EXAMINING SILVER MANIPULATION: What Some Analysts Miss

One of the major topics discussed in the precious metals community is the manipulation of the gold and silver prices by the large bullion banks.  Many precious metals analysts point to the massive commercial short positions held by JP Morgan and Scotiabank as the root cause for the low silver price.  While I agree that the bullion banks’ massive short contracts are controlling the silver price to a certain degree, there’s another factor that is overlooked by the majority of precious metals analysts.

According to Ed Steers’ recent article titled, JPMorgan’s Silver Short Position Now At 195 Million Ounces, he stated the following:

For the current reporting week, the Big 4 are short 148 days of world silver production-and the ‘5 through 8’ large traders are short an additional 62 days of world silver production-for a total of 210 days, which is seven months of world silver production, or about 510.3 million troy ounces of paper silver held short by the Big 8. [In the COT Report last week, the Big 8 were short 203 days of world silver production.]

As I also stated in the above COT Report, Ted pegs JPMorgan’s short position at about 39,000 contracts, or around 195 million troy ounces, which is up about 35 million troy ounces from what they were short in last week’s COT Report. 195 million ounces works out to around 80 days of world silver production that JPMorgan is short. That’s compared to the 210 days that the Big 8 are short in total. JPM is short about 38 percent of the entire short position held by the Big 8 traders.

The two largest silver shorts on Planet Earth-JP Morgan and Canada’s Scotiabank-are short about 111 days of world silver production between the two of them-and that 111 days represents 75 percent of the length of the red bar in silver in the above chart…three quarters of it. The other two traders in the Big 4 category are short, on average, about 18.5 days of world silver production apiece, which is unchanged from last week — and the prior week. The four traders in the ‘5 through 8’ category are short, on average…15.5 days of world silver production each, which is up a hair from last week’s COT Report.

Ed Steer is making the point that two banks, JP Morgan and Scotiabank control approximately 53% of the 210 days worth of global silver production to cover these short positions.  If we look at the chart above, we can clearly see that silver has the highest amount of short positions in days of a production compared to any other metal or commodity.

Furthermore, Ted Butler, well-known silver analyst, made the following remarks in his recent article, Life Under Manipulation:

We as individuals have little or no control over the state of markets, all we can do is adapt to market realities. In the case of silver, the reality is that it is in the grip of a price manipulation. History shows that various world governments have often artificially set the price of silver and gold in connection with official monetary policies. However, for the past 35 years a specific type of price manipulation has existed in silver via futures contract positioning on the Commodities Exchange, Inc. (COMEX).

Nothing can be more significant than the fact that silver is manipulated. Whether to participate in a manipulated market is something everyone must decide. To me, the choice is easy. Virtually all price manipulations in history have been of the upside variety which caused prices to be higher than they should have been. Buying an asset priced artificially high is a surefire prescription for eventual financial loss. But because the manipulation in silver is of the rare downside variety, the price of silver is artificially low, thereby guaranteeing eventual profits for those taking advantage of the opportunity.

Please understand that if the bulk of the COMEX silver short position was held by hundreds or thousands of separate traders, there would be no manipulation possible and I wouldn’t contend otherwise. But the COMEX silver short position is held by very few traders and it is that concentration that equals price manipulation. Since there is no obvious explanation why just 4 and 8 large traders would be more heavily short silver than in any other commodity, away from seeking to cap and control prices, the most plausible conclusion is that they are protecting and continuing their perfect trading record scam.

Ted, like Ed Steer, is implying that the silver market price is being manipulated by the bullion banks massive short positions.  While I agree with these analysts that silver does indeed have the largest concentration of short positions compared to any other metal or commodity, there is another factor that needs to be considered.

As I have mentioned in many articles and interviews, the prices of energy, metals, and commodities are based on their cost of production, rather than supply and demand forces.  Yes, it is true that supply and demand forces impact the price, but on a short-term basis.  If we take a look at the following two charts, we can plainly see that cost to produce gold and silver parallel the market price:

In the first chart, Barrick and Newmont’s cost of production was always lower than the gold market price.  Even though these gold miners may have suffered net income losses during certain periods, I used “adjusted income,” rather than net income.  The same was done for Pan American Silver.  When the silver price was $35 in 2011, Pan American Silver enjoyed a $9 profit per ounce.   However, as the price fell, so did its cost of production.  The reason for the lower silver cost at Pan American Silver was due to falling energy prices and massive cutbacks in exploration and spending.

The following chart shows how Pan American Silver’s cost of production paralleled the change in the price of oil:

Regardless, the cost to produce silver has always been tied the market price.  This is also true for gold and copper.  I looked at the top gold, silver and copper miners’ Q1-Q3 2017 financials, and here were their profit margins:

According to Barrick and Newmont’s financial results, the average profit margin for these two gold miners was 9% versus 6% for Pan American Silver and Coeur Mining, and 5% for Chile’s Codelco and Freeport McMoRan.  Thus, the cost to produce gold, silver, and copper by the top major companies was still less than the market price.

So, if we take the Concentration of Traders Short Positions in days of production and add the profit margin, we can see that there’s more to the story:

While it’s true that silver has the largest concentrated short position of any other metal or commodity, most of the silver miners are still making profits.  Furthermore, it is also true for companies producing platinum:

Now, this is an older chart from 2015.   However, we can see that even platinum’s production cost was very close to its market price.  Even though platinum has the second largest concentration of short positions in days of production, the market price is still very close to its cost of production.

Unfortunately, Ted Butler and Ed Steer do not include the cost of production in their analysis of the silver market price.  While I agree that the banks are controlling the silver price, the majority of manipulation is taking place by the propping up the STOCKS, BONDS & REAL ESTATE values.  According to the Savills World Research, the value of global assets in 2015 equaled $372 trillion.  With the majority of the world’s wealth invested in stocks, bonds, and real estate, the Central Banks’ manipulation is focused on keeping these values from falling.

