Silver manipulation

[dali lambone]

So every day I make it a point to read Ed Steer's Gold and Silver Daily, (which I'd recommend to any of you guys out there if you don't already get it) and just as sure as the sunrise, he makes reference to silver price manipulation. Frankly, I can't remember a recent time that he hasn't.

So the immediate benefit to the financial institutions doing this are short term profits. As well, since they know what they are doing, I'm sure they guys are stacking physical on the side as well. The manipulation can't last forever, right?

Actually, that's what I wanted to discuss. Can it last forever? When does it end? How does it end? What is the benefit to the CFTC for continuing to allow this to happen? (We are more than 3 years passed the first investigation). In my mind and in my heart, silver breaks free, but in reality is it really inevitable, or are we trapped in their game with the hopes that they slip up one day?

 

[Steven Douglas]

You can inflate the hell out of everything, and fudge and manipulate CPI and GDP, including what's counted and not counted, but silver is more sacred than gold as a silent, but ever-watched measure of how fiat currencies are performing overall.

Of all commodities, silver - the poor man's gold, and more importantly the definition of the original "Dollar" - is a well known canary in the Keynesian-spawned economic counterfeiting mine. It is for this reason that silver is in a gilded, protected cage, and that it is essential for the Fed-related JP Morgan control it; to manipulate the price of silver on behalf of the Federal Reserve, and keep its price artificially low for as long as possible, and by whatever means necessary (including crashing MF Global and looting allocated holdings in order to avert a COMEX failure). That would be with full blessings from every fiat currency government and central bank in the world that depends on the stability of the Treasury/Fed's fiat dollar regime.

 

[pmbug]

Like most any fractionally reserved Ponzi, the game is up when when enough people decide to take their toys and go home (withdraw their owned stuff from the game). As long as their is sufficient physical supply to satisfy the small fraction of demand that requires physical, the folks rolling over paper contracts can continue playing the game with the crooks.

 

[bushi]

Can it last forever?

...assuming people/investors still have trust in, and want to accept paper money, it can. Theoretically. For as long, as we are able to continuously expand GDPs, even only in numerical (and not productive) terms. Which means, once we hit ANY physical limit to further expand global economy (population limit, resource depletion, etc), it will start collapsing, together with the current economic order. Frankly, I do believe we are watching this final chapter right now, and remember, the bigger the thing is, the longer it takes for it to fall down, so I presume it will still take a little while.

When does it end?

when the above fails (people/investors are no longer willing to accept that particular currency(ies), and want something tangible instead, for their oil/food/goods/services.

How does it end?

...erm, more or less badly? One thing for sure, it won't be pretty, it never was.

 

[pmbug]

... Theoretically. For as long, as we are able to continuously expand GDPs, even only in numerical (and not productive) terms. Which means, once we hit ANY physical limit to further expand global economy (population limit, resource depletion, etc), it will start collapsing, ..

This is what Chris Martenson is talking about here:

http://www.pmbug.com/forum/f13/chris-martenson-presentation-gold-silver-meeting-madrid-259/

It's not just continuous expansion that's required, but continued exponential expansion. Energy production is the limiting factor.

 

[bushi]

PMBug: Yep . Exponential growth, and at the rate higher than the effective interest rates, that money has been borrowed into existence on. Anyone wonders, why they are trying to introduce NEGATIVE IRs now? Also, the trick is, that debt CANNOT be repaid in full, EVER, because INTEREST amount on the debt capital was never ever created. So it is just never ending cycle of going deeper & deeper into debt, our current monetary/banking system.

So it follows logically, than bigger & bigger part of the economy is being transferred from the productive investments into servicing debt, the very same debt, that is built-in into the system BY DESIGN, to create a money supply, that very blood of any healthy, non-toxic economy. That is just a simple, and very intuitive math, once you grasp the way the money is borrowed into existence today.

