When Silver Shortages Reach The Mainstream

Many observers have realized that the price of silver will rise dramatically at some point because the amount of paper silver is many times the amount of physical silver. When this fact is even partially acknowledged by the mainstream, silver will probably move much higher.

Furthermore, silver has historically been a real money substitute for paper fiat currency. The governments of the world cannot afford to allow silver’s price to rise on the perception that people are losing confidence in their country’s paper fiat currency.

Manipulation Has Contributed to Physical Silver Shortages

The price of silver has been kept in check by via the management of a profitable and decades-long net short futures position held by the market’s largest banking players, who have allegedly been acting as agents for the controllers of money.

Of course, if these controllers selling silver make a futures market trading loss, they only have to print more paper money to pay for it, since the seller of a futures contract controls whether or not physical delivery occurs.

Lower paper silver prices also allow them to pick up cheap physical silver from the unsuspecting public that still typically remains unaware of the futures market manipulation.

Chronic Shorts Unwinding

That these illegal and manipulative short positions currently appear to be unwinding as public awareness and even official scrutiny rises has now become widely accepted. Perhaps this is a visible response to the CFTC’s ongoing and largely ineffective five year investigation into silver futures price manipulation.

The revelation that J.P. Morgan Chase and Goldman Sachs are basically exiting commodities also seems timely. Both of these banks are members and primary dealers for the U.S. Central Bank — the privately owned Federal Reserve Bank. JPM and Goldman are essentially acting as fronts for the Fed’s market presence and therefore are one and the same.

While the Fed is neither fully federal nor a reserve, like its name would imply, its independence seems more and more at risk as the need for a buyer of last resort for U.S. government debt is growing. It now seems almost inevitable that the need to prop up the ailing Treasury market will be 100% once the bond market really begins to fall.

Physical Supply and Demand Factors

Still, what if the big players agreed to look the other way and actually allow silver’s price to rise because of an acknowledged industrial shortage? This sort of reasoning reduces the risk to their funny money fiat currency system. The price rise could be framed as simply being due to an increase in volatility, or perhaps more negatively portrayed in the media as speculator driven.

The mainstream has never acknowledged silver’s steady investment demand, and always seems quick to parrot questionable "surveys" that count coin demand as surplus. Furthermore, the bullion banks seem to desperately need gold bullion, if the progressively negative GOFO rates the gold market has recently seen are any indication. Negative GOFO rates are a relatively rare occurrence that means the bullion banks will pay physical gold holders to lease their bullion and are indicative of a physical gold shortage.

Given the recent widening of the gold to silver ratio, silver could readily outperform gold this year before garnering too much attention. This could be the mainstream’s justification for a rise in silver over coming in months, especially since silver’s price has already fallen considerably along with the quantitative easing taper-induced free fall in equities.

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