FORENSIC EVIDENCE: Why Silver Price Manipulation Will End

The one thing silver investors want to know, is when will the manipulation of the silver price finally end.  And who can blame then.  It becomes extremely frustrating to watch the silver price fade lower and lower, especially as the Dow Jones Index gets ready to surpass the 20,000 level.

Furthermore, precious metals sentiment continues to head down the toilet and into the cesspool, while the financial networks like CNBC get ready to pass out “Go 25,000 Dow Jones”baseball caps.  However, the broader markets are in serious trouble, pointed out by Wolf Richter’s article, What The Heck’s Happening To Our Shale Buyback Boom.  In that article he posted this chart and stated the following:

Share buybacks in the third quarter plunged 28% year-over-year, to $115.6 billion, the biggest year-over-year dive since Q3 2009, according to FactSet. It was the second quarter in a row of declines, from the glorious Q1 this year, when buybacks had reached $168 billion, behind only Q3 2007 before it all came apart.

So, it looks as if the Dow Jones Index is most certainly well beyond BUBBLE TERRITORY.  Of course, this won’t stop those with “Sugar Plums Dancing In The Heads & Dollar Signs In The Eyeballs” from jumping onto the runaway stock market train-wreck.

This is a horrible failure of the human psyche.   Instead of an individual becoming more cautious, prudent and steadfast when markets are behaving completely insane, we find quite the opposite as greed and avarice increase the severity of the BRAIN DAMAGED investor.

That being said, the best we can do when the fan finally hits the cow excrement, is not to tell our friends, associates and loved ones who didn’t listen, “I TOLD YOU SO.”  Best to keep our big mouth shut.  However, I don’t see a problem with wearing a T-Shirt that has “THANK GOD PRECIOUS METALS SAVED MY AZZ” printed on it.  Nothing wrong with being respectful, but also subtle.

Alright, let’s get to some of the Forensic Evidence on why silver price manipulation will end.

To Make Sense Of Silver Price Manipulation, You Have To Understand The True Fundamentals

Even though Deutsche Bank finally came out and provided evidence that they have been manipulating the silver market, this didn’t do much to change the falling price trend.  Ironically, after Zerohedge published the Deutsche Bank Silver Manipulation article on December 8th, the price of silver fell another 8%.

I would imagine this must have done wonders for already disenchanted silver investor.  Which is why I decided to write this article.  Even though the present downturn in the paper silver price can be quite frustrating to many investors, SILVER’S REAL VALUE is totally misunderstood by the market.

To understand how the silver price is being manipulated, we have to first understand the silver pricing mechanism.  To explain this, I decided to use one of the largest primary silver mining companies in the industry, Pan American Silver.

Unfortunately, the majority of the market still believes that “Supply & Demand” are the leading drivers of price.   They aren’t.  While I used to believe in this economic theory, I no longer do.  I have made the case for this in several of my past articles, but I will show it again using Pan American Silver as another example

I have updated my chart below to show Pan American Silver’s “Estimated Break-even” from 2004 to 2016:

This chart may seem a bit complicated, but it’s not.  The top of the BLUE AREA is Pan American Silver’s estimated break-even, the WHITE LINE represents the realized annual silver price and the GREEN or RED figures show the estimated profit or loss per ounce each year.

Basically, when the white line is above the blue area, Pan American Silver made a profit and when it fell below, they suffered a loss.  So, except for a few really good years (2011 & 2012), Pan American Silver did not make much money for each ounce of silver they produced.  Pan American Silver enjoyed a $9.02 profit per ounce in 2011 and $5.20 in 2012.  However, they lost money in 2004, 2013, 2014 and 2015.

NOTE:  I did not include data for 2005 or 2006.  I designed this chart originally for 2007 and later, but wanted to see what the change would be going back until 2004.

To get an idea of the growth and financial change at Pan American Silver since 2004, I put together the table below:

In 2004, Pan American Silver’s estimated break-even was $6.77 versus $15.71 today.  Thus, Pan American Silver lost 10 cents an ounce in 2004 compared to a profit of $1.54 in the first three-quarters of 2016.  Even though Pan American Silver’s total revenue jumped from $98 million in 2004 to $584 million in 2016 year to date (YTD), it’s estimated silver income was only $27 million for the first three quarters of the year.  That’s not much money considering that they increased silver production from 11 million oz (Moz) in 2004 to 19 Moz in 2016 YTD.

If we look at Pan American Silver’s statistics over a ten-year period, they provide more interesting evidence:

From 2007 to 2016 YTD, Pan American Silver’s total revenues were $6.3 billion, based on 220.3 Moz of silver production.   However, 44% of Pan American Silver’s total revenue ($2.7 billion) was from by-product metal production of gold, zinc, lead and copper.