The coming surge in the silver price will be due to the disintegration of the global oil industry and the negative impact on the value of stocks, bonds, and real estate, rather than the number of bullion banks silver short positions.

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85 Comments on "EXAMINING SILVER MANIPULATION: What Some Analysts Miss"

  1. So, when the dollar loses its status as the worlds reserve currency and the SDR takes it’s place, what will happen to the price of gold and silver? Will they raise in a steady climb? Or, will it just be a moon shot?

    • Holders of the metals will retain and increase buying power. Don’t worry about Dollar price (or any paper currency)of pm’s, how many good downtown hotel rooms can I buy for a pocket full of gold coins? It’s 1920 in Berlin, and EVERYTHING is for sale, efryting.

  2. So stored gold, silver and bitcoin, all obtained by mining are in reality stored BTUs. BTC a hedge a against the metals and vice y versa.
    I don’t think China will let the internet go down.

    • Not a crypto article | November 25, 2017 at 7:43 pm | Reply

      “So stored gold, silver and bitcoin, all obtained by mining are in reality stored BTUs.”

      OH NO, THE CRYPTO PUMPERS HAVE INVADED SRSROCCREPORT TOO. Frankly I’m sick and tired of them trying to covertly and slyly group cryptos in with gold and silver, like above, trying to make them appear the same. Cryptos are just hyped up digital garbage with no real value – wasted electricity to generate them is not value. And NO, the mining of gold and silver is very different to the fake “mining” (generation) of cryptos.

      Please steve, the infiltration of these pumpers is starting to annoy me. It may be time to start deleting such spam, for it is purely that – SPAM.

      • Those with weak arguments seek to silence their critics. Your suggestion to ban anyone who speaks positively of crypto shows your true colors. We are not your enemy. Perhaps save your vitriol for the ones manipulating the PMs. Crypto converts merely saw another path to work outside the fiat system, and took the ball and ran. So instead of trashing something you obviously don’t understand, maybe take the time and learn why so many people have taken a liking to a decentralized, trustless, censorship-resistant, and fast form of money.

      • Your analysis is correct. It annoys me,too. Bitcoin people may be paying for the subscriptions, so what can Steve do? Sad dilemma.

  3. Not being a paper trader, I don’t understand how they can make a profit with silver trending up. And why does Scotia Bank Canada have their commodities business for sale if it is so profitable?

    I am thankful for the depressed silver prices as it allows me to make monthly additions to my stash but I am paying $3.00 more per ounce than 18 months ago.

    Is this an algorithm play knowing if the SHTF, margin calls will send down precious metals prices for a short time?

    Thanks for the perspective.

    • They can send the paper price down but actual silver ounce from USA, Canada or other major country will never be below 17 dollars.

  4. Time on my hands, today😁. GO BEAVS (Civil war @ 4PM). Any who follow astrology know big changes coming to the financial system 2018 to 2024, as Uranus enters Taurus, the sign of money. Uranus controls forked and sheet lightning and all things electrical and shocking. Money as electrons, anyone? Silver, gold, crypto sparks. Gotta surf the wave, jump the candlestick like jumpin’ Jack Flash. Take supplements to hack your brain and mitochondria. Rev it up, dance with the changes. Think like a Millennial.

    • Sorry Sammy the Beavs.were shocked by the Ducks,hacked,whip sawed look out 2018.

      • The Beavs got crushed. Only allowed to win every 10 years. Like silver. And you can’t delete my spam as I am a paid up member, in silver coin no less. Eat your hearts out 😀.

  5. For once I agree with Steve. Conspiracies about price manipulation are massively overdone and simple economics determine the price of precious metals.

    However this article seems to be also warning against buying shares in Gold & Silver miners.
    “When the oil industry disintegrates” the oil price will skyrocket and so will the cost of mining. So even if Silver is $100 or $500 or whatever miners wont be making anymore money as the cost of production will skyrocket in unison with the price of Silver. The same goes for all metals.

    • Stuart,

      While it was nice for once that you agreed with my analysis, you shot yourself in the foot suggesting that the oil price will automatically surge as supply declines.

      You, like 99% of the market, believe the oil price will skyrocket as supply declines. It won’t. I gather you don’t understand that the falling quality of oil doesn’t allow the market to bid it up because it’s not worth it. Unfortunately, you continue to believe in the AUSTRIAN SCHOOL OF ECONOMICS DELUSION of SUPPLY & DEMAND to determine price.

      steve

      • Regarding demand and supply is it correct to say that it influences price while economy is doing ok, but when there is crisis ( or situation is so bad there is no enough potential in economy) no matter what is demand when there is no enough energy to meet that demand it does not matter if supply is lower or higher. In other words economy can not afford higher prices in spite of fallen supply.
        Is this logic ok or is there some fault in it?

        • Marijan,

          The value of a good is based on its utility. If it costs more to produce a barrel of oil than the public can afford, then its utility has been lost. The high net energy in a barrel of oil is what allowed to market to bid up the price. However, the falling NET ENERGY or FALLING EROI of a barrel of oil makes it impossible to bid up the price. Although, the massive increase in debt, to offset the FALLING EROI, has given an ILLUSION of a rising oil price.

          steve

      • Yes oil will rise in a first time : people cannot allow to buy 100 USD oil : but that’s already we are paying in europe…

      • Michael Kohlhaas | November 26, 2017 at 1:51 pm | Reply

        Did you just flip the bird at those Austrian School economists? Finally somebody! I had these idiots.

      • Steve, Remember peak oil that was all the rage 10-20 years ago? It turned out to be a total fizz as the world is now awash with oil.

        I believe your EROI will suffer the same fate. Technology will continue to march forward and neutralize any EROI issues. Renewable energy advances coupled with storage including batteries, super capacitors, etc. will continually reduce our dependence on oil for energy in the future.

