Ted Butler (https://www.butlerresearch.com/) has posted a sample letter to the US Commodity Futures Trading Commission (CFTC) on- https://silverseek.com/article/time-act. Below is the info and sample letter that he posted. I urge all to do this and it has had some effect in the past when he has put out a call to do this, generating thousands of letters/comments/emails.
Ted Butler’s post:
Interest in silver and concerns about its price being artificially suppressed by excessive short selling are now at levels never seen before. While those concerns are well-founded, in my opinion, too often the remedy for what to do about it is less clear.
Since silver and silver futures trading is regulated by the US Commodity Futures Trading Commission (CFTC), it is the statutory first line of defense against market manipulation. Here’s something that will take only a few moments and has always worked in the past in assuring the agency will, at least, address the issue directly.
If you are concerned that the silver price is being artificially influenced by excessive and manipulative short selling, please email or send a copy of the enclosed letter to the CFTC. If you would like, substitute my name with your name, but please send it to the addresses of the Commissioners I’ve included.
For US citizens, please take an extra few minutes to send a copy to your local representative or senator, asking them to request the CFTC address this matter. I can further assure you that the agency will respond to every inquiry from every elected official who contacts it. Interestingly, this is one of the few completely non-partisan issues of the day, so politics shouldn’t determine whether you contact your elected representatives and senators.
Rostin Behnam
Acting Chairman
US Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st Street, NW
Washington, DC 20581
Dear Acting Chairman Behnam;
On Feb 1, you stated that the Commission was closely monitoring recent activity in the silver markets, concluding that the agency remains vigilant in surveilling these markets for fraud and manipulation.
As I am sure you are aware, a large segment of the investing public feels that the main source of an alleged fraud and manipulation of the silver market is the documented large concentrated short position in COMEX silver futures.
The Commission had found this issue to be significant enough to post public letters addressing the matter in May of both 2004 and 2008, but clearly the issue has not gone away and has, in fact, intensified. In terms of real world production, the concentrated short position in COMEX silver futures towers over the concentrated short positions in any other commodity, raising suspicions that it is this short position suppressing the price of silver.
More to the point, the Commission’s own Commitments of Traders report covering positions for the week ended Feb 2, clearly indicate that the 4 largest short sellers in COMEX silver futures added 6672 new short contracts (33.4 million oz), establishing a net short position of 65,262 contracts (326.3 million oz), their highest level in nearly a year, while the largest longs sharply reduced their long positions, further strongly suggesting any manipulation was on the part of the large shorts.
It is hard for a reasonable person to understand how the concentrated short position of only 4 traders can legitimately increase so sharply at a time of widespread evidence of tightness and even unavailability in the wholesale physical silver market. It would have been impossible for silver prices not to have risen much more than they did without this concentrated short selling.
Since it has been nearly 13 years since the Commission has last addressed the issue of the concentrated short position in COMEX silver futures, it would be in the public interest for the Commission to publicly address the matter at this time.
I would urge the Commission to explain how such a large short position by only 4 traders would not suppress the price of silver artificially, or as an alternative, move to order it reduced to levels comparable to other regulated commodities.
I have changed the name from Contest to Survey as I think that more accurately represents what this Contest/Survey is about. Whether it is a Contest or Survey, I would like to make it as statistically accurate and as non-bias as I know how. I ask everyone to please make your weekly EntryBEFORE looking at previous weeks results so as to not influence your entries. I think the more entries we get, the more accurate and interesting this Contest will be. Please SPREAD THE WORD!
I think the Results Table below is fairly self-explanatory. The dates under the Target Price are the average Target Date of the entries for the given week. The following column is the number of entries for the given Target Price.
Week End Date
Week #
$35 Target Date
# of Entries
2/13/2021
1
4/30/2021
30
2/20/2021
2
4/13/2021
20
2/27/2021
3
7/3/2021
13
3/6/2021
4
7/7/2021
5
3/13/2021
5
8/10/2021
3
3/20/2021
6
8/12/2021
3
Overall Average
—>
5/19/2021
74
Week 6
Week 6: Not many entries again and the projected $35 target date has crept up a little. I am going to do some promo on Reddit this week and see if we can get some more interest in this survey.
Week End Date
Week #
$35 Target Date
# of Entries
2/13/2021
1
4/30/2021
30
2/20/2021
2
4/13/2021
20
2/27/2021
3
7/3/2021
13
3/6/2021
4
7/7/2021
5
3/13/2021
5
8/10/2021
3
Overall Average
—>
5/16/2021
71
Week 5
Week 5: I did find an error in my calculations for Week 4 and have corrected that in this weeks results. I did not do any promoting this week on Reddit and only got 3 entries. I do appreciate the dedication on those entrants! I continue to think that this Survey will become much more popular and relevant once silver starts moving higher and/or hits $35/oz.