Eventually, if it continues - all the productive economy output would be consumed by the debt servicing. You know, everyone would be running like a squirrel in a cage, working 70hrs workweeks, and, he will get NOTHING to sustain him and his family, because of debt servitude. That is very sane, isn't it?

 

[DCFusor]

I hate to say, PMBug, that it's even worse than that at this point. You can't have everyone working 70 hour weeks if there's no demand for the stuff produced! It's another direction for the eventual collapse to come from in my opinion.

I'm not talking of the obvious spiral here where no jobs means no demand which means no jobs. I'm talking about just not needing the stuff at all.

I've been watching this for a long time, and trying to come up with an answer.
Here's a gross problem-statement.

As tech improves - more and more things are automated. There's more productivity per man hour, thus, to make the same amount, or even an increasing amount of "Stuff" there needs to be less labor input. Our system in general (though some would say we're moving away from this) doesn't know how to pay you if you don't work. Capitalism will always drive toward maximum efficiency - this is normally considered a good thing. But in the limit - you could imagine just one huge robotic factory that makes *everything* humans want, and due to the "monopoly board game" nature of all this, it's probably owned by just about one entity.

Only now, that guy is screwed - because he already has all the money, no one can pay him for the output of that factory in any value he's interested in - he already has all the money and all the means of producing stuff.

I believe this is already happening. After I have all the cars I can drive, and all the computers I can decently use, all the land as far as the eye can see - I drop out of the markets for any of those things, and in my case, I even take care of all my heat and some of my food....

We see things bouncing off all these limits already. The commodity computer makers are all going away, as there's no value at the margin of making yet more of the same old thing - Apple is an exception at the moment - as they keep creating new "must-have" things, requiring their fanbois to trash the old, and acquire the new to keep that "I'm cool because of what I bought" BS going on. Except they are foundering themselves now...and having to sue the entire rest of the business over some pretty silly stuff before they lose all market share to other things that will eventuate in the utter commoditization of cheap phones, pads and so on - whereupon that whole high markup business is toast, just like a lot of others in the past. Innovate their way out of it? Well, I'm waiting, but it doesn't look good at this point.


So, the capitalist system itself is finally hitting a wall, on top of what Martensen is talking about - this isn't the same problem at all. We could go to the star trek universe, where no one has to work, and value is automatically and somehow "fairly" distributed - except human nature doesn't allow for that, it was a major flaw in the concept. Without a profit motive, no one will invest or work. With it - we hit this wall at some point.

I wish I had an answer to it, I'm no booster of socialism, because that doesn't work any better - human nature issues arise in all extant systems....so far - and it feels pretty unfair, not to mention being anti-Darwinian, which is never a good thing.

And of course, the above, as PMBug points out, is why Ben is stuck in a trap of his own making - you can't go below zero IR, and you can't allow them to rise as that kills any ability to even pay the interest - and hyperinflation here we come - the thing is, it can keep getting kicked down the road longer than most of us can wait to place the bets most effectively. Betting on that outcome right now means tying up money that could be more productive now, and holding things at a loss is just not the best for anyone concerned.

Stupid-human tricks!

 

[ancona]

Actually DC, hyperinflation and economic collapse wipes all of it out, and everyone has to start over. If you look at what happened after the depression and after the war was over, demand increased exponentially. Although demand was "created" by bombing all of Europe back in to the stone age, hence the exponential demand for products. Our growth in the fifties and sixties was fueled by the complete destruction of much of the existing factory infrastructure and transportation systems. We targeted railroads and industrial centers just like the Germans did, and in the end we were the beneficiary because our factories remained intact.

I am not advocating for a war here, but just wanted to point out that absent the destruction of existing factories around the world, the US will never again see the prosperity we had in that thirty year period after WWII.

 

[DCFusor]

If it happens while I care - I'm feeling the old saw about "the market can stay irrational longer than you can stay solvent" just now. This should have hit the can long ago, but here we are...

That is very much my take on WWII and what happened after - but we seem to be the main ones with this take on it - there's a lot of bogosity around that one out there. Turns out my grandpa (John Lee Coulter) helped write and execute the Marshall plan, FWIW, so I got a few lectures on all that way back when.

