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Silver Price Management

by Turd Ferguson, TF Metals Report:

If the entire world only produces 880,000,000 ounces of silver per year…and if 75% of that silver is consumed through the production of cell phones, solar panels and other items…then how do The Banks manage price off of the remaining 220,000,000 ounces? The answer: Alchemy.

Look, you likely already know how The Bullion Banks alchemize gold in order to control price. After the failure of the US to manage price in the 1950s and the failure of The London Gold Pool in the 1960s, the alchemy of paper/digital “gold” was formalized with the creation of Comex gold futures in 1975. If you need a refresher, perhaps you should take a moment and read this: https://www.tfmetalsreport.com/blog/8075/42-years-fractional-reserve-alchemy

Today, we want to focus upon how The Banks and The Comex alchemize silver. Like the alchemy of gold, the alchemy of paper/digital silver is also done to manage and control price. However, where the gold price is managed in order to prop up and sustain confidence in the fiat currency system, the alchemy of silver is primarily done for profit. And which parties profit?

The Banks which manage, manipulate and control price through the brute force of sheer market domination.
Manufacturers who use silver as a key input in their products. For examples, check the list found here: http://www.silverusersassociation.org

If someone is profiting in this process, then it follows that someone is also losing. And who are the losers?

Mining companies, their shareholders and their employees.
Any and all investors and traders of physical silver.

So, with all that in mind, let’s take a look at how The Banks alchemize “silver” for investment demand.

As with just about anything, and as we wrote here (https://www.tfmetalsreport.com/blog/8252/econ-101-silver-market-manipulation), much of this can be explained through the lessons of Econ 101. Where supply meets demand is where you discover price. If demand outstrips supply, price is forced to rise. Conversely, if supply increases faster than demand, prices fall.

Applying this lesson to silver…If industrial production annually consumes about 3/4 of mine supply, leaving just 220,000,000 ounces per year for investment, then the shifting demand for that 220,000,000 ounces would largely determine price. In years where investment demand rose, leading to a shortfall in supply, prices would rise. In years where investment demand fell, leading to a surplus in supply, prices would fall.

And now we’ve come to the crux of the matter. How do Banks manage price for themselves and the manufacturers when the supply of actual, physical silver is so incredibly tight? The answer, again, is alchemy. The Banks create all forms of virtual/paper “silver” and then convince the investment world that it’s a proxy for the real thing. Whether through the creation of shares in the SLV and other ETFs or the creation of futures contracts on The Comex , these forms of digital silver take the place of actual, physical silver and are used to meet the investment demand that exceeds the supply of real, physical silver.

For today, let’s just focus upon how The Comex functions in this process. Again, in numbers that are approximations, the world annually produces about 880,000,000 ounces of physical silver per year. This leaves only about 220,000,000 ounces to satisfy investment demand after industrial demands consume up to 660,000,000 ounces per year. How do The Banks on The Comex manage this investment demand? Through the unfettered creation of paper derivative contracts which are fed to speculators and traders who seek silver “exposure” through investment.

Read More @ TFMetalsReport.com

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