        • Stuart,

          LOL… thanks for the laugh.

          steve

          • If EROI is correct then no amount of PM’s will sustain, only food and lead to protect it will work,,for a while, and then what?
            Folks today will burn all the wood for heat and eat all the grain before we can build wagons and grow the horses to pull them.
            Heck, I’ve got 6,000 gal of water in a tank outside and will get tired of carrying it in a bucket at a time to fill the toilet.
            If indeed EROI is correct we should be using the last of the petroleum to develop coal and some form of coal gasification, but no, our public will just keep going to Big Mac and Wallyworld until the doors close.
            For one, I’ve had all the big O’s I deserve, it’s my kids and grandkids I worry about.

          • Steve, so far you have been wrong.
            The predictions you have made about the collapse of the oil industry & gold/silver prices have not materialised.

        • Just because there is a temporary oversupply of oil (a few weeks consumption?) and a low price, it doesn’t mean that there is 50 more years of Saudi 1950-2000 quality (100+:1 EROI) oil out there. The Saudi wells are mostly pumping salt water now. The Saudis will stop exporting oil to us well before they will stop selling into local markets. Arabs love big US cars like Caprice because of easy servicing and cold-blowing AC (9 mpg in town? no problem).
          Unless there is some kind of magic/scifi power source (ZPM), the oil will stop pumping before the wells are actually dry. Got good walking shoes?

    • Anybody who comes regular to this website and still believes PMs are not manipulated makes me lose hope for humanity buts help me understand how the G7 countries, over the last 15 years, have dropped tens of thousands of bombs on millions of civilians and yet still deny they do it. Denial of reality could be put on the resume of 90% of people in the West.

  6. They slash every important supportline with heavy sales within SECONDS and rebuy slowly again. I have seen it so many times when I daytraded. They also make massive shorts during times with little to no action in the market . . so all automatic systems sell like crazy. I have seen this triggered chainreactions so many times ..
    The PM-charts are the only ones I am not touching again . . because they behave simply strange and illogical. Like someone is slashing them on a button push when ever he wants.
    I can trust every other chartanalyses of me but I know that silver will be crushed.
    It’s just a fact . .

  7. They short silver because it is useful. Everyone owns and holds silver, a small few hold it in coins but the vast majority hold it in electronic devices.
    Shorting silver benefits the vast majority by keeping prices of electronic devices down. The only ones who complain are the few poor souls who own it in the form of coins and want to get rich from doing nothing.
    You don’t own gold and silver to make fiat currency, you own it as a hedge against disaster.
    If you want to make money from gold and silver invest the time and learn futures trading. I make money whether the price is going up or down.

    • Barry, as per your words- ” The only ones who complain are the few poor souls who own it in the form of coins and want to get rich from doing nothing.” So, are you telling us that the”doing nothing” method applies to stocks, bonds, all other investment instruments, why even your hedge plays on phony paper price chasing? You might want to rethink that one.

      • Legendary inwestor Marc Faber is preaching the value of PMs, but somehow he advocates them rather as a hedge against market turbulence. He does not say that your portfolio should be mostly made up of PMs

    • I love low priced silver. I buy more and take delivery. Rolls of dimes are especially wonderful when I consider massive deflation then hyperinflation. A silver dime for a kilo of organic prizewinning 4-H porkloin? Yes, please.

  8. We are now 6 to 6 1/2 years into the gold and silver bear market. Prior to that, the bull market lasted about 10 to 11 years, but with much of that occurring prior to the financial crisis of 2008 when people began to learn about all of this.

    I am permanently scarred and will not stack any more gold and silver. If you want to, be my guest, but there is no future for you or anyone else. The only future all of us have is this:
    -we grow old
    -our cost of living goes up as they inflate the currencies

    That’s it. That’s what we 7.5 billion people face.

    • dolph,

      Your negative sentiment on gold and silver suggests the BOTTOM is in… Thanks. Just to let you know, the wealthy continue to buy GOLD & SILVER in a big way. It’s the small fickle investor that has become complacent and negative.

      A Perfectly normal reaction by the typical small investor.

      steve

      • A bottom, maybe but a rise in term of other assets, in how many decades from now ?
        PMs have been falling against all the assets for many years now (papers, real estate, cyptos and so on). If that is the production costs plus a a few bucks for silver or tens of bucks for gold, we are going to remain here for many decades indeed.

        • What if you live that long? It’s okay to be poor and young and healthy, but I want to have money when I’m old. Dying early doesn’t work for me.

          • lastmanstanding | November 27, 2017 at 8:23 am |

            I’m with you brother.

            As one who understands how the earth works, I can only put true faith in things that come from the earth.

            Digital numbers, markets, access to oil, etc. are just things that the planet can eliminate (for everyone) in a few seconds.

            One best have a bit of earthly wealth to survive. Land, water, seeds, livestock, some kind of metal that has 5000 years history, lead, brass and propellant instruments.

            For those of you who haven’t listen to Ryan Bundy’s opening statement, you can do so at…

            http://www.westernrifleshooters@wordpress.com

            Things need to be put back in an earthly order.

      • Steve,
        Would love to hear your thoughts on the phases of commodity bull markets, 50% retracements, and what comes next. This is just as oil (EROI; not price action [yet], but drilling balance sheets) is in deficit. As you said to Dolph, sounds like the bottom is in.

        Keep up the good work! Your insight is helping me position my family to prosper in the next few years. Ps. We also support your work as Patreons. It’s making a difference for us!

  9. I’ve seen good arguments that the amount of Silver in most products is so small that, as critical as it is, vastly increasing silver price would still have a minimal affect on products price.Maybe add $10 bucks to your phone cost if silver goes to $300.

