Once-upon-a-time, in 'never-never' land, there were two competing silver prices
Posted August 27th, 2008 by SIERRAHPBT
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Once-upon-a-time, in 'never-never' land, there were two competing silver prices
Peter Degraaf
Aug 27, 2008
These two silver prices were at loggerheads with each other. Every time the 'real' silver price began to rise, a 'paper' silver price would show up in large quantities and scare some of the holders of real silver to dump and run.
Silver miners and coin dealers with 'real silver' in inventory, instead of being organized, and using supply and demand to determine the price of silver, would look at a computer screen, check to see what 'paper silver' was doing and meekly accept that as the price at which to sell silver.
The Silver Users of America (SUA), is the only 'user cartel' in existence. (Cartels are usually comprised of suppliers - OPEC comes to mind). For years the SUA and their willing accomplices have been able to spook the people who deal in 'real silver' into coughing up silver at low prices, simply by dumping 'paper silver' onto the markets. While there are no manuals available detailing how they do this, we will have to make some assumptions based on observations regarding market action.
Here is my assumption: Assume that I am a member of the SUA, and it is in my interest to keep the price of silver as low as possible. Along with my fellow SUA members, I go about engaging half a dozen large bullion banks that are active in the futures markets. I mention to them that my fellow SUA members and I would like to cap a rally that has just driven silver to a new high. Would it be possible, I ask them, as soon as we see that buying is drying up because of resistance at this new price, for you and your fellow bankers to start selling a large number of futures contracts and options using 'paper silver'?
Let's pick a time when there are not too many people active in the marketplace, and volume has slowed right down.
My fellow SUA members and I will do the same, and as soon as we create some momentum, the hedge funds will dump their 'long' contracts and join us, since they like to chase a trend. Then, the small and large investors who have bought silver on margin will have to sell, and they will also become our helpmates.
By any chance, do any of you bankers have an inside track to any of the central banks? It would be very helpful if one or more central banker could raise the value of the US dollar at the same time as we start our selling campaign.
It would also be very helpful if you people used your influence with the governing body at the various futures exchanges to tell them that what we are doing is simply 'normal market behavior.'
If we all work together, then you and your fellow bankers will be able to buy back the contracts you sold high, at a lower price, and my fellow SUA members and I will be able to buy 'real silver' cheaply from the mining industry, since these people still have not figured out our game and have not yet banded together to form a suppliers cartel.
A funny thing happened last week. The SUA and its fellow travelers may have pushed 'paper silver' too low. Shortages in 'real silver' began to appear, and more and more people now are beginning to understand what is happening. My advice to those among you who think you are buying 'real silver' when you are trading 'paper silver' is this: Make sure you buy 'real silver' with the profits you make in 'paper silver', just in case it turns out there is a shortage of 'real silver' to back the 'paper silver.'
Featured is the daily silver chart. The blue arrows point to times when the silver price fell below the 200DMA (red line on the chart). Two years ago, at the seasonal low in September, price fell to 2% below the 200D. A year ago during the August seasonal low, price fell to 3.5% below the 200DMA. Last week during the presumed 2008 seasonal lows the price was pushed 37% below the 200D! Think of this as the sellers of 'paper silver' having pushed a beach ball well below the surface of the water in a pool. Think of how rapidly the beach ball can rise when it is released, then go buy some 'real silver', just as I have been doing.
Notice the RSI at the top of the chart is already turning positive, and the MACD at the bottom of the chart is also ready to turn up again.
The positive aspect that is impressive about the rise in today's silver price (Tuesday 08/26)), is the fact that the US dollar is also rising. In 2005, silver, gold and the US dollar all rose in tandem.
Therefore, a decoupling (separating the metals from the movements in the US dollar), would not be unique. The main driver for silver and gold is the fact that 'real interest rates' (T-bills less CPI) are currently negative. Whenever rates are negative, silver and gold usually rise, as money in bank accounts is punished.
This is 'real silver'. It does not fold, crumple or burn, and you cannot create it on a computer.
Peter Degraaf
email: itiswell@cogeco.net
About Peter Degraaf
I am an on-line stock trader with over 50 years of investing experience. I send a weekly Email alert to my subscribers. To benefit from a 60-day free trial, contact me at itiswell@cogeco.net or visit my website: www.pdegraaf.com.
Disclaimer: Please do your own due diligence. I am NOT responsible for your trading decisions.
321gold Ltd
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recent manipulation charted
This story has been posted before about the recent evidence of massive manipulations but this version has a nice chart. I love charts.
http://www.financialsense...
Last week, widely regarded silver analyst Ted Butler, reported on recent developments during the July 1 – August 5, 2008 time period in the precious metals complex [specifically, open-interest data in COMEX futures].
Butler’s work shows, as of July 1, 2008, two U.S. banks were short 6,199 contracts of COMEX silver (30,995,000 ounces). As of August 5, 2008, two U.S. banks were short 33,805 contracts of COMEX silver (169,025,000 ounces), an increase of more than five-fold. This is the largest such position by U.S. banks I can find in the data, ever. Between July 14 and August 15th, the price of COMEX silver declined from a peak high of $19.55 (basis September) to a low of $12.22 for a decline of 38%.
For gold, 3 U.S. banks held a short position of 7,787 contracts (778,700 ounces) in July, and 3 U.S. banks held a short position of 86,398 contracts (8,639,800 ounces) in August, an eleven-fold increase and coinciding with a gold price decline of more than $150 per ounce. As was the case with silver, this is the largest short position ever by US banks in the data listed on the CFTC’s site. This position was put on and resulted in massive market price collapse as our GLD gold-price proxy shows:
Good article...
Maybe some of the dummies will read this....
Another tale by someone with an agenda...
I have one agenda. Take money away from stupid traders so I can build a foundation from which to fight the crime of politics in America and starve the Federal Beast.
So this guy Degraaf, has been arounf 50 years. WOW! In 50 years I wonder if he ever looked at a bond chart. Because if he did he would have to sat that interest rates are poised to skyrocket.
Screw the Federal Reserve. The MARKET, where the real power (that never forgets) resides will correct the interest rates and fairly soon.
What will that do to silver prices? I'm not sure, especially since we have such a divergence between real silver and paper silver. But my guess is that the heavy hitters in silver will abandon the real commodity.
That's when you buy silver. When everyone else is looking the other way.
Disclaimer: I am not knocking silver! Nor do I knock the accumulation of silver. NO!
I'm bringing light and truth to the rest of the interest rate story. Take it to the bank...rates will rise with a vengence. And that will attract capital. Always has. Always will.
"Committed To The Eradication Of Poverty Among Patriots"
Daddy I agree, rates will
Daddy I agree, rates will rise like crazy! at the same time the fed will be printing money like crazy.. as Ron Paul said INFLATIONARY DEPRESSION! even thos the free market rates will go up the fed rates will stay low... very interesting times..
as for me and my home, we shall worship the LORD
silover went up when rates
silover went up when rates were high back in the late 70's.. but this time around I think it will be different.. silver will explode because the federal government does not have 3 billion ounces sitting in stock pile that they flooded the market with to bankrupt the Hunts! this will get interesting!
as for me and my home, we shall worship the LORD
If you look at the charts in the late 70's and early 80's....
Then you had T-Bond rates of interest rising with silver/gold....