Week End Date
Week #
$35 Target Date
# of Entries
2/13/2021
1
4/30/2021
30
2/20/2021
2
4/13/2021
20
2/27/2021
3
7/3/2021
13
3/6/2021
4
5/11/2021
5
Overall Average
—>
5/8/2021
68
Week 4
Week 4: The number of participants has fallen again and maybe I’m not “pushing” it enough and/or people are losing interest. I encourage all that are reading this to continue participating in the Survey. As I said last week- I am hoping that the survey comes close to predicting $35 and that should gain some momentum for the next target price.
Week End Date
Week #
$35 Target Date
# of Entries
2/13/2021
1
4/30/2021
30
2/20/2021
2
4/13/2021
20
2/27/2021
3
7/3/2021
13
Week 3 Overall Average
—>
5/8/2021
63
Week 3
Week 3: The number of participants has fallen some each week. When I began this survey I was hoping to get 50+ entries per week, with the number increasing each week. That has not happened. I urge ALL who have entered to enter EACH week. There have only been a few that have entered more than once. We won’t know how well this “silver crowd wisdom” is working until silver does hit $35/oz and then how close we were in predicting. This week the Target Date prediction is further out than last week.
Week End Date
Week #
$35 (USD) Target Date
# of Entries
2/13/2021
1
4/30/2021
30
2/20/2021
2
4/13/2021
20
Week 2 Overall Average –>
4/23/2021
50
Week 2
Week 2: This week I have collected the entries for the $35 Target Price only. I have changed the name from Contest to Survey and collected entries directly from Reddit and Twitter. Of course you can also use the easy to use Entry Form. I wanted to make the Survey easier to participate in and understand. So, now you can just reply to one of my Silver Price Survey Reddit or Twitter posts with a date that you predict silver will hit $35. When $35 is hit then the Survey will work on predicting $50. Please make a note on your calendar to participate in this Survey weekly (Sun – Sat) and tell your friends and family about it. I think the more entries, the more accurate the date projections will be.
Week 1: This is the first week of this Contest and I am excited about the results. Hopefully, we will have more entries as time goes on, but I think this is a good start and I find the results interesting. You may be wondering about the disparity in the number of entries between the $35 and other 2 Target Prices. A couple of my posts about this Contest on Reddit were not clear and I had several people just reply to my post and they made guesses for the $35 target only. Where it was clear what they were guessing I did include their guesses in the Week 1 tally.
RESULTS – Please make an ENTRY for the current week (Sun – Sat) BEFORE looking at previous SPS Results, so as not to influence you guesses.
Information
The purpose of the Silver Price Survey is to get some “silver crowd” wisdom to predict the Target Date when silver will close at or above a Target Price- currently $35oz. (USD). Once the price exceeds $35 we will predict the Target Date for $50 then $100. Mainly, I think this will be interesting, but I also think that the crowd wisdom may have some insight into the future price movements of silver. Silver going above each of these Target Prices will be a big psychological boost. You can make a new guess each week. You will be predicting the Target Date when the spot price of silver closes at or above the Target Price at the 5pm EST close per Kitco.
You have probably have read or heard of stories of ‘crowd wisdom”. Here is a link to one that I found:
The only reward at this point to the best guesses in this survey will be bragging rights. The winners will be the top three who had the least number of trading days between their Target Date guess and the actual Target Date. Whoever ends up with the fewest days for one of their guesses (either before or after the Target Date) will win first. A tiebreaker will be whoever posted their entry on the earliest date. I personally may enter Target Dates once per week, but I will not compete for the recognition.
I think this will be fun and interesting. I am thinking that I will post the average Target Dates calculated from the previous week’s entries towards the end of the following week. I don’t want those posted Target Dates to influence people’s guesses, but I do want to put out that info in the interest of reflecting the current silver price sentiment. Put a reminder on your calendar to place an entry each week! Let me know what you think about this survey and if you have ideas on how to improve it. Spread the word!
LATEST INFO& RESULTS
If you ask for a copy of your responses on the Entry Form to be sent to you, the Dates in the email are not formatted right. I have requested Google to look into this.
Please remember to enter weekly (Sun – Sat- midnight EST) as I think the more weeks and the more entries will mean the date predictions will be more accurate.
