the ultimate Ponzi scheme, given that there is always just enough silver produced to service the illusion of solvency and liquidity to all the paper derivatives. Thus, it may take a far more massive run on physical to cause an actual implosion, and crash all the inverted pyramids. That might well account for why Sprott is encouraging silver mines to reinvest 25% in their own physical, taking it out of circulation as well, so that it can't keep re-seeding the illusion.
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Old 12-10-2011, 06:47 AM   #16
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Well said Steven. COMEX futures are the tail wagging the dog as Ned Naylor-Leyland explained in one of his missives about the Pan Asian Gold Exchange (PAGE) changing the game.
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Old 12-10-2011, 05:48 PM   #17
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Originally Posted by Shelby-villian View Post:
And I, being rational, tend to reject the overarching conspiracy theories.
Alas, but many of the conspiracy theories, even the larger overarching theories, have ceased being theories since they are supported by logical and rational facts.
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Old 12-10-2011, 08:22 PM   #18
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I agree w/ Sprott, how does the world operate(did) under Capitalism?.
Supply & Demand.

What's to keep the Miners from having there silver ore, smelted into .999 bars,storing 50-75%.

Sell only enough into the market to meet minimal obligations, and pay expenses, op costs, dividends,and cost of marketing.
Hold the excess off the markets, and THEY basically are getting to set the prices. of course NOT in collusion)..LOL

Easily done, I would think.
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Old 12-11-2011, 10:17 PM   #19
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http://www.zerohedge.com/news/physic...spike-imminent

Is a physical silver shortage imminent?
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Last edited by Shelby-villian; 12-11-2011 at 10:19 PM.
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Old 12-12-2011, 12:29 AM   #20
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Just as we were discussing the topic, ZH post's this masterpiece! Great timing I'd say!
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