You don't hear much about the precious metals markets in the mainstream, and believe me, this is by design. After all, the band doesn't stop playing just because you've hit an iceberg - in fact, it has to play even harder.
For quite a long time, precious metals have been a thorn in the side of money-printers everywhere. However, governments have finally rendered this threat mostly toothless in the era of modernized financial markets and un-backed commodity contracts.
The COMEX is the primary future market for the trading of precious and industrial metals - gold, silver, copper, and aluminum being prime examples. Other metals such as platinum and palladium have elements of both, and each is traded on their own futures market, allowing speculators or hedgers to gamble on future price movements.
As you can probably tell from the above graphic, the amount of "paper" metals traded absolutely dwarf the trading of the "real thing" (physical gold). Naturally, this creates a massive suppressing force on the price of the "real thing". It's hard to overstate just how great this forces is, though it is also very hard to attempt to calculate it.
Consider a market in equilibrium with 100 ounces of gold for sale, at a price of $100. Now, consider the effect of adding 42,300 new ounces of gold to that market. That is effectively what paper contract trading in gold in London and at the COMEX has accomplished in the last 50 years.
If you've ever heard crypto-enthusiasts who were sour in the implementation of futures for Bitcoin (or other cryptocurrencies), you need only review the previous two paragraphs to get an indication of why. They are worried that futures will be used either to suppress real demand by satisfying it with un-backed paper futures, or manipulate the price in ways detrimental to the "proper" investors in the market.
Anyway, getting back to the headline...the silver market is a perennial favorite of market manipulators for at least a decade owing to its lower public profile and substantially smaller size. Positions in the market are routinely out-sized relative to metrics like demand and annual market supply.
Nevertheless, the silver market has never been more leveraged than it is currently. Extreme situations like this tend not to hold for too long, although they often hold longer than you expect (or can remain solvent.)
Silver may well be preparing for a big move, and this could have something to do with the looming "trade war" with China. Keep an eye out if you are holding it.
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Silver just might be the most undervalued asset in the world.
It kills bacteria... and vampires. It is a pretty amazing metal when you think about it.
Nano-silver infused clothing for the win.
Werewolves too :)
people do not talk much about silver but once after the marked had crashed somewhere in 2008 it had given a magnificent return
Silver has got to be undervalued. I have thought that for years, but I never understood one fundamental reason why before your post. The leveraging of paper silver creates inflation. If investors actually knew that an ounce of silver backed every ounce they bought, the market would correct a lot. I wish that day would come soon.
It might not be the best thing to gravitate towards events that might potentially affect the silver market because doing this might create panic and unrest among the investors. Because personally I think the silver market is a stable market at least compared to cryptos
Watch this video by Mike Maloney. He talks about something new brewing up for silver. Comercial shorts have never been this low!
Isn't this also why Blockchains backed by an asset is also a stupid idea? You can just create more coins without actually having the asset. Tether is the worst. It undermines Bitcoin as well.
I keep an eye out for this one, but I have a feeling this market has already seen its glory days, probably just probably we meet hit the 20 dollar mark that would be greeted with the traditional smack down... Look at what today, I am pretty sure the precious metals bugs went long Friday taking into account the political uncertainty and trade war looming added to mini market crash on Friday expect to make a profit instead they were greetings Dollar trading higher and precious metals including Gold trading lower... Its not easy and people still say crypto traders are gambling, talk about fundamentals and technicals of precious metal bugs getting high of their own supply while the market elites smack them in the face
Eh, Cryptos just seem to evolve faster over time. It takes a lot of patience and in a fast-moving ecosystem like blockchain, patience gets removed because we all can see 10% rises and drops in as little as 5 hours.
Good discussion and clear explanation on how the paper instruments suppress silver's price. I've read a lot on this, but this is the best anyone has explained it. I have a monster box of coins. Gold/silver ratio is back above 80 which is historically an excellent time to buy silver. There is always a reversion to mean, where silver then outperforms gold. I've got some calls on silver miners and expect by September to sell them for good profit. Good article.
Thank for your clear explanation, really appreciated
The post is quite clear, the truth is that the market is quite moved and the money is today in a place that perhaps never thought to be.
thanks for writing about this. I've always been interested in precious metals. I love to go gold mining and have found just under 1.5 oz lol. But I've never really understood how futures work and honestly I haven't really understood all of how what you say here works but I've bookmarked marked it so I can refer to it. It takes me a while to grasp some of these financial concepts.
I am one of those that were not a fan of futures for BTC. The concept of the futures contract makes sense but the application of future contracts are rarely used for their intended purpose resulting in manipulation and distorted markets as you mentioned.
silver seems to be doing well amidst the trade war saga
I wonder which one will be more expensive in the future. Will it be silver or gold? I'm very curious to know because many are investing in it.
Yeah right, hasn't JPMorgan like, hoarded more silver than anyone in recorded History in the last 5 or so years?
Pretty impressive...
I still'd rather have 10 bitcoins than the equivalent in physical silver though...
And fuck paper metals, dafuq is dat
Good post. You are dead right and there are numerous examples of actual legal proceedings against price manipulators.
For future reference you should use the tag #steemsilvergold whenever you are posting about precious metals. There is a whole community of us over there who lap this content up if they see it ;)
All it means is that there is much less Gold than being traded on exchanges. What if many of high volume trader demanded physical supply and if exchanges failed to send it then Gold prices may spike.
Thanks for the post. What do you guys think of Peter Schiff and his promotion of the Goldmoney company?
Nice one
Nice
That big move is UP, check out my silver post, once the 200 weekly MA clears, the market forces have taken over and it won’t be rigged anymore.
The precious metal market (gold and silver) will only break out to the upside exponentially when the fiat market collapses.
There are many undervalued assets and silver is one of them!
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