Has The Silver Market Been Destroyed By Derivatives?

very interesting read...verifiable?

Here is an excellent website with knowledgeable people discussing the state of silver (and other precious metals) and the manipulation that is occurring daily in the markets.
http://www.tfmetalsreport.com/

Well said sel, couldn't agree more; keeping the job is certainly important, wish it was as easy as just saying it!

This has been going on for years.

Government regulators and big banks (namely JP Morgan Chase) have been complicit in this fraud and are still pulling the strings. They stand to lose too much.

As others have mentioned, that is a great post, SEL!

Nice read.

However, there are several aspects not addressed in that article.

First, ALL markets are always somewhere between overbought (too high) and oversold (too low). I don't care if you are talking about the silver market, the housing market, or even the 1975 Ford F150 market. They are always moving up and down between too high and too low.

Second, speculation, whether using derivatives or the physical assets, is ALWAYS a ZERO sum game. No one can buy anything unless someone else sells it. One always loses money and the other always makes money on the transaction. Sometimes the buyer loses and sometimes the seller loses. The ONLY sure winner is the broker, if used, who always gets a slice of the pie.

And third, derivatives decrease volatility of markets. Markets with few players have larger and faster price swings than markets with lots of players. Removing derivative markets reduces the number of players thereby increasing volatility and wild price swings.

As far as the silver market is concerned, anyone who knew the history of the silver market would have known months ago that silver would crash big time when it hit $49 per ounce. For those of you who don't remember the Hunt brothers, it may pay you to learn that history. Pay particular attention to the silver market and how it reacted.

Also note that MOST LIKELY we have not seen the end of the silver crash. Based on history we could easily see a crash from $39 today to $22 before the end of the year. Will it happen? No idea.

Personally, I am looking for a low in silver around October 24th at about $22 per ounce. If I am correct, I am loading up on silver.

Just like the depression, with different names for the characters.

Back then, the house of cards was caused by stock ownership. Not so much individuals owning stock, but corporations.

Rule #1: The best place to invest money should be your own business. This is true whether you're talking about reinvesting profits, or investing your savings as an employee. You have the skill and incentive to improve things, and should know more about your biz than any outsider.

Rule #2: If you think it's better to invest in another biz, then maybe you should be in the other biz. The year Meg cashed in $1 Billion in ebay stock, I pointed out that this was a huge red flag. ebay stock took a huge hit, and I don't think it's ever recovered.

If you expect your biz to be fantastically profitable, why would you put your money elsewhere, where you have no control over how the biz is run?

Back to the depression. The geniuses didn't need derivatives to screw things up royally, regular stock would work fine.

Biz A had a great year, and took their $100 million profit and bought shares of Biz B.

Biz B did well, too, and instead of putting the money back into what made them profitable, bought $120 million in Biz C.

You can see where I'm going with this alphabet soup. Everything's fine as long as biz stays good. When it starts to slow, Biz A needs money, so they sell their stock in Biz B, their most liquid asset.

This causes problems at B, so they sell their stock in C.

All the stocks crash. Why? Because everyone came to the pickpockets' convention with $300, went home with $300, and picked a half dozen pockets. The biggest asset that most biz had was partial ownership of another biz. When all the stocks crashed, their biz didn't have the money to invest in running their own biz.