I have now changed the name of this from Contest to Survey The survey will also only have entries for one Target Price at a time- currently $35/oz. Whether it is a Contest or Survey, I would like to make it as statistically accurate and as non-bias as I know how. I ask everyone to please make your weekly EntryBEFORE looking at previous weeks results so as to not influence your entries. I think the more entries we get, the more accurate and interesting this Contest will be. Please SPREAD THE WORD!
To participate in this survey complete the simple ENTRY FORM OR you can just reply to a Twitter or Reddit post about this Survey with your predicted date for silver to close at or above $35/oz.
I will not in any way distribute or sell your email address or username. I will not use your email address or username, except to notify you if you have one of the top 3 entries. If you are one of the top three entries for a Target Price, you will have the option of whether or not you want your email address or username posted on the website.
*Only the first entry of a Target Date you make each week (Sunday – Saturday) will be used in this survey. Do not use multiple email addresses or usernames.
Your Target Date entries can be different each week based on your current best perdiction.
The date you are trying to predict will be the date that the spot silver price closes at or above the Target Price (USD) per ounce at the 5pm EST close per Kitco silver spot price.
The winners will be determined after the Target Price is hit, even if the silver price should go back below the Target Price on subsequent closings.
*Your Target Date entry cannot be any further out or closer than the following limit for $35/oz. – up to 2 years out; OR less than 3 trading days from the entry date.
Individual entries or names will not be made public. The average Target Dates for each Target Price for all entries may be publicized.
The top 3 winners will be determined by the number of daytime trading days (not counting weekends and holidays) between their guessed Target Date and the actual Target Date either before or after the actual Target Date. If more than one entry has the same number of trading days from the Target Date then the tiebreaker will be which entry was entered on the earlier date.
Rules are subject to change and any changes will be announced and posted on TheSilverStory.com website.
*Reasons for Rule
3* I don’t want entrants making multiple entries that might skew the average.
7* I don’t want entrants to skew the average by entering dates that are 10 or 20 years in the future. I think the minimum of at least 3 days out will make the survey more fair. Any entry date beyond these limits will be entered with a Target Date of the stated date limit.
Please send an email to me at [email protected] with any questions, comments or suggestions about this survey.
Available Silver Production for Investment (ASPI) means (to me anyway) the silver production/supply, mining and recycling, less the amount of silver that gets “consumed” by industry and fabrication. In the page Supply & Demand, I present that the average total silver production for the last 9 years has been about 1000 Moz. (million ounces or a billion ounces) per year and an average of 740 Moz/year is consumed in industry and fabrication. Yes, some of that will come back as recycling, but only an average of less than 20% and the recycling will show up in production in subsequent years. That leaves only about 260Moz./year available for investment demand and that amount is what I am calling ASPI If there is a better or more standard name for ASPI please let me know.
I doubt I am the only one who recognizes the importance of breaking out the ASPI, but I haven’t seen much talk about it by other silver commentators, at least not in specific terms. So,75% of silver production is consumed and this leaves only 25% for investment demand- ASPI. One example of how the investment demand for silver can affect the price happened earlier this year between mid-March and the end of July. During those months 330 Moz. of physical silver flowed into the world’s silver Exchange Traded Funds (ETFs). So, in 4.5 months there was an average of 73 Moz./month of silver deposited into the ETFs, which is more than 50 Moz./month over the ASPI of 22 Moz./mo. The price of silver during that time went from $12.00/oz. to $24.60/oz. Was it rising prices that caused the large silver deposits in ETFs or the large deposits causing prices to rise? It seems to me that the two are intertwined, especially given the tightness of ASPI. Carl Loeb is attributed as saying that SLV (the largest silver ETF) will be the “Death Star” of silver- gobbling up all silver in sight.
Why is ASPI so important? In most commodities, the commodity is produced, then sold, then consumed. Think crops, most other metals, energy, livestock, etc. Gold is somewhat unique in that it is mostly an investment metal; very little gold is consumed. Silver is both consumed and bought and stored for investment. (Platinum is also dual a purpose precious metal, but I’ll let someone else speak about platinum as I don’t know the fundamentals.) In effect, the two main reasons to purchase silver – fabrication and investment – are competing with each other. The users of silver would probably be happier if they didn’t have to compete with investment demand, but they are NOT going to be denied- they need the silver for their products and businesses.