 

[rblong2us]

my grandpa (John Lee Coulter)

so is / was your dad John Lee Jr, or David Coulter (-;

and did he really run for Vice President ?


bloody google )-:

 

[Shelby-villian]

@DCFusor- I disagree, we will always have jobs.

The US is sadly a nation of war. We have the best weapons but we have to continue using them to produce more. By using our weapons and destroying things, we will always have an economy of building things back.

The war on drugs continues to incarcerate more and more minorities and poor so we will need more jails to be built, guards and police to enforce our ever pervasive laws, and staff to maintain these people.

And once we start seeing real rioting here in the US as the Occupy movement grows, more and more people will be needed to staff and guard the FEMA camps as there will be a war vs Americans.

Anyway this is why our endless wars will never end. We need the jobs that come out of it.

 

[DCFusor]

Dad was David C Coulter. He never ran for anything I know of (Physics major, but engineer for the Navy and Melpar), but looked shockingly like R. Nixon, to the point of getting a lot of jokes about it.

I haven't yet been impressed with the occupy movement. They seem to have this vague feeling that they have been getting screwed, but are too lazy to figure out the hows and wherefores - so aren't all that effective - or deserving, thus far. They should be hanging bankers from lamposts instead of sitting around listening to iTunes and waving signs - I'll be impressed then. At least they've largely resisted being co-opted by the various other parties with a stake, unlike say, the tea party, which originally had nothing whatever to do with social conservatism.

Yes, we can create jobs pushing each other around, and in creating no value thereby, require ever more of those nasty, sweatshop jobs. That, however, doesn't address the point of what's happening to the value-creating ones or the endpoint of capitalism.

War is becoming less and less practical and people are noticing it. I don't see major changes in the short term, but...humans get around to changing a little if you give them enough time. Not in their basic nature, but in what's the accepted wisdom.

There will always be war, but perhaps it's moving more toward economic war, police states (war on one's own people), and away from high explosives and projectiles. Too many countries are all too good at the latter these days. We've addressed this via having little proxy wars to test out our cool toys - but even that's getting past what works well even for the ulterior motives behind them, much less the stated agendas.

 

[swissaustrian]

Must get silver to close CRIMEX trading (at 1:25pm ET = 19:25 CET+1) below 28.5. Doesn't matter that there is no volume.

 

[swissaustrian]

Somebody continues to play games in the silver market, this time ramping the market higher after the stock market has closed. There's usually minimal volume. HFT robots should already be shut down for the weekend...

 

[swissaustrian]

So the insanity in silver continues as giant volume (for a Sunday evening) caused massive short term volatility for no apparent reason during the first 20 minutes of trading. And then it suddenly disappeared. These price swings were NOT caused by illiquidity.

 

[benjamen]

http://www.silverdoctors.com/silver-prices-defy-the-law-of-supply-and-demand/#more-22602

"In about three months, silver has declined from its late-November price of about $34 per ounce to its current price of about $28.50 as of today’s close (February 28, 2013). That’s a drop of about $5.50, which equates to a decline of over 16% in about 90 days. An economist with a solid grounding in the supply and demand theory, when viewing this decline, would have to conclude one of two things. Either the supply of silver had recently rapidly expanded or the demand for the precious metal had substantially decreased over the same period. These would appear to be the only logical explanations for this situation."

"We need to ask ourselves how is it possible for the price of silver to undergo a substantial drop in price while simultaneously experiencing extremely tight supplies and burgeoning demand."

 

[swissaustrian]

There's absolutely NO volume in silver today since about 8:35am

 

[pmbug]

Looks to me like the smart money has left the building (isn't playing the paper game).

 

[swissaustrian]

Silver holds 26 all day and 5 minutes before the Globex closes for the weekend somebody dumps 25000 contracts into a totally illiquid market to force it below 26.
This is the most obvious manipulation I have ever seen.
If the CFTC doesn't examinate this, the prosecutors need to be fired.

