Is it Silver’s Time? Part 2

Is silver currently greatly underpriced? Many people believe both gold and silver prices are being manipulated to keep them artificially low.

It is suspected that certain entities have been using Comex, a division of the New York Mercantile Exchange, to manipulate silver prices by unloading large quantities of silver onto the market. The silver doesn’t actually exist as it is bought and sold in futures contracts (papers that promise to deliver silver sometime in the future).

There is no other commodity with such a large short position. For example, the amount of gold sold in futures contracts is around 2.5% of inventory. The amount of silver sold in futures contracts is over 200% of known inventory. Since this artificial paper silver market is so big it’s setting the price over the real physical silver market, depressing the price even further.

Eventually the physical supply will run so low that short sellers won’t be able to deliver on their contracts and shortages will develop causing prices to skyrocket.

More manipulation methods:

• Silver leasing – When a silver producer borrows silver from a supplier and promises to return it in the future and then sells the silver to a buyer. The problem is the loans are never really paid back. They are rolled over to more loans. These leases create more phantom supply with nothing really backing them.
• Silver certificates- Certificates issued representing real stored silver when there is no real silver. Companies take clients money and invest in interest free while they hold their silver accounts.
• ETFs – (GLD & SLV) Exchange traded funds that are supposed to represent physical silver and gold but many think they don’t actually have the full supply the paper represents.

Source: Mike Maloney