When mining companies calculate their “Cash Cost” or their “All-In Sustaining Cost”, they deduct their by-product credits.  As we can see, Pan American Silver reported $2.7 billion in by-product credits for this ten-year period.  Basically, they are artificially lowering their real cost to produce silver by deducting these by-product credits.

For example, Pan American Silver’s total Adjusted Earnings from 2007-2016 YTD were $664 million.  So, if they just gave away their $2.7 billion in gold, lead, zinc and copper metal production, Pan American Silver would have lost $2.1 billion for that ten-year period ($644 million minus $2.7 billion).

Which means, Pan American Silver’s by-product credits weren’t really credits when the company needed them to stay profitable.  A CREDIT is only a CREDIT when you don’t need the damn thing to be profitable.  That is why I show an estimated “Silver Income” of $396.9 million or $1.81 average silver profit per ounce for the entire 2007-2016 YTD period.  Which means, part of Pan American Silver’s $664 million in Adjusted Earnings came from their gold, zinc, lead and copper sales.

Regardless, if we realize that Pan American Silver only made a 10% margin of profit ($664 Adjusted Earnings on $6.3 billion Total Revenues) during that ten-year period, that isn’t much money considering the 220 Moz of total silver production.

But guess what?  Pan American Silver didn’t get to keep all that $664 million they made in Adjusted Earnings.  Why?  Because that figure doesn’t include their capital expenditures.  From 2007 to 2016 YTD, Pan American Silver forked out a stunning $1.35 billion in capital expenditures:

You see, the financial statements reports don’t include how much money they are paying out to maintain, upgrade or add new projects.  This is listed in their “Cash Flow Statement.”  To get a real idea of their true profitability, we have to look at Pan American Silver’s Free Cash Flow.

Simply put, free cash flow comes from subtracting their capital expenditures from their cash from operations.  This chart shows Pan American Silver’s free cash flow since 2007:

The net value of Pan American Silver’s free cash flow from 2007 to 2016 was $218.3 million.  So, even though they stated they made $644 million in Adjusted Earnings during this period, their true profit was $218 million. 

But not so fast  We also have to consider the dividends Pan American Silver paid to its shareholders.  According to Pan American Silver’s Annual Reports, they paid a total of $247 million in dividends from 2007-2016.  If we include their dividend payouts, this is a more realistic picture of their profitability:

By deducting dividends from Pan American Silver’s free cash flow, we find they suffered a net loss of $29.3 billion for the ten-year period.  Of course, this does not include their investments or other items, but it gives us a good ball-park figure of their operating profitability.

Even if we dismiss all their dividend payouts, Pan American Silver’s free cash flow was only $218 million.  Which means, Pan American Silver’s free cash flow of $218 million was only 3.4% of their $6.3 billion in total revenues for the ten-year period.  This is peanuts.

However, this proves that one of the largest primary silver mining companies in the world made very little in the way of profits producing silver since 2009… and this was during the really good years including the huge price spike to $49 in 2011.

As I have mentioned before, the price of silver has been based on the cost of energy.  Here is a chart of Pan American Silver’s estimated break-even price and the Brent Crude Oil average annual price:

Here we can see that Pan American Silver’s estimated break-even trend line (BLUE LINE) paralleled the Brent Crude Oil price.  However, the cost to produce silver will continue to increase even though the oil price may be lower.  This is due to the falling ore grades and the increased cost to extract, transport and process larger amounts of ore to produce the same amount of silver.

For example, Pan American Silver primary silver mines average yield fell from 6.2 oz per ton in 2004, to 4.4 oz per ton in 2015. 

Now that I have given you the evidence showing that the price of silver is based more on its cost of production than supply and demand forces, why will the silver price manipulation end?

Understanding Why The Silver Price Manipulation Will End

There are two ways to value silver.  One is based on its “commodity priced mechanism” and the other is due to its “high quality store of value.”  I already explained how silver is valued using Pan American Silver as an example.  If I added many of the other primary silver mining companies, we would see a range of estimated break-even prices in the $15-$17 range for 2016 (some maybe even lower such as Tahoe Resources, but they are an exception).

So, the Fed and Central Banks, using their member banks for trading purposes, make sure the price of silver does not fall too low below its cost of production.  This is why it is impossible for these member banks to push the price “WHERE EVER” they like, claimed by some in the precious metals community.  There is some method to the silver market rigging madness.

If the price of silver was pushed too far below its cost of production, traders would come in by the droves.  Thus, taking advantage of a low market price situation that wouldn’t last.

That being said, silver is also valued another way… as a HIGH QUALITY STORE OF VALUE.  Very few assets contain this ability.  Gold is another.  While silver is consumed and used in industry, it is also the number one invested precious metal in the world, if we go by ounces:

In just the last five years 2011-2015, investors purchased 1.14 billion oz of silver versus 223 million oz of gold.  As we can see, Platinum and Palladium physical investments are nothing more than rounding errors compared to gold and silver.