Some may think, “Well if the silver price goes up because of investment demand, then the fabrication demand will go down because of the higher price and so the price will equalize”. I don’t think that will happen, at least not to a significant degree. Much fabrication demand is for small amounts of silver for a product. From my research I estimate that there is about .5 – 1 ounce of silver in a car. Are car makers going to make fewer cars if silver price doubles and they have to spend an extra $12 – $24 per car? Electronics in general – smartphones, computers, all manner of devices – use a few grams of silver per unit, so if the price of silver increases are the manufactures going to use less silver? A typical Apple iPhone uses .34g of silver per phone. At $25/oz. that is only 27 cents of silver per phone. Is Apple going to make or sell fewer phones if they have to spend $1 more insilver for each phone? Over time the silver users may come up with alternative materials or methods of using less silver, but in the short term they are going to be much more concerned with getting sufficient quantities of silver, at whatever price. Then there is solar Photovoltaics (PV). Solar currently uses about 100 Moz./year of silver and is anticipated to more than double over the next few years while from what I have read the amount of silver used per watt is going down. In a recent article Ted Butler (https://www.butlerresearch.com) had a link to a very informative article on solar PV- https://ourworldindata.org/cheap-renewables-growth. The bottom line is the demand for silver has been constant and will probably rise in the future.
Ed Steer (https://edsteergoldsilver.com/) presents the following chart weekly that he attributes to Nick Laird. This chart is dated 10/8/20. Currently, the 8 largest silver shorts in the COMEX futures market are hugely short compared to the production of silver per the chart below. It looks like the silver production numbers used for this chart includes mining only, not recycling, but it still gives an accurate perspective on just how short these traders are.
Below this chart are my comments.
This chart is showing that the Top 4 Silver Short Traders are short 129 days of production and the Top 8 Silver Short Traders are short the equivalent of 164 days of silver production.
At the time of this chart the Top 4 silver shorts were about 301 Moz. and the 5 – 8 were short another 82 Moz.
So, the average Top 4 silver shorts are short 75 Moz. and the average 5 – 8 shorts are short 20.5 Moz.
Using Days of Production- note how the silver shorts tower over all of the other commodities.
But, these shorts are banks that have built this manipulative position making some money (in the past) and now find they are stuck. They are not miners or users, they are speculators. So, when their short positions are compared to days of ASPI (Available Silver Production for Investment) the numbers balloon. The Top 8 silver short traders are 539 days short of ASPI- almost 1.5 years!
The big silver shorts are definitely the elephant in the room. Who are these big silver shorts, what are they doing and why? Most of my information comes from Butler and if you want to know how we got here I would suggest you read him. Over the years, Butler has laid out the workings of this precious metals (gold and silver) manipulation in detail. The big shorts are mostly big banks; they have been using their outsized short position to keep the price of silver (and gold) lower than it would be without that position and they have used this manipulative position to make money. According to Butler they have never collectively lost money on their positions up until about a year ago. But, at this point they are about $10 billion in the hole on their short positions in silver and gold. I am concentrating on silver because that is the market that I believe has the most potential. It is a very volatile market, especially lately. I think most of that volatility has to do with these big shorts trying to maintain control and get out of the corner they have painted themselves into. See my Open Letter to the 8 Big Silver Shorts . I think there will be fortunes made (and lost) in the silver futures market by those who know (or think they know) what they are doing. It will be a wild ride. I expect the big shorts will try every trick in the book to squirm out of their position, but I don’t see how they can and for the last few weeks they have been selling short even more.
Futures trading is supposed to be a vehicle for users and producers to hedge risks. For many years now speculators in the COMEX future trading have been setting the price of silver. This fact is shown by the weekly Commitment of Traders (COT) report produced by the Commodity Futures Trading Commission (CFTC). I believe it will be the tightness of physical silver- the constant demand of silver fabrication and the increasing demand of silver investment- that will cause the silver price to explode. The big silver shorts may be the trigger and they will find that the gun is pointed at them.
Supply is the other side of the equation. People might assume that as the price of silver goes up so will the production- mining and recycling. Yes, I am sure production will go up, but it will take a few years for new mines to come online. Also, the majority of silver production comes from mines that are primarily mining for other metals- gold, copper, zinc and lead. So, even if the price of silver is up that doesn’t mean that miners will find it profitable to mine more of their primary ore to get more silver. Silver recycling might ratchet up some, but again it will take some time for it to come in and then be refined into usable form.
I think the fabrication demand for silver will increase over the next few years. When the price of silver goes up, the fabrication demand and production will stay about the same, but investment demand will hugely increase, causing the price to spiral upwards. Remember there are ‘only” about 260 Moz./year which is 22 Moz./month of ASPI. Fabrication demand uses 62 Moz./month of silver. That is why I think that physical demand will be the “trigger” that will end the silver manipulation. Just the rumors of physical silver shortages could cause the silver users to want to go from their usual “just-in-time” silver inventory to stocking an extra month or more of silver supply. So, they will want to buy (at most any price) an extra 62 Moz. (probably more) of silver which is almost 3 month’s worth of ASPI.