    No, the price is crushed to support the phony dollar, debt and the equities markets, i.e, the whole obscene shinola.
    So yeh, ship is sinking, mainly for the reasons Steve has managed to portray so succintly, but moving from that fact to stacking is a jump into faith, a pure desperate gamble. Tried to get Steve to expound on this once but he was busy.

    For one, I can’t see that the pm price jumping because everyone loses their shirt in markets is a given. True, there are quadrillions in paper investments and nothing in Silver so there’s logic there but this is an unprecedented global collapse so #1- even with our inverted pyramid maybe not enough will have a shirt and #2- maybe the fools will all go to crypto. And #3- stackers are going up against the man, a battle honest people have been losing since at least 1873 but really since the traders and priests first broke bread together in the 1400’s.

    Our lords will just make trading in silver (if not cash) illegal and or put a 90% tax on it (tell me why they won’t please) and if you think you’re tough enough for any resulting black market you haven’t lived. Maybe in a few places like Scandinavia for awhile but in the heart of the beast, urban or rural, you’ll be shot within a week of buying your first apple. Actually probably hide longer in more anonymous big shitties.

    Okay, US government will fall maybe so free silver then? Hah! Say hello to your new warlords.

    Maybe after 30 years we get some kind of economic reset and the village survives another few decades and silver is useful but like i said, it’s a stretch and big gamble, Long as people realize that. suit yourself

    And blockchain? Easy yes but on the the level at which some personal freedom is achievable it is mind numbingly complex, and probably illegal Besides, everyone’s forgotten, but cell phones are Orwellian tracking devices, plus you think most people will have $50 bucks a month? Fundamentally stupid imo

    Sorry for rant. I’ve just gotten real depressed behind doom, but don’t think I’ll bother to stack.

    • Frank,

      You stated, “Maybe after 30 years we get some kind of economic reset and the village survives another few decades and silver is useful but like i said, it’s a stretch and big gamble, Long as people realize that. suit yourself.”

      I wouldn’t gamble on a 30-year reset. The collapse of the global oil industry will likely begin to occur in a BIG WAY within the next 2-5 years. The U.S. Shale Oil Industry will be mostly DEAD within five years.

      steve

      • Steve,
        Wondering whether you’ve considered high energy density of the liquid hydrocarbons. Although battery technology is evolving, it still not capable to fly large aircraft nor it is plausible to scale up to replace crude as transportation energy source. Perhaps in this situation it may be produced even if it takes more energy to do so?
        Working in oilfield industry, I do not see collapse as imminent. Demand destruction during (an overdue) recession and potential monetary system reset concerns me more.

  10. Let me inject a different perspective: when the price of silver and gold rise, mining companies process the lower quality ore, which increases the cost per ounce ratio. Simple economics. They are able to sell the lower grade ore at a small profit. I believe you need to give some thought to your thesis.

    • Wm,

      Precisely. However, without energy, the mining of lower grade ores is impossible. Thus, when the oil production peaks and declines, so will the production of gold and silver. It won’t matter what the price is at that point.

      steve

      • Steve: You make it sound like an all or nothing proposition. Oil will just be gone. BUT, that would not be the case in the day to day world. But could be true if you jump over years at a time. Seems to me that the most logical scenario would be that oil becomes a decreasingly available commodity, sorted out by those producers who can withstand the required EROI to maintain profitability.

        Oil production will still be out there, but likely be bid up by the industries that can support a higher price, and the necessary EROI to maintain that production. Not all production has a substandard EROI.

        In our world of potentially peak production of oil and silver, if one regards the PM prices as a measurement of the value of a dollar, then a weaker dollar, perhaps due to weaker national oil production ability would, by definition, raise the $ value of PMs, at the same time lowering the purchasing power of the population, reducing oil demand. Since oil is a component of the production cost, a rising price of oil will result in a lower production of ounces at a higher cost as higher grade reserves are depleted to supply sufficient cashflow, thereby necessitating a higher PM $ value or suspended production. Conversely, a lower oil cost (assuming that some oil is actually available) will likely decrease the cutoff (breakeven) grade on the ore and interestingly ALSO result in a lower production of ounces. Either way, once peak production is exceeded, the supply of new ounces will be diminished, just not all at once.

        • Steve hasn’t done much commentary on the value of human labor/life dropping with the fall of high-EROI oil. Lots of people assume that their income will be steady or improve (go up in nominal terms), but they are blind to the falling Quality of their lives when compared to grandparents.

          • The value of human labor: Industry estimates it to be 50 watts / hour of power, or 0.4 kilowatts of energy per day. Compared to our electric bill’s report, we’re screwed.

  11. Considering this report on physical silver, this reader has to add Savoie’s thorough study of the Pilgrims Society and its complete control over the miners and metal, throughout the early 1900’s until present. Steve’s research regarding silver’s price fluctuations based on oil prices, mining costs, and the 3 markets, stock, bonds, and real estate, further add fuel to the fire. Overall it seems the threat to both the US dollar as well as the English pound sterling played a big part based on actions taken.

    • Slvrwlwn, where can I find out more information on the Pilgrims Society? Thanks.

        • Great article, thanks. I will continue this research. Savoie’s conclusion that it is the controlled, corrupt medical system with its fake science and prescription poisons that will strip us of our wealth and lives, was enlightening. I have thought for some time this medical system is like living in hell. Fallen angel psychopathic control grid. Every day I pray that God will keep His hedge of protection around me.

          • All my own opinion, but I believe, back in earlier times, gold, silver, mineral incorporating herbs and gems were used primarily as healing agents not for wealth or money. Silver is a great and blessed healer. Gold, and especially in mono atomic form, has some really cosmic properties. The elite know the alchemy and information denied to the common person. They use it to their benefit as we are fed only lies. Jump outside the box.

  12. Mike Bogenschutz | November 25, 2017 at 7:33 pm | Reply

    The silver shorts of 7 months makes sense to me since JP Morgan has 7 months supply they could dump in the market.

