Will The Real Silver Commercials Stand Up?

September 12, 2014 07:45 AM

One of the more persistent flaws in the world's most important price discovery mechanism comes down to a simple question.

How did it come to pass that banks were given access to the commercial category of traders?

It's a given that the market is rigged to high heaven. And it’s completely obvious by now how it is accomplished. They only folks left in denial about it have a direct incentive for ignoring it - usually an obvious one.

The nature of the players should tell one all they really need to know about price discovery and a system that is corrupt through to the core. They have 24/7 access to a paper market that is a gamblers den, and a faint shadow of that which it is purported to represent: fair price discovery.

What you have in the silver market is an extreme continuation of a policy from long ago. The commercials that operate these massive illegal and naked short positions are simply an extension of the users, the original CBOT board members whose positions were threatened by the Hunts.

Of course, the Hunts were easy scapegoats. The users were protecting themselves long before the Hunts. The users have been around since the days before silver was officially demonetized.

By extension, they opened the avenue for big finance.

The users could now operate in the background, while financial conglomerates could do what all giant trusts strive to accomplish - dominate with deep pockets, tentacles spread everywhere. Completely above the law by sheer size and political revolving door connection.

Meet the Silver Users

It's interesting to take a look at who the silver users are today.

"The Silver Users Association is a non-profit organization that was established in 1947 to represent the interests of companies that make, sell and distribute products and services in which silver is an essential component".

And you can be sure that their primary interest is in not seeing the price of silver rise to meet its natural price equilibrium based on real, physical supply and demand.

"The Association's members employ more than 200,000 workers and processes 80% of all silver used in the United States "

That sounds quietly dominating, to say the least.

"Members include representatives from photographic, electronic, silverware, mirror and jewelry industries, producers of semi-fabricated and industrial products, and trading and service organizations responding to member needs."

The mission of the Silver Users Association is to:

"Inform members, government and the public on all facets of the silver market in a timely manner;"

Except that they really don't. Their website still has agenda corresponding to the lead up to the ishares silver ETF (SLV). They were officially aligned against its establishment because it was assumed that it would impact the price, i.e., make it go up in price.

"Maintain liaison with U.S. Government Executive Departments and independent agencies responsible for silver market oversight;"

Take a look at the definition of liaison:

Li•ai•son: Communication or cooperation that facilitates a close working relationship between people or organizations. "The head porter works in close liaison with the reception office.

There are probably no more independent agencies at this point. Regulatory capture has full infested any chance of fair market oversight.

“Serve as industry spokesperson for accurate silver market information;”

Yes, everything leading up to and including fair price discovery. Or perhaps an accurate accounting for coin or retail investment demand.

“Monitor domestic and international silver activity;”

Perhaps they are the only ones outside of Ted Butler who have noticed the absolute frantic and gargantuan in and out movement of physical silver between COMEX warehouses - unique only to silver and no other commodity.

“The purpose of these activities is to ensure that the silver market participants receive accurate information and, thereby, contribute to orderly trading conditions within the silver market.”

This is the Orwellian definition of orderly chaos because if the shorts were to cover in a hurry the market would go ’no bid’ a lot faster than a CME official could say force majeur.

A few weeks ago, I woke up to the house shaking. It was the first significant earthquake we've had in many years. I waited for it to stop.

It was fascinating. The sounds of the foundation sliding, the house rolling and creaking like a wooden ship at sea.

Before it was over, I found my self getting up out of bed - to find the kids. They slept through it. But I also ran through the scenarios. Our plan. Our supplies. The survival mindset kicked in.

I felt calm.

It is inevitable. And most people walk around as if it could never happen. People are quick to criticize prepping. As if it may kharmically induce the outcome. And that, dear reader, perfectly condenses most people's understanding of wealth and money.

Most people walk in this world as if it was mostly run by magic. 

The silver users still maintain their ghost of an influence. Through rogue investment banks, they wield power over the price of silver. They've created an accident waiting to happen. An accident very much tied in to financial system.

It all boils down to the fact that precious metals should be a risk trade at best. Not a bet on a short time rise or fall.

Price predictions are worthless, not only because the short-term is so impossibly, overtly rigged, but because it is rigged from a point so far detached from any semblance of reality.

All the paper in the world cannot withstand the randomness of Mother Nature, no matter how fancy the programs become at calculating long tales.

The earth will shake at some point.

About the 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 guidance for precious metals investors.