# the silver market



## jrmycooke (Jan 22, 2012)

I would like to ask a rather broad question and please do not mis construe this as solicitation for financial advice.
I just finished reading another investment package that came in the mail today and am still left wondering, why does silver behave the way it does ( financially ) in relationship to the other groups of metals it is traded right next to?
The data that I have been presented with shows me a small but consistent rise over the past decade ( with the exception of November) and an inventory where our supply just meets the demand. It never seems to follow the other precious metals trends. Maybe because I just see two numbers and a decimal point and not hundreds or thousands. I often wonder what would the market be like if digital photography hadn't been developed.
Could someone tell me why silver appears to never really have taken off?


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## patnor1011 (Jan 22, 2012)

It is because of price manipulation.


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## Geo (Jan 22, 2012)

actually, silver tends to be a better investment because it doesn't see the dramatic ups and downs as, lets say gold, does. and too the profit margins are much higher for silver than it is for gold.silver trades are solid because the market value tends to increase steadily giving investors time to recoup investments made in other markets that arent doing so well. i can remember selling sterling for $4 and ounce thinking that was a high value, about twenty years ago.if i had kept what i sold back then, my $2,000 would now be worth about $16,000.


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## element47 (Jan 23, 2012)

Without saying THEY'RE WRONG and I'M RIGHT I disagree with both prior posts. I've been collecting silver since 1965 and buying it in earnest since 2001. I am NOT buying much at these levels, but, since the hundreds of pounds of it it I own at about $13 and thus I have massive price protection, I am rarely hesitant about buying small lots as the opportunity arises. 

Silver is an *industrial* metal. As a commodity, it is second only to crude oil in the number of uses it has. It is NOT a monetary metal but many people WANT it to be so or believe it SHOULD be so and you or I can have an opinion either way on this but for the moment, the true truth is that it is NOT, at present, a monetary metal as is (sort of) gold. As an industrial metal, and furthermore considering the fact that virtually all silver is mined alongside, eg; as a co-product with zinc and copper, it is more aligned with the market stance of industrial metals. Witness the current pricing of Pt, which is highly correlated to auto production as in cat converters. It is very, very rare to see the price of Pt below that of gold. Pt is far more rare than gold, perhaps 10x as rare, and far more irritating to extract than gold. So...why is it cheaper than gold...~~$150 (current spread) is about the widest I can recall, btw.

Silver, as part of its DNA, is capable of VASTLY more volatility (on a pctage basis) than gold. It can rip your head off if you trade futures. As well, if you look at the period from 2001-2006, it took agonizingly loooooooong periods of time to creep up in price. From $5 to $6, from $6 to $7, from $7 to $8....these moves all took over a year. I remember very well the early 2000's...12 cents was a giant move, maybe 3x a year. 7 cents was a biggish move. Normal was a 2-3 cent daily move. Silver spent 1/3rd of 2008 under $10 and did not really leave $10 behind until 2009. Thus, IMHO, silver, as much as I like it and think it has a nice future, is somewhat in rarefied territory up here over $30. In my opinion, silver has to prove it can maintain these price levels, and it could take several years of it being over $30 to show it can do so. That is, if history is a guide to its price behavior over medium-term periods. 

I believe that what is affecting silver the most is the much larger pool of investors and speculators in the market, now worldwide (not just the US, as it used to be) and to a small extent, manipulation. Know too that miners are constantly selling silver forward to create current income (to pay bills) out of current production. This imposes a short bias to the market, versus stocks, which in general have a long bias. There is at virtually all times over the past 30 years much more short than long interest in the silver market. For many years, when interest rates were in the 5-6% range, silver could be borrowed (from a bullion bank) for 1.5%. Thus the JP Morgans of the world would borrow silver, sell it, then invest the proceeds in stuff they controlled and earn a 10-15% (or more) ROI. This alos exacerbated the short interest in the market, which in the 2000's, was overwhelmingly massive. This is where much of the "manipulation' talk comes from. In order to profitably cover their short, JPM would want the price of silver to FALL, so they could buy silver, and pay back their very large borrows. Is there manipulation today? Sure, as there is in every market. Whether is a black conspiracy is going a little farther than I would go. People point to the eight margin raises that smoked silver when it fell from $50. Yes, the executives at the CME very much tend to be shorts, but those margin raises were in line with CME practice on other commods. (Please do not think I am defending the CME, they are crooks, as revealed by this MF Global scandal, which is beyond shocking) But nobody makes money screaming and yelling about perceived injustices. You wanna play, you have to accept the corruption of the game. 

