Silver Prices When the
Traffic Lights are Blue Today
By Dr. Jeffrey Lewis
The view of the
silver market from ten thousand feet away shows what is really going on behind
the scenes. The manipulation of the market by deep pocket bullion banks with a
hugely concentrated combined naked short position has become increasingly
market spoofing practices that involve dropping their bids to give the
indication of a weak market and then quietly buying back their short positions
for a profit are well known.
Regulation Remains Ineffective
highly questionable practices, the more realistic silver traders and investors
also know that the CFTC’s purported investigation into the manipulation of the
silver market will never resolve successfully because the regulators have
already been captured by the manipulators.
Most silver market
observers — even some of the most influential and bullish members of the analyst
community — simply refuse to acknowledge this absolute key to understanding how
silver trades and is priced.
Effects and Explanations
So, what is the
observed effect on perception and the surreal world of market pricing that keeps
the price of precious metals artificially suppressed?
First of all, when
good economic data comes out, stocks tend to rise and precious metals typically
decline. The explanation for this reaction is asset rotation because a better
economy means there is less need among investors to own "safe haven" assets like
the precious metals.
bad economic data comes out, stocks tend to fall but precious metals also
decline. The apparent explanation for this is that a worsening economy means
more margin calls and greater cash needs that result in the liquidation of
precious metal holdings.
Then, when so-so
economic data is released, dividend stocks and bonds tend to go up, but precious
metal prices again drop. This is explained by the idea that precious metals do
not pay a dividend.
Easing Effects and Explanations
easing, or money printing as it is sometimes called, should ideally dilute the
value of a paper currency and therefore increase the value of commodities like
the precious metals when expressed in the paper currency.
more quantitative easing is announced, precious metal prices fall. This is
explained by investors forgoing owning the precious metals when stocks are now
expected to outperform. Another explanation is that a QE program signals that
deflation is coming, so there would be no need to own precious metals as an
On the other hand,
when no new QE appears to be forthcoming, precious metals also decline.
Supposedly, this happens because the paper currency’s value will not be further
diluted by more money printing.
prevalence of such explanations, it sometimes seems that silver simply cannot
win the game of perception. Nevertheless, what is really going on is that the
price of paper silver is being talked, explained and pushed down so that the
smart money can buy the physical metal at an artificially low price.
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