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Silver Price Manipulation: Setting the Record Straight

Unfortunately, the fact that the prices of most goods and services are based on their cost of production tends to be overlooked by the majority of the analyst community… whether they are from the mainstream or alternative media. I can assure you that if you consider the price of a standard pair of jeans (not a high-end name), it would be based on the entire cost structure from beginning to end, when it finally shows up on the retail shelf.

Thus, the overwhelming majority of goods and services, including precious metals, are not overvalued, but this is not true for the majority of stocks, bonds, and real estate.  These supposed assets are extremely overvalued.  Which means, this is where the greatest degree of market intervention is directed.

The WHITE LINE represents the silver price Pan American Silver received that year and the green, and red prices show the estimated profit or loss per ounce (Green = profit, RED = loss).  When the silver price shot up to an average of $35 in 2011, Pan American Silver enjoyed a healthy $9.02 profit per ounce. However, if we look at the majority of years, Pan American Silver made a profit or loss of about $1-$1.50 an ounce.

So, should we expect Pan American Silver to earn $9-$10 profits per ounce a year for an extended period??  That depends on how the market is valuing silver. Currently, and for quite a while, silver has been valued based on its COST OF PRODUCTION.  And we can clearly see this shown in the long-term silver chart:

So, the silver price chart represents the REALITY taking place in the silver industry if we look at the metal as a commodity, based on the cost of production.  However, silver is more than just a commodity used to make Solar Panels and I-Phones. Silver is also a store of value and money.  But, the market is not valuing gold or silver as money currently, BUT IT WILL.

Setting The Record Straight On Silver Manipulation

Now, it would be one thing if the bullion banks and their shrewd precious metals traders were pushing silver down to $8-$10 an ounce. That would likely bankrupt a large percentage of the primary silver mining industry.  However, we have not seen that.

Let’s start with silver.  A silver contract on the COMEX is for 5,000 oz.  With 225 million in volume in August, at $18 an ounce, the notional trading volume was $20.2 trillion:

Please understand, I am just making a simple calculation here and with the other charts.  No need to get too sophisticated.  The silver trading volume in the chart above may include the smaller 1,000 oz Mini, but I am not sure.  So, in August when silver shot up more than $2.00, the notional trading volume was a whopping $20.2 trillion.  Sounds insane… ah?  Well, let’s look at copper. If we use peak copper volume back in 2018, of 250 million contracts, it traded $17.5 trillion in notional value:

The market traded an astonishing $101.5 trillion in notional value in the WTIC oil that month. If we thought silver trading 225 million in monthly volume and copper at 250 million, well, WTIC Oil blowing through 1.75 billion contracts in a month… that TAKES THE CAKE.

I just wanted to point out that the majority of the market is experiencing a tremendous amount of trading.  And let’s not forget, the NASDAQ Index is trading over 40 billion in volume every month. Thus, the NASDAQ’s monthly trading volume is more than 10 TIMES the peak trading monthly volume of Silver, Copper, WTIC Oil, and Gold combined.

The key to understanding when the Fed and central banks lose control of manipulating the markets, we need to pay attention to what is taking place in the Oil Industry, especially the U.S. Shale Oil Industry.  Why? How much economic activity would be generated if the OIL TAP was suddenly shut off??  How would that impact the trillions in Financial Paper Assets???

And how will the Fed and central banks lose control of the market?  That’s right… OIL.  While the central banks can print money, they can’t print barrels of oil. Take a good look at Venezuela, and you will see how money printing works as oil production plummets… the result is HYPERINFLATION on steroids.

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