Part 2/12:
The Dual Nature of the Silver Market: Paper versus Physical
One of Morgan’s central points concerns the fundamental distinction between the paper derivatives market and the physical market. The vast majority of trading in silver—around 99%, according to Morgan—is conducted through futures contracts, options, and derivatives. These virtual trades are zero-sum, with winners and losers settling on paper, rather than actual metal changing hands. The markets are driven heavily by speculators, trading funds, and commodity trading advisors who settle contracts without necessarily taking delivery of physical silver.