The Accidental End to Silver Price Manipulation

It should be clear now to most precious metals observers that gold and silver price manipulation is just as common to the metals as it is to every other asset class. And equally evident should be the realization that resolution will not come from organized efforts. Be it regulation or legal class action, market forces will more than likely assert themselves.

With silver (and gold to less of a degree), it’s strictly “look the other way” from a regulatory stand point. The greater market and public don’t seem to care, and are not at all aware that they should.

Those who see it clearly are tiny compared to the rest of the potential observers. They are smaller even in the broader “trading class”, who has a tendency towards precious metals. They access information biases each of us toward the trading class, making their influence significant. Unfortunately for the professional trader, accepting that manipulation is a dominant force runs counter to their philosophy and business methods.

The illegal commercial category positioning on the largest, most powerful and primary world price discovery exchange is both toxic and like coiled spring. It currently unfolds at a snails pace.

According to Ted Butler, the commercial net short position in silver was most 179.5 million ounces, meaning that JPMorgan holds about 55% of the Commercial net short position all by itself – and about 33% of the short position held by the eight largest traders on the short side combined.  This is a short-side corner by definition.

Ongoing rationalization is that despite the manipulation, there are still market forces unfolding that must be obeyed. That the invisible hand still works, and this may be true. But the implication is clearly meant as a rationalization and not the bolder counter-reaction that you and I are embarked on (in however large, small of a position we take).

Government and markets will always enmesh despite better intentions, and the balance cycles in terms of intensity and density. Currently, private sector is uneven in terms of its economic capacity. The largest entities are too big to fail and therefore “risk immune”. As a result, they are short term focused and reckless.

To bring justice for the precious metals investors would mean sacrifices to the status quo to the point of failure. This is in large part because of the massive expansion of the financial sector, including the corporatization of giant investment banks; we have enabled a system to flourish without responsibility of real skin in the game.

Silver and gold lie at the center of this. For, once the last vestige of backing was removed from currencies; this cancer was allowed to flourish. To bring in the cure at this point would risk destroying everything from the derivatives complex on the outside all the way to the beating heart of what is left of the economy. The destruction would be widespread and only history would be able to judge the heroic efforts of the movement that ended it.

Surely in real-time ending the misunderstood and framed act as a criminal ploy – a terrorist act, no less. And sadly, when market forces finally converge to resolve this, someone will surely take the fall. Perhaps we are seeing this already as a wave of suicide spreads through the banking class.

In the meantime, nothing has changed fundamentally, nor has anything much been altered from a trading or price action standpoint. Prices “respond” the way they always do, predictably and tethered to commentary and painted for sentiment.

More and more awaken to this each day. We see it reflected in investment demand, coins and jewelry – representing both a conscious as well as a less observable market shift.

For now, we just keep going with the flow and preparing for the storm the best we can.

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