Some might say I am looking too hard at just production and demand. What about the estimated 2000 Moz. of above ground silver bullion in 1000 oz. bars? 1500 Moz. of that “inventory” is in “visible” storage- ETFs and COMEX warehouses. JP Morgan probably owns or controls most of the rest. This is physical silver that has been purchased and stored as an investment. The big question in silver will be “who is going to sell and at what price?” We already have 8 silver traders who have sold over 380 Moz. in “paper” silver. How are they going to buy back those contracts and/or deliver that much silver? And at what price? I think that if even one of these big silver shorts tried to get out of their position there would be such a price increase that the others would be scrambling to also get out causing the silver price to skyrocket.
Using ASPI as a framework puts silver in a much tighter market and it is a small market (this is a great visualization of just how small the silver market is) to begin with.. On one hand- silver production is 1000 Moz./year; on the other hand- we only have about 260 Moz./year that is available to be purchased for investment. Once we (the silver investment purchasers of the world) purchase more than 260 Moz./year, then we will be competing with silver users and holders of existing silver- neither of which will sell cheap. There was an interesting article on Silverseek https://silverseek.com/article/silver-eagle-sales-blow-pass-30-million-prepare-fireworks-investment-demand-surpasses by Steve St. Angels that states the investment demand has outpaced the fabrication demand this year. I believe this is the direction of the silver market. As the demand for silver investment increases so will the price causing the silver price to snowball, rolling into an avalanche.
I can’t imagine how you must be feeling or what you are thinking. Who are the “you” in that statement? The 8 largest silver shorts on the COMEX; those that decided to try to manipulate the silver price down and make some money; those that made the decisions that got your mostly big banks into this position.
You seemed to do OK for 8 or 9 years. Manipulating silver and gold to the downside and making some money leading the managed money traders (mostly technical traders) around by their collective noses. As the top 8 silver shorts, you are now almost 80,000 contracts short on the COMEX. As you know, that is over 400 Moz. (million ounces). How are you going to buy back or deliver 400 Moz. of silver in this market without losing your ass?
You helped manipulate the silver price down to under $12/oz. in mid-March 2020, but you were only able to reduce you massive short position by about 40 Moz. and have been stuck at about 350 – 400 Moz. since. What was your average entry price? My guess is around $16/oz. You had a couple months until mid-May before the price went over $16/oz. when you could have tried to buy back your shorts. I assume you did try to buy back as much as you could without triggering a big price rally.
Then the price goes up. Per Ted Butler (https://www.butlerresearch.com/), the 8 Big Shorts in gold and silver futures are about $10B (yes, B for billion) in the hole between realized and mostly unrealized losses. You do read Butler, don’t you? Well, maybe not until recently because surely if you had been reading him you would have known that this would happen. I guess maybe JPM (JP Morgan) was reading Butler as they used to be the big short of the 8 Big Silver Shorts. But, they managed to whittle down their short position to flat and accumulate 700 – 1000 Moz. of physical silver to boot. I’ll bet for the right price they would sell you 400 Moz. to help you out of this fix. Or maybe they will lease the silver to you so you can’t be accused of naked shorts.
As you know gold accounts for a majority of the $11B of your losses. So, why I am talking about silver? Because I think silver has been more heavily manipulated and the fact that you couldn’t get your hands on anywhere close to 400 Moz of silver at anywhere close to current prices. I think you can probably squirm out of your gold short position, take your lumps and lose a few billion. But it will be much harder to get out of the silver position. I’m sure you know why, there is just not that much silver for sale.
From what I read there is only about 2000 Moz. of above ground silver in 1000oz. bars. Much of that has gone into the silver ETFs- a total of 1120Moz according to Butler. There is 380 Moz. in the COMEX warehouses, much of that owned by JPM. So, who is going to sell you 4000 Moz. and at what price? Out of the about 1000 Moz. of silver that is mined and recycled per year, almost 75% of it is consumed by fabrication and industry. You don’t want to compete with industry for silver. The world wants its solar panels and smartphones. This leaves only about 260 Moz. per year for investment demand and you are short 16 months what I call ASPI (Available Silver Production for Investment).
As I have said on my website – TheSilverStory.com – if what you have been doing isn’t illegal, it should be. You have managed to control the price of silver (and gold) for years to the detriment of producers and investors. Now how do you get out of your huge silver short position? It seems you will need to have some Prime Directives, such as:
Prime Directives
PD#1 Do whatever is needed to exit the big short position without losing a fortune or your company.