  13. For such a capital intensive industry as Mining, those Gross Margins are quite low in comparison to other industries? Doesn’t that also suggest that the manipulation of prices by the CB/BB/ESF/BIS Complex in the futures markets is the predominant factor at paly? They clearly manage prices right down to close to the breakeven point because they know that losses would force closures, which would reduce supply which would put upward pressure on prices; which they don’t want. Such an analysis as this should be accompanied by a chart comparing capital intensity and margins with other industries to carry credibility?

    • True, Hermès bags are 90% margin (10 fold price). How Pms could rise with oil doing nothing according to this website : silver should so languisd around 10 USD for many years.

  14. Steve,

    I was not clear. I’m totally convinced a major collapse is imminent within next 5 years. “30 year reset” just loose speculation that at some point far down road some kind of much smaller economy might reorganize in which metals would be valuable.

    But to the imminent collapse. Seems like deflation forces may be stronger then even the inflationary push on dollar of all that money coming back home. Usa still produces lot of food if can afford oil(big if! even at $20) and cash could be king for many long years at least in groceries. little else probably.

    This in a world where silver sales outlawed or extremely taxed so any cash withdrawn from bank of Sealy to buy silver now a waste.

    So would be be very interested in any speculation you might have about likelihood of such silver capital controls after and even before collapse.

    Also, Not to belabor but perhaps if you have the juice someday. A related matter. Is it your intuition that deflation of dollar regarding food is short lived and we will move into hyperinflation in all respects within a year after banks at least temporarily shut down?

    Surely you must be making this kind of bet for your own self and/or family

  15. Mike,

    Aw, Ted Butler, right? He never actually presented any real evidence that JPM was stockpiling silver. Could be wrong but remember looking into him a awhile back when started reading about this stuff and was disappointed in him. Do you know better?

  16. In 2002 I️ read an article about silver on a long term basis was undervalued. The article projected silver to be 100.00 an ounce by 2022. I️ was convinced, and bought. This was all based on future supply and demand. The money printing and potential extra demand could be icing on the cake.

  17. Hello Steve, I appreciate your expert knowledge of EROI. But I disagree with you production cost theory of Gold & Silver. Gold & Silver are a hybrids of a commodity and a stored value/Money. Gold & Silver are the enemies of the Central Banks Fiat Monetary System. Thus Gold & Silver price suppression has been the policy since 1971. The 1.4 Quadrillion Derivatives Market is use by the banks to manipulate all markets.
    I used to believe in the fundamentals like yourself until the price of Silver dropped from $19.39 to $14.76 a 24% decline from 8/29/2014 to 7/31/2015 or 12 months. The CME/ Reuters Gold & Silver Platform went live on 8/29/2014, which was the beginning of the massive paper Short Contracts by the Bullion Banks. I urge you to watch the video “The Illuminati are the Central Banks and a 50 year old recording EXPOSES Them” at my blog:https://steemit.com/@skipweston and understand a planned monetary reset is coming in 2018. When this event happens then the true price discovery Gold & Silver will occur.
    “Gold is Money everything else is Credit” JPM

    God Bless you & your family,
    Weston

  18. Mr. St. Angelo…

    First off, I would like to thank you for efforts… from what I’ve seen you’ve consistently brought forth unique perspectives given your integration of financial/economic analysis with energy analysis.

    Second, I would like to apologize in advance for any ignorance on my part going forward… I have not spent an extensive period of time on your website, so maybe I’m simply misinterpreting your position/s, and/or you may have already my concerns elsewhere.

    Third, my concerns relate to various economic theories concerning “value”… and in particular, the appearance of your emphasis, and/or embracing of the “cost of production theory of value”. Obviously, this can be contrasted with other theories of value… including:

    1)Intrinsic theory of value
    2)Labor theory of value
    3)Power theory of value
    4)Subjective theory of value

    My own perspective has been much more influenced by #4 than any of the others… which on the surface, it appears as though you’re not particularly fond of.

    Fourth, even if we do embrace the “cost of production theory of value”, then there is also the possibility that you may have “put the cart before the horse” in relation to the COMEX short positions that you describe in this article. More specifically, if I was part of the Gold Cartel, then my thought process would likely be as follows:

    1)I need lower metal prices in order to support dollar hegemony.
    2)I need physical metal to ensure no disruptions in industrial application.
    3)I need physical metal to provide foundational support for the paper derivative games.
    4)I know the price levels at which miners can eke out a profit.
    5)I want to keep miners in business in order to achieve the above goals.

    Therefore:

    6)I’m going to rig the price in the paper markets high enough such that the miners can eke out a profit and remain in business and supplying real metal to the market, while simultaneously rigging the price low enough in order to achieve my other economic and political objectives.

    If the above thought process is indeed an accurate portrayal of the priorities and objectives of the Gold Cartel, then wouldn’t embracing a “cost of production theory of value” perspective in relation to silver pricing be an inaccurate reflection of the core dynamics involved?

    Thoughts?

    Lastly, I would like to thank you in advance for any time and attention allocated in addressing my above points…

    …cheers!

    • EDIT^:

      “…so maybe I’m simply misinterpreting your position/s, and/or you may have already [addressed] my concerns elsewhere.”

  19. DisappearingCulture | November 26, 2017 at 12:08 pm | Reply

    “While I agree that the banks are controlling the silver price, the majority of manipulation is taking place by the propping up the STOCKS, BONDS & REAL ESTATE values.”

    This sentence alone could be expounded upon and clarified for an entire blog. If the CFTC [with support of the plunge protection team, e.g. treasury & Fed] wasn’t allowing the concentrated short positions [on gold and particularly silver] of the banks far in excess of any other commodities “traded” on the COMEX, the fiat price would rise. It would rise to the point reasonable short positions [like on other commodities] couldn’t contain them. Dollars would come in; seeing the rising price as an investment opportunity. Or when the prices of the stock “markets” decline… or investment-grade real estate is declining… or bonds…any of these trigger a rise in fiat valuation of silver.
    The manipulation is multi-faceted and for now in a firm grip.