 

[LarsL]

Sure,
The market is most likely manipulated, but to try to corner true market forces, is like trying to fight gravity. It works for a while, but eventually, the laws of nature wins.

 

[pmbug]

Hi Lars, welcome to the forum. :wave:

We're watching the demand for physical metal overwhelm supply (or manufacturing / production) in silver right now. Seems gold hasn't quite reached the same tipping point yet. It's possible the inventory drains to the COMEX, GLD, LBMA are indications that we are at the beginning of the end. Interesting times...

 

[LarsL]

Thanks for the welcoming!

I have many years of experience in precious metals. Acting professionally as a buyer and trader (of the real thing) since several years now (don’t know if it’s allowed to post link to the company on the forum, to present myself and my business in more detail).

Regardless of that, I am still fascinated that the price of the physical commodity is set from a paper promise. As you write, there has been a great demand and the premiums on investment silver have increased while paper prices at the same time have fallen. The question from my point of view isn’t when it’s going to happen, but how the paper price and the physical will divide.

 

[Aubuy]

Thanks for the welcoming!

Regardless of that, I am still fascinated that the price of the physical commodity is set from a paper promise. As you write, there has been a great demand and the premiums on investment silver have increased while paper prices at the same time have fallen. The question from my point of view isn’t when it’s going to happen, but how the paper price and the physical will divide.

This is something I am struggling to understand as well. Some of my better off friends, who never bought gold or silver before, are now starting to buy some coins in anticipation that they might come in handy someday. If everyone buys just a few coins that seems like it might be a lot of metal being sucked up and going into mattresses, or maybe it's not that big of a deal. India and China? is data from those places really reliable? I can't tell from where I sit what is really going on, so yes, this divergence between paper and physical is concerning to me, and I wonder if there is plenty of metal available to satisfy all the physical demand, or if in reality it's some kind of commodities shell game. Can the big guys just flood the market with metal from the warehouses whenever they want if they see a jump in demand, or is most of this paper metal just a bookkeeping trick? It beats the heck out of me. Maybe Bug can explain it.

 

[ancona]

Welcome to the Forum.

I went to your site but do not speak your language, so I couldn't really tell what you do. Based on the pictures, it looks like you buy/sell silver.

 

[LarsL]

This is something I am struggling to understand as well. Some of my better off friends, who never bought gold or silver before, are now starting to buy some coins in anticipation that they might come in handy someday. If everyone buys just a few coins that seems like it might be a lot of metal being sucked up and going into mattresses, or maybe it's not that big of a deal. India and China? is data from those places really reliable? I can't tell from where I sit what is really going on, so yes, this divergence between paper and physical is concerning to me, and I wonder if there is plenty of metal available to satisfy all the physical demand, or if in reality it's some kind of commodities shell game. Can the big guys just flood the market with metal from the warehouses whenever they want if they see a jump in demand, or is most of this paper metal just a bookkeeping trick? It beats the heck out of me. Maybe Bug can explain it.

This is actually something that struck me recently. I have heard twice lately, unknown people telling me that they just invested in precious metals for the first time.

My guess is that there in the western world, precious metals are starting to have a renaissance as an investment and a protection.

The question is how the physical commodity will be traded when all the major precious metals companies set their prices, for buy and sell, based on the spot price.

Welcome to the Forum.
I went to your site but do not speak your language, so I couldn't really tell what you do. Based on the pictures, it looks like you buy/sell silver.

Thanks Ancona. Since we act locally, there has been little reason for us, to translate the whole site it into other languages. We buy silver, mostly in the form of old silverware and jewelry. This describes our website http://www.silverklubben.se/english.html

We also have another site that buys catalytic converters from cars, from which we extract platinum, palladium and rhodium.

The point of purchase secondary materials (scrap) and purify it, is that we can purchase the materials at a price lower than the spot price. Since I have some background and interest within silversmithing, it is pretty nice having that knowledge coming to use.