PD#2 Don’t get charged or convicted of doing anything illegal.
PD#3 Remember everyone is watching including the DOJ.
So, PD#1 can make you break PD#2 because of PD#3. Maybe you should just take your losses and buy back the shorts now before the price goes higher, which it will no matter what you do.
I plan to get a better page up for those that want to get notice when I post a new article. But, for now please send me an email to [email protected] with the word Subscribe or Unsubscribe if you no longer want notices. I will send you an email notification with a link to the new articles as I post them.
I have been a computer tech for 30 years yet I HAVE to admit that I am a social media luddite I just created Facebook and Twitter accounts fairly recently and in anticipation of using them to project and re-enforce this site. I am going to use this page to post things that I and others have posted on social media. Please let me know if you see things on social media that I should or shouldn’t be doing.
Twitter- handle is AgMan and address is @stevemc25. So far, I am posting to #silver, #tripledigitsilver, #TheSilverStory.
Reddit- handle is Romulus76. I’ve started reading and posting on Reddit in the last month or so. I am on Communities involved with silver- r/SilverSqueeze; r/Bullion; r/Wallstreetsilver. I find people on these communities to be very interested in silver and silver info.
The silver price is currently manipulated down, every manipulation must end, when a manipulation ends the price moves strongly in the opposite direction, if a critical mass of people learn about the silver manipulation it will end, the price goes up. #TheSilverStory#Silver11:18 AM · Oct 18, 2020·Twitter Web App
The Justice Department announced a record $920 million penalty and a Deferred Criminal Prosecution Agreement (DPA) against JPMorgan (JPM) on 9/29/20. LINK-
The complaint seemed to focus mainly on “spoofing” which has been a problem but only the tip of the iceberg regarding JPM’s manipulation of the precious metal (PM) markets. Hopefully, though, it will at least be enough to cause JPM and the other big PM traders to at least back off on manipulating silver.
As of 10/13/20 the 8 largest silver futures short traders are still over 350Moz. short silver. Per Ted Butler these 8 traders are all or mostly big banks. I think this concentrated short position has to be resolved before we can really say that the manipulation has ended. Yes, for every short contract there is a long contract, but the long contracts are spread out among dozens of traders and not concentrated or collusive. You can bet if there were concentrated long positions equivalent to the current short position that “people” would be screaming and demanding that restrictions and/or higher margins be placed on those traders. What are banks doing speculating in the futures market (with their in-house accounts) anyway? Are these naked shorts? Or do they have the metal that they have already (in effect) sold? Who is going to sell them 350Moz. of silver and at what price?
The big 8 silver shorts were short 550Moz. in Feburary and were able to trim that down to 390Moz. during the big price smash in the middle of March when the price was $12/oz. But, since that time they seem stuck in this 350Moz. range with the price now at over $24/oz.
I am not a futures trader and don’t intend to start now. I think that the resolution to this situation will come from the physical silver market. Obviously, a few large traders can “control” a lot of silver in the futures market but that is not what futures is supposedly for. Futures trading has gotten out of hand, probably in most markets. The futures trading is dictating the price where it should be the fundamentals (supply and demand) of the underlying commodity that sets the price. But, I think the silver market is unique compared to most other markets in two important aspects:
It is a relatively small market.
It is both a commodity that is consumed and an investment asset.
If you really know and understand the silver market and the futures market and you think you can make some big money trading futures- then go for it and good luck. But, then you also know that silver is a VERY volatile market and the big silver shorts are not going to “give up” without a fight. I think for the vast majority of people owning paid for (not on margin) physical silver or shares of a ETF (like SLV) is the safest and best way to assure that they will have something when the price starts ratcheting up.
As I have said elsewhere on this site, I want this site to be an open forum of those interested in or who want to learn about silver. After the 2008 housing crisis and recession I heard an investor say that when he heard his barber talking about flipping houses he knew it was time to get out of that market. I think it may be the same with silver. When your barber or Uber driver is talking about buying silver, then it might be time to get out of the market. But, we are far from that level of public awareness now. I believe that public awareness will be the key to increasing demand for physical silver which should be the beginning of the end of the silver manipulation. Let me know what you think, your ideas on how we can spread the word. For instance- Main Stream Media (MSM) reports daily on the stock market. Why don’t they report on the Precious Metal (PM) market? How could we encourage them to do so?