  20. Steve. Thank you for your articles. Please excuse my ignorance but what are the banks hoping to achieve by shorting Silver and what is their endgame? Are they (the banks) planning that this will go on forever or have they got a final goal in sight? Am I right in thinking that they are stockpiling physical silver? If so will they one day let the silver price go to the moon?

    • DisappearingCulture | November 26, 2017 at 5:07 pm | Reply

      Rob,
      I’ll take a stab at answering for Steve; he can add his flavor
      1] The banks make a lot of $ shorting silver.
      2] They are encouraged [to use one word] to play this game, as suppression of the price of silver [historically money] and gold [still money internationally], as this is essential to propping up the perceived value of fiat currencies [all of them are backed by nothing but heavily indebted sovereign nations].
      3] JP Morgan has a huge stockpile of silver by COMEX disclosure; maybe not as much as is alleged by people like Ted Butler. JP Morgan knows the silver price can’t be suppressed forever. Their paper/contract short positions could backfire on them some day; the physical in their possession is their hedge on their short game.

  21. Steve,
    I think that due to silver mostly being a commodity metal these days, it will follow oil down in price as there will be little demand for it. Gold I am not so sure. Happy to be wrong on both.

  22. @ Marijan
    A clarification/simplification:

    To get oil out of the ground you first need a barrel of oil to provide the energy for drilling, refining, distillation, and distribution of those harvested barrels.

    In the past, that one barrel of oil got you 20 barrels of oil- a lot of cheap energy by which the economy could grow.

    Today, one barrel of oil only gets you 5 barrels out of the ground, at least by shale averages. As Steve says, this means that paradoxically, that barrel of oil you have in anticipation of getting more oil isn’t worth as much, since it only gets you 5 barrels of oil.

    We are facing a weakening positive feedback loop linked to a daisy chain. One barrel of oil doesn’t get you as much oil that you need to maintain, much less grow an economy. With fewer barrels coming from that barrel on an energy returned on energy invested (EROEI), the daisy chained economy slows.

    The question is, to what level does economic activity have to contract so that at a 5 barrel EROEI at a “limited” economy can be maintained?

  23. In regards to Silver, I see two conflicting explanations of its expected trajectory.

    If the economy slows due to lack of cheap oil, then demand for silver, currently @58% of its use as a “disposable” material need for manufacturing will drop, thus lessening the pricing pressure. This is the first direct cause and effect of a price drop., subject to change of course if investment demand and sore of value perception change course.

    A second direct cause and effect which would increase the price of silver is the increased energy requirements to mine the remaining silver in the increasingly poorer ore grades.

    However, Steve also has proposed an indirect or secondary reason why silver may increase in price, and that is if the economy slows dramatically due to the EROEI or EROI of oil, then the paper assets of stocks, bonds, possibly even cryptocurrencies will decline in real terms, although maybe not nominal, if the Central Banks continue to print and prop up the paper markets. If paper assets turn out to be crappy investments, then people will turn to PMs.

    I make a distinction between EORI and EROEI.
    EROEI refers to the thermodynamics of how many barrels of oil can be pulled from the ground from the one barrel available to get those 5 out of the ground in the shale play. How many fish can you reel in if you only have one worm left in your bait can?

    EROI refers to the financialization of the extraction process, which is a subset of the EROEI. By the declining EORI description, more capital is diverted to prop up the declining profitability of the oil drillers, whether banks lend more, or the FED prints more, etc. As Steve said earlier, the oil drillers are no longer in the business of producing profits from an EROI standpoint, rather they are in the business of sucking more investors’ capital into a black hole. (Terrible pun. I meant financial black hole, not a shale oil drill hole.)

  24. If the silver price is tied to cost of production, what accounts for the two historical price rises to near $50? Were those periods when supply and demand was in control or simply people piling in on a rising price to drive it (temporarily) way up? I am 70 and mostly bought at the high assuming the manipulation was broken. Boy was I proven wrong. Analysts are always saying it is but a few years away until the reckoning, but I no longer expect to live to see it. From the horrible forecasts of what would happen as a result of the final financial/energy collapse I am no longer sure that I’d want to.

  25. Steve,

    I think you do a good job of highlighting how price reflects cost of production and how energy plays into it as well, and not just supply and demand. I have a couple of questions I was hoping to get your thoughts on:
    1. Precious metals (especially gold and silver), are different than other base metals due to the fact they are monetary assets/metals. As such, there are times during history when supply and demand can really affect their price. Do you agree with such a statement?
    2. What are your thoughts about uranium? Per my understanding, for the last few years, uranium has been priced around $20.00 a pound, whereas most mines around the globe cost of production is $40 to $60, per my understanding. Does this not reflect supply and demand?

    • Jonathan,

      Over history, the value of gold and silver were tied to their ECONOMIC ENERGY. This changed from HUMAN & ANIMAL LABOR to OIL, NATURAL GAS & COAL. However, as the public funneled its funds into STOCKS, BONDS & REAL ESTATE over the past 50+ years, they have made one FATAL ERROR. The value of most stocks, bonds, and real estate are based upon the CONTINUED BURNING of oil, natural gas, and coal. When the energy production of these three energy sources head south, so will the value of most STOCKS, BONDS, and REAL ESTATE.

      Thus, at this time, GOLD & SILVER will disconnect from other base metals in their ECONOMIC ENERGY value to more of a HIGH-QUALITY STORE OF VALUE.

