• Gold: 1,379.88 24.68
  • Silver: 15.24 0.12
  • Euro: 1.127 0.004
  • USDX: 97.117 -0.518
  • Oil: 54.69 0.26

Precious Metals Paper Sellers Conveniently Trapped

July 2, 2012 - 3:11pm

The large and mostly naked holders of short positions in precious metals are conveniently trapped, especially in the silver market. Covering in any meaningful way would blow the U.S. Dollar's cover.

The Dollar’s increasingly serious valuation issues are also being ignored, but this may only last as long as the Euro continues to remain in the currency market’s spotlight as a target for selling pressure as Europe’s debt problems deepen.

Financial Repression

Financial repression was implemented after World War II to help melt away the war’s oppressive debt burden. It consisted of maintaining the following conditions:

1. A moderate rate of inflation

2. Some amount of growth

3. A compelling situation for large banks to buy debt

Nevertheless, the extra, and unmentionable, fourth ingredient to the official policy of financial repression is modern day coin clipping. Since physical silver has long been absent from circulating currency, the next best thing is to bury its value in paper.

Basically, large banks have been allowed to enjoy commercial status in futures markets, which has allowed giant short positions to evolve. To be fair, this has occurred in all commodities, although the silver and gold futures markets typically see a far higher concentration of sellers.

This questionable access allowed obvious “not for profit” selling, as well as coordinated and manipulative selling, according to whistleblower Andrew Maguire. The result has helped keep precious metal prices low and sentiment poor to confuse the investing public for years.

Pretending That Regulators are on the Beat

In the meantime, not only have those big banks made easy profits, but they also enjoy the ability to buy, control and build long positions in the physical metals market without having any underlying commercial interest like miners and industrial users. They do this by inducing weak specs to sell on the downside momentum they induce.

The futures markets make this manipulation convenient by legitimizing the banks’ participation, which typically characterize their market manipulation as hedging customer business or over the counter derivative products.

As a facilitator of this manipulative process, government regulators have turned a blind eye since the process keeps metals and other commodity prices low, thereby allowing some political leg-room for more printing of paper money.

The mainstream media would not dare mention market suppression, since the word conspiracy seems synonymous with lunacy or fringe theories at best. Also convenient is the fact that silver has become of substantial strategic importance in modern times as an industrial commodity.

Despite poor economic indicators overall, perhaps this manipulation serves to support a spurious “hope” campaign that a return to better economic times is likely. For those that remain skeptical, physical silver continues to offer a safer haven than paper currency.


For more articles like this, and to stay updated on the most important economic, financial, political and market events related to silver and precious metals, visit www.silver-coin-investor.com

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About Dr. Jeffrey Lewis / Commentary Author

"In addition to running a busy medical practice, Dr. Jeffrey Lewis is the editor and publisher of Silver-Coin-Investor.com, where he provides practical information for precious metals investors".

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