We as individuals have little or no control over the state of markets, all we can do is adapt to market realities. In the case of silver, the reality is that it is in the grip of a price manipulation. History shows that various world governments have often artificially set the price of silver and gold in connection with official monetary policies. However, for the past 35 years a specific type of price manipulation has existed in silver via futures contract positioning on the Commodities Exchange, Inc. (COMEX).
Nothing can be more significant than the fact that silver is manipulated. Whether to participate in a manipulated market is something everyone must decide. To me, the choice is easy. Virtually all price manipulations in history have been of the upside variety which caused prices to be higher than they should have been. Buying an asset priced artificially high is a surefire prescription for eventual financial loss. But because the manipulation in silver is of the rare downside variety, the price of silver is artificially low, thereby guaranteeing eventual profits for those taking advantage of the opportunity.
The proof that silver is priced artificially low, creating the investment bargain of the ages, comes from reliable U. S. Government data. Weekly reports from the federal commodities regulator, the U. S. Commodity Futures Trading Commission (CFTC), include detailed information on the number of futures contracts held long and short by various trading groups. Nearly all this trading in COMEX silver (and gold) is speculative, meaning there is little or no true hedging taking place. In the case of COMEX silver futures, the trading has become overwhelmingly speculative in nature. This paper trading has supplanted and replaced any price input from real world production and consumption.
This post was published at SilverSeek on November 24, 2017.