      As for Uranium… we must remember, the market is being supplemented by a large amount of old atomic weapons and etc. Also, with the bankruptcy of one of the only two new Nuclear Power Plants in the United States, and the horrible problems with new plants in Europe, I don’t see demand for uranium in the future.

      steve

  26. Hi Hubbs

    Don’t think anyone has ever portrayed the conflicts regarding silver pricing so well as you. Kinda pulled same thoughts together myself last 6 months except the diff tween your eroei and eroi which am still little unclear on but maybe review later.

    But yeh, there are those 2 opposing forces which i don’t think Steve has addressed. Also is the question of why it is so certain price will go up because investors will flood in when paper crashes when they now have cryptos to flood into in their panic. Do you have an opinion here?

    We would all like the people who have been involved in this for so long to discuss/compare all 3 forces on silver but nada from any pundit though they are obvious issues. It’s one thing to prove rationally that system will fail, quite another to talk about results.

    All the writers, including Steve are benefiting from Silver sales. The fact that there is thus no honest appraisal will Inhibit all these fearful traders from going into pm when the crash comes, as it is inhibiting me, tho still tempted

    • Hi Frank,
      First of all Steve has outlined these issues in his posts and rebuttals. Having said that, I don’t own any cryptos but own some PMs which I am quite happy to sit on as I consider them more in terms of insurance in case a-when-all-hell-breaks-lose-scenario were to develop, and which I intended from the outset to give my wife and daughter as a generational wealth transfer. But I never bought them expecting to “profit” from them- or “cash them in” for that matter. In fact, they are the only thing I DON’T really think about. I explain to my daughter that you should never look at the “value” in fiat dollars of PM’s that you own. It matters only how many ounces you have. The only time it matters what the “price” is is when you are buying them and want to know how much fiat for an ounce, or at the end if you have to redeem them for the fiat currency du jour when the time comes that you need to buy sommething. But my opinions need to be taken in my personal context.
      Saw the stock market collapse coming in 2007, got out of stock market entirely, looked like a genius, but then sensing all the BS going on with bailouts, QE’s, market rigging etc, sat out this entire stock market rally! You win some and you lose some I guess. Because I am unemployable, and therefore have not been able to take on very much risk, at 63, my risk tolerance has drastically changed. If I am wrong and get suckered into the stock market or crypytocurrencies and they tank, then I may never recover. If I were still working and had income I would be quietly buying some PM @60 % gold 40% silver, but not a lot, maybe a third of my disposable income but not more than half, but more than the 10% that the “financial planners” all espouse, especially when the prices are so low and the PMs are being kicked around. At this point still feel better buying PMs, rather than stocks or Cryptos. I have clearly missed the boat, and am pissed, but it is all hindsight now. First priority was to get out of debt, although still have the tax man showing up every year for property tax, and other perpetual expenses looming like ACA which will eat us alive (currently paying tax penalty and getting temporary insurance-for now) car insurance, etc.

      Crytpos? Well since I don’t own, buy or sell any, as Louis Camarrasano says, I don’t /can’t determine whether they will continue to skyrocket or tank , as it is not what I think, but what those who actually are willing to buy or sell them think. (Putting their money where their mouth is). It just seems to me that if they have to compare them to gold or associate them with gold backing, it reinforces the question: What is their inherent worth other than a belief that they are worth something? Originally, they were touted as a way of handling transactions secretly, but the reality is, they are not about secrecy, or at least not being bid up because they are “secret.” In fact, people seem all to happy to let Fidelity, Schwab and Comex set up trading accounts- by which the secrecy is blown, and they are taxed. They are not about store of value if they have to rely on fiat currency or PMs to derive their value. In fact they are not really functioning as currency either. People are not using them for day to day payments. They are sitting on them treating them as “investments.” I’ll bet most people don’t understand them and are buying them merely because it is something that is going up in price. At least when you bought tulips, you could see and smell what you were buying. Naive speculators basically are wanting cryptos to be all things: 1.)Efficient for use as currency (VISA and fiat cash are faster, more widely accepted), 2.)store of value (wild wide swings do not imply store of value) 3.) an asset or commodity (it isn’t. They have to keep making references to gold or even lowly fiat to “derive” their “value.” If BTC was so hot they wouldn’t have to consider linking it to gold or fiat accounts or “Tether.”

      Therefore, cryptocurrencies are in a way a misnomer like the Federal Reserve: It is not Federal and it has no reserves. Crypocurrencies no longer function “cryptically, “nor are they, least at this point, “currencies.” They are for now functioning as “cybercasinos”. Sometimes you win big at the casino, but over time, even if you hit the jackpot on your first pull of the slot machine, the longer you play, the more you are likely to lose your jackpot and more. The system is rigged, as are the markets. But the energy requirements for mining are growing, not decreasing, the number of competitors stepping into the market increasing, and the government’s ability to target cryptos at the fiat cash entry/exit points of purchasing and selling (mining) cryptocurrencies is just the beginning. Ultimately, I think they will have the computer power to decipher the blockchain or at a minimum, infiltrate the blockchain programs and establish a back door. Blockchain is NOT a technology. It is merely a computer program! Why the hype if BTC is so great? Every program I assume has been hacked or hackable.

      PM’s are wallowing because of several factors I think: slowing economy and demand, manipulatioin by govts trying to bolster the dollar, investors chasing the “new fad” cryptocurrencies especially since they are buying first and asking questions later, the sense that the fiat currencies of the world are running into some problems such as increasing deficits despite the FED’s ability to print with seeming impunity, even to the extent that it can “outprint” the increased debt servicing if the FED raises interest rates, the constant alt-media reminders that the markets are rigged and therefore you will “lose” if you buy PM’s when in this case, it is the opposite, which Russia, China, India etc well know. Maybe, most traditional conservative investors just flat out don’t have any money to buy any more PMs here in the US at least, whereas some of the nouveau investors might be taking out loans, cashing in their PMs, getting second mortgages etc., to buy into the cryptos. Two reckless endeavors, you see, not just one. This ponzi scheme source of new investment money into cryptos could suddenly hit a brick wall if the credit markets were to suddenly freeze up, although hard to say since so much of the cryptos are being bought by Chinese, S Koreans, etc- but these are the same ones who have run up enormous debts also, so who knows?