Sometimes, silver appears to trade in sympathy with gold. Other times, it does not. Lately, say over the last 2-3 months, we have seen a flight OUT of the Euro, which makes the dollar look STRONG, which depresses the price of silver and gold and all other commodities that trade in USDs. I guess Europe has solved all its' problems [NOT] but for the moment, the same effect that has been goosing US stocks for the past couple of WEEKS has been goosing gold & silver (and copper!) prices. I think what I am saying is that it is wrong to trade silver like it is gold. One has to also look at the "non-glorious" copper market...which of late, has recovered DRAMATICALLY from threatening sub-$3 back to $3.70. (On a pct basis, that is a BIG move) 

Like all commodities, they get into bubbles and at times are subject to VIOLENT collapse in price. If you like commods, that's fine, but you better be prepared to take a 20% price hit at almost any minute.


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## jrmycooke (Jan 23, 2012)

Thank you for that brief but very informative reply Element. 
Everything that I had read yesterday was just confirmed by you. Jp Morgan and the shorts, manipulation etc etc. I was sent the Silver Lining by James Cook, and while it contained great facts, it was perhaps the most bigoted financial prospectus I have ever read.

They're data and research is telling my that there are more paper notes against silver than there is silver available , above and below ground. Furthermore, they continue to say that there is no more readily accessible surface silver and that there is more gold stock than silver, above and below ground.

For me to really do my homework, where can I find un biased information so that I may come to my own conclusion?


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## goldsilverpro (Jan 23, 2012)

Excellent, element47!


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## element47 (Jan 23, 2012)

Thank you, GSP!

I think the one thing that must be realized by "fans" of silver is this, and all the things I said in my prior post are things I've read & researched in tens of other places, but:

*If you agree that silver that is an industrial metal, then it follows that the biggest users of physical silver want the price to FALL. *

Oh sure, the miners want higher prices, but they MUST sell forward in the futures market in order to stay current on their bills. As I said, silver is co-mined with copper and zinc, and there are VERY FEW pure silver mines. I think there is exactly ONE in the US, and it is a tiny one. *Most miners treat the silver they mine as almost a freebie.* Sure they would like higher prices. But it is more important that they get 7 cents more per pound for their copper when they mine hundreds of thousands of tons of copper, than it is for them to get a DOLLAR more per silver ounce when they mine 30,000 ounces. They do NOT mine enough silver to keep their doors open even if silver goes a fair amount higher...UNLESS they are selling their copper for good dollars. Forward sales (the equivalent of covered calls in stock trading) exert a dominant short interest in the market when executed to the extent that all those miners collectively do.


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## element47 (Jan 31, 2012)

Here are three recent silver articles that I feel encapsulate most of all that can be or need be said about silver. 

http://seekingalpha.com/article/322807-the-silver-singularity-is-near?source=yahoo

http://seekingalpha.com/article/321194-the-remarkable-rise-in-the-price-of-silver?source=yahoo 

http://libertyinsight.com/2010/12/15/the-top-10-reasons-silver-will-soar/ 

The last one is kind of a silverbug manifesto but does a decent job of gathering all the poop in one place.


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## jurekk12 (Oct 27, 2012)

Man-is the story of investments -
monetary history and big politics -
actually gold and silver-bimetallism -
International Conference - and a great loss
Silverman - generally can be a dangerous topic -
because it is and was - big politic !!!

Fed-and many bankers will be very angry for you 

best regard's

jurek

ps-Silvermen lost the presidential election in the U.S. in April of 1900 years -but the forces are playing the same despite the passage of time ex -BIS - and the new Basel banking law -....So ...


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