As I have said several times on this website- I think silver is a great investment, see Why Invest in Silver? There are many ways to invest in silver and I am going to list and provide some information on some of the ones that I am aware of. Please provide comments on silver investing with other investments or comments on the ones that I have listed.
Silver– Owning physical silver under your control is probably the safest way to invest in silver. One challenge with silver is that its bulky. You can physically keep several thousand ounces of silver in a home safe, but it is heavy and bulky. One thousand (troy) ounces of silver weighs about 83 pounds (31 Kg.) So, some people pay for silver storage. I haven’t ever had the need to do this and don’t know much about it, but obviously you would want to carefully investigate storage, know how and how quickly you can get your silver if needed and know the serial numbers of your silver bars.
Think about buying silver, storing silver and using silver. If you need to use your silver by cashing it in or bartering to purchase goods what will be a good form to have. You want something that will be widely recognized and accepted and you want forms that will be convenient. In other words you don’t want only have a 100 oz. bar if you are going out to buy a loaf of bread. What you don’t want for your “rainy day” silver is for it to have to be assayed before someone will accept it.
Silver coins- Silver Eagles, Maple Leafs, Pandas, etc. are coins minted by governments or possibly a private minter. Typically they are one troy ounce of .999 silver.
Advantages-
Typically readily available & very recognizable which is good when you sell.
The more “collectible” a coin is then usually the higher the premium (over spot) is.
Disadvantages-
Higher premium than some other forms of silver
“Junk silver”- these are 90% silver coins (US) from 1964 and before that don’t have numismatic value. Dimes, Quarters, Half Dollars and maybe some Silver Dollars.
Advantages-
Currently readily available at the local coin shop or online
Very recognizable
My local coin store charges about .75 X spot price per $1 face value. So, at $17/oz. spot, 4 silver quarters would cost about $12.75 and $1 of silver coins has .715 ounces of silver. So, the premium usually not as high with junk silver, but the buyers discount when they buy it back.
Disadvantages-
Not that I can think of except the bulk and extra weight given that they are only 90% silver.
Silver Rounds- these are “generic” (usually) one ounce coins or small bars.
Advantages-
Typically a lower premium than Silver Eagles.
Fairly recognizable
Disadvantages-
Many different coins and images on the coins, may not be as recognizable as Silver Eagles and junk silver.
Silver bars- 5, 10, 100, 1000 oz bars- typically .999 pure silver.
Advantages-
Typically will have a lower premium than coins and typically the larger the bar the lower the premium.
Should be fairly recognizable, I usually look for a recognizable refiner name and/or a serial number on the bar.
1000 oz. bars are what fabricators and the big silver investors use. In a physical silver shortage I imagine these will be very desirable and may even command larger premium.
Disadvantages-
None that I can think of
SLV- a silver ETF & PSLV- Sprott silver ETF
Advantages-
Can be traded thru most any brokerage account including most retirement accounts (you may have to sign additional notifications)
Has physical silver backing most shares. There has been some shorting of the stock, but that has been fairly minimal and consistent for the last few years.
Currently (2/26/21), there are about 1254Moz. of silver in the silver ETFs according to Butler and other reporting. I think the spike in silver prices is going to come about due to demand for physical silver and the ETFs is where the silver is at. The question will be who is going to sell silver and at what price? You should do some research before investing in an ETF. Some say that PSLV is better than SLV because of a tighter correlation between the shares and physical silver.
Disadvantages-
You don’t have the silver under your direct control.
There is a maintenance fee which I think is .5% for SLV
BlackRock, Inc. is the SLV sponsor, JPM is the SLV custodian. I’ve seen many comments and questions about JPM being the custodian and the potential for them to somehow use that position to their trading advantage. I haven’t seen any reported abuses, but something to keep an eye on.
Silver futures– this is where there is a lot of action. I do not have any first hand knowledge about trading future contracts. So, if you do then please feel free to comment on the Pros & Cons of silver futures trading. The price of silver seems to be determined by the futures market and that is backwards to what it should be. Physical supply and demand should determine price and the futures market should be a place where legitimate producers and users can hedge price risks. Currently (2/23/21) the 8 top silver shorts are short almost 400Moz. I think there will be some traders who make a fortune in the coming silver market, but it is going to be volatile. If you KNOW silver and you KNOW the silver futures market and you think you can make some money there, then go for it. Because if you KNOW you know that it is going to be a wild ride.
Silver Options- Options are a contract to be to buy or sell a futures contract before a certain date. There are Call (long) and Put (short) contracts and a Strike price and an expiration date. I have had some experience with Options, but probably without the fundamental knowledge that I should have had to invest in them. All of the option contracts that I have bought have been Calls and most of them have expired as worthless- what Butler call “kamikaze” options.