      One thing for sure, we ain’t in Kansas anymore. No longer any certainty about anything, just opinion based on guesswork and suspicion.

  27. Hi Diseapperingculture,
    Help a babe in the woods here? How does one find JPM’s holdings on the Comex, like can you provide a link or something?

    Have distant memory of trying this once 1/2 year ago but financial world not my thing. Think I did go to some kind of comex web site and found mention of JPM but was not clear really what it meant if you could explain. For one thing was not clear ( I think) whether was referring to JPM’s own holdings or their clients or even whether was strictly physical.

    • DisappearingCulture | November 28, 2017 at 10:41 am | Reply

      It might be an exercise in futility anyway. The COMEX & primary participants self-reporting the truth? That might be like asking a PM ETF to honestly report their physical holdings.

  28. My biggest problem with Crypros: They add nothing to the economic pie. Let me explain…

    Theroletically agriculture combines various inputs, then with water from the water cycle and energy from the sun, outputs are obtained greater than the beginning sum of inputs. Thus the economic pie increases.

    Mining and petroleum industries have in the past achieved this pie increase, although that maybe nearing an end along with agriculture because of its dependence on petroleum.

    Cryptos add nothing to the economic pie, they only shift one slice of pie to another participant.
    Sure crypto players have paid off student loans and purchased homes, but where did their new found wealth come from? It came from another crypto player giving up a portion of his wealth.

    This does not mean cryptos want have a place in the future, it only means that if govt fiat currencies desolve, then the speculative nature of cryptos against these fiats will desolate as well.

    The future of cryptos as an asset may very well resemble today’s trading between various world currencies.
    When I look at the so called “wealth” created by crypto trading I get the same feeling as when a city has a bond to raise taxes to build a new municipal facility which is to be a boom for the local economy.
    They are creating no new wealth, only seeking to draw wealth from another city which in turn must build new and bigger to regain the economic activity.

    For the last several years there has been very little new wealth added to the pie, only the shift in wealth making winners and corresponding loosers.

  29. DiseapperingCulture,

    Perhaps I misinterpreted but was just reacting to your statement that morgan had huge physical as indicated by the Comex. Are you retracting this? that there is any evidence?

    • DisappearingCulture | November 28, 2017 at 3:58 pm | Reply

      Just Google [evidence of] “JPM’s physical silver holdings” or a similar term and see what you find. It has been well-disclosed and/or well accepted they have a lot of silver. I can’t remember source[s] of this becasue it has been a long time since I have seen such disclosure, and from whom. How much they actually have, few if any outside of the company know for sure.
      OK I just did a search and came up with this: http://news.goldseek.com/GoldSeek/1483891740.php

  30. Hey Steve, you are spot in with the reason the price of silver has not moved higher. Long term the cost to produce is much more a factor of price than manipulation. Until the cost to provide silver increases significantly or the amount produced declines significantly, the price will be stuck in a range. The only other thing that could impact price is for a mania into metals as people lose confidence in other currencies.

    Question: do you know the cost to produce one Bitcoin? I’m sure it is a lot less than $10K. That market is the greatest bubble of all-time. Wish I was in it :-).

    • DisappearingCulture | November 29, 2017 at 7:27 am | Reply

      “Until the cost to provide silver increases significantly or the amount produced declines significantly, the price will be stuck in a range.”

      No! If the manipulation of silver on the COMEX only equaled the average manipulation of other commodities traded on the COMEX…if the CFTC did their job…if the manipulation of the silver price was not backed by the Treasury and Fed [and this is just U.S. manipulation not counting London etc.], the price would be up several dollars from where it is now. And if the price had gone up half as much as the stock markets in the last few years, money would pour in because it would then be seen as an appreciating investment. At some point the supply wouldn’t meet demand as they have been able to do now, then there would be a real breakout. TPTB are working increasingly hard to prevent a price breakout, and it takes everything they are doing to accomplish that.
      It really wouldn’t take all that much for the price to have a breakout.

      “The only other thing that could impact price is for a mania into metals as people lose confidence in other currencies.”

      Before that a drop in stock markets…or any other bubble bursting…real estate…bonds. Many things other than or before a confidence crisis in a currency.

  31. JP Morgue & Scotia probably also have the biggest short poistion in the mining shares … short the Bullion and control the action in the shares to their financial benefit.

  32. People use to invest in Precious Metals because of the rarity … but, because of the massive paper short positions, and the current ability to create millions of paper Gold or paper Silver ounces with the press of a button; Gold & Silver are no longer rare by defacto standard (thanks to paper Gold & paper Silver).

    The elephant in the room is Paper Gold & Paper Silver; get rid of Paper Gold & Paper Silver so they essentially trade on a cash basis, and you’ll quickly get $5,000 Gold and $150 Silver.

  33. I am curious, are the production costs stated in the quarterly or annual reports valid or are they manipulated to create the impression that they follow the market price of silver

  34. the price of something is always only dependent upon demand and supply: production cost do principally not count (easily seen with a monopoly, if there’s lot of competition, production cost give a lower limit of course): what, if the manipulators let the price somewhat above production cost to keep the mines alive? without them it would be even more difficult to keep the price down with naked short selling.

  35. Now we know why JP Morgan has kept shorting Silver!
    https://news.goldcore.com/ie/gold-blog/silver-prices-physical-silver/

    They’ve been quietly accumulating physical Silver whilst artificially suppressing paper Silver.

    This suggests that they are willing to suffer short term losses (minimised through Options) in exchange for what they know will be massive gains long-term!

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