Advantages-
You can “control” a lot of silver for a relatively small price. Each silver option contract controls 5000 oz. An example of an option contract would be- say today you predict that silver will be at $35/oz. by the end of the year. You could buy a January (expiration 12/28/20) Silver Call Option with a Strike price of $35 for about $125. So, if silver didn’t make it to $35/oz by 12/28/20 your contract would be worthless. If it got close to the strike price with some time before the expiration you might be able to sell the contract and even make some money. If silver was to go over $35/oz. then you would be “in the money” and so at $36/oz. you could sell the contract for close to $5000 (+$1/oz.). So, a defined risk with potential large returns.
Disadvantages-
The time element is the big factor. If the price doesn’t move as fast as you think then your option contract is probably going to expire as worthless. I think some very sophisticated traders trade options much closer to “in the money” and so also pay a higher price for those options.
Proshares Ultra Silver (AGQ) – is an ETF that shoots for 2X the return of the Blloomberg Silver Subindex which seems to closely follow (percentage wise) the price of silver. So, if silver goes up 5% AGQ will go up about 10% and vice versa when the price goes down. It makes a volatile commodity even more volatile. But, does give more exposure to silver per dollar which will can pay off in a bull market. I like this investment better than silver option contracts because I don’t have to worry about them expiring.
Silver Mining Stock- these can give you better returns (and more volatility) than silver. Just to give what isn’t necessarily an accurate example- say the average production cost for a miner is $17/oz. and silver is selling for $20/oz. Then the minor has a profit of $3/oz. Now the price of silver goes up to $23/oz. and the miner has increased profit to $6/oz. or by 100%. Obviously, these are theoretical numbers, but it shows how increases to the price should make big increases to the miners profits. The silver and gold miners stock have not lived up to that potential during the last few months and actually that might be an opportunity to get them before they start catching up. Ed Steer of https://edsteergoldsilver.com/ has a subscription based 5 days/week newsletter that provides much very good information about the Precious Metals market. He also seems to post publicly (free) most every Saturday to Silverseek.com The following is one of the many charts that he shows on a regular basis. This shows that for YTD the silver price has risen more than the Silver7 which I just realized that I don’t know exactly what that is. I assume that it is an index or ETF that tracks 7 Silver miners. More later.
The mainly big banks have been playing a no lose (so far) game for years. They have maintained a concentrated short position in gold and silver- selling more when the price is going up to cap the rally and then buying back as they manipulate the price lower. See my article on how they have done this. As of 2/24/21 the top 8 silver shorts per the CFTC weekly COT report are almost 80000 contracts short silver. That is the equivalent (at 5000 oz./contract) of almost 400 Moz. of silver. They seem to be having trouble at this point trying to get out of that position as they have been short this much and more for the last 6 months at least. I have no doubt they will do everything they can to get out of this position without losing their shirts or maybe their companies. See my Open Letter to the 8 Big Silver Shorts.
I know that Ted Butler has made an estimate on what the entry price of these silver short contracts was, but I can’t find that info right now. But, I am sure it was well under $20/oz. probably around $16 – 17/oz. and they seem very adverse to buying those back at a loss. The top 8 shorts may not be the same for both silver and gold, but they are currently (2/26/21) about $10 billion dollars in the hole- combining realized and unrealized losses.
Woes the big banks- right? I say this is the little guys chance to stick it to the “big boys” for once. We can keep their feet to the fire. The more silver we buy, the more people understand the situation, the higher the price goes, the more they lose, the more we gain. At some point (soon I think) one of them is going to flinch and buy back their short contracts, causing the price to jump up, causing the rest of the big silver shorts to fall like dominoes. How can they buy back a 4 month’s supply? Or the way I look at 350 moz. is over 15 month’s of Available Silver Production for Investment (ASPI) after average silver use, so ASPI is the amount available for investment.
For a long time now the futures market has dictated the price. That is not the way future markets are supposed to work. The supply and demand of the physical commodity is supposed determine the price and the futures market is supposed to give producers and users a chance to lay-off some of the risks. It is upside down in the PM markets and is completely out of hand in the silver market. For decades Butler has advocated for position limits in the futures market that would prevent these concentrated positions from controlling the price.
You may have heard the expression “silver is the poor man’s gold” and I think the current situation will prove that point. There are millions of people who could buy one ounce of silver per month, but not near that many that could afford an ounce of gold per month. I think gold will do fine in the coming market (see Gold), but I believe that silver will do much better.