The reason silver is valued differently than just a mere commodity, is that it contains stored ECONOMIC ENERGY.  Someone else has to provide either labor, goods or services to equal the value in the silver coin or bar.  Physical silver investment is also much different from the majority of assets out there, such as Stocks, Bonds & Real Estate:

The Fed and Central Banks have thrown in tens of trillions of Dollars worth of liquidity since 2008 to prop up these assets.  Even though we had a short collapse of these asset values during the 2008-2009 downturn, they are back up in record territory.

Unfortunately, the highly inflated value of Stocks, Bonds and Real Estate are based on the burning of oil, now and in the future.  Those who own physical gold and silver, do not have this problem.  Why?  Because gold and silver coins already have the stored energy value locked in them, whereas Stocks, Bonds and Real Estate are ENERGY IOU’s.

BIG DIFFERENCE, most in the markets fail to understand.

To understand why U.S. and world oil production is in BIG TROUBLE, please read my article, THE COMING BREAKDOWN OF U.S. & GLOBAL MARKETS EXPLAINED… What Most Analysts Miss.

While the Fed and Central Banks can control the price of silver (or gold) based on their cost of production, they will not be able to do so when the Greatest Financial & Economic Ponzi Scheme finally implodes.  Thus, the value of gold and silver will rise to very high levels as they are finally valued as STORES OF WEALTH, rather than MERE COMMODITIES.

And it will actually be much more explosive due to the fact there is very little in the way of physical gold and silver in the world.  Unfortunately, most investors continue to pile into the TURBO-DRIVEN HIGHLY-INFLATED STOCK MARKET.  The resulting crash and collapse will be far worse than 2008-2009.

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60 Comments on "FORENSIC EVIDENCE: Why Silver Price Manipulation Will End"

  1. “t becomes extremely frustrating to watch the silver price fade lower and lower, especially as the Dow Jones Index gets ready to surpass the 20,000 level”

    In the land of the blind, the one eyed man is king.

    • Save_America1st | December 30, 2016 at 7:40 pm | Reply

      @Steve
      Neumeyer from AG came out a couple years back and wanted other major minors to hoard their PM’s and not sell in order to starve out the Crimex. None did so.

      Is it possible that they did not do so because most minors are actually participating in the Crimex paper manipulation fraud as a way to hedge the losses on their phyzz output sales???

      Just askin’…

  2. Oh, btw, central banks took over share buybacks from companies simply before it became too obvious. Its just a worldwide circle jerk of diminishing returns before we go back to normal. Whatever that is.

  3. Another great article Steve – I really needed the perspective – Im really getting tired of these Comex shenigans . . . cant wait for the real price discovery !
    Regards
    R.Marsh
    United Kingdom

  4. “That being said, silver is also valued another way… as a HIGH QUALITY STORE OF VALUE.”

    silver doesn’t “store value” any more than a hammer stores nails. it’s a tool to facilitate trade – whether or not there is anything to be traded is a completely separate issue.

    • Stored energy like a good quality hammer vs stored energy like silver. Almost gman….

      Silver, and gold, as intermediates between the hammer and the screwdriver. Ultimate stores of energy; physiccaly exchangable without the inconvenience of ‘needed’ or ‘not needed;

      Money.

      Money made the lady into a whore. Interests and greed made ‘money’ a tool of growth, infinite growth, sociopaths, politicians, ‘Wir haben es nicht gewusst”

      Google it.

    • DisappearingCulture | December 22, 2016 at 3:14 pm | Reply

      You have made this point before. It comes down to semantics. Silver is a high quality form of storage of something, if you choose not to use the term value. It’s one hell of a tool to facilitate future trade, if for no other reason than it’s indispensable role in industry. And compared to the iron in nails, it is rare.

      Also other than cash, nothing is as liquid as gold or silver to get cash…at a published rate in my area. Try selling any other possession as quickly as gold or silver.

      • “You have made this point before.”

        yeah, and nobody seems to get it. sure silver is “a tool to facilitate future trade”, but what you’re missing is that a tool has value only in and as it has utility. no utility, no value. and in a setting where the fiat debt federal reserve dollar is falling apart, and has taken the world’s financial and economic systems with it, leaving vast swathes of population in a 1400’s environment with no peasant living skills and no peasant resources but lots and lots of guns and ammo, silver will have little to no utility, because no-one will be trading anything, rather they’ll be taking and hanging on to everything they can grab.

        nobody here seems to get that. they think they’ll have the gold/silver and will just plug into the new markets and get whatever they need and will be the new kings on the motte-and-baily hill. they won’t be. they’ll be shot.

        assuming everything goes down that way. until then, g/s is just a lump. and if it does go down that way, g/s will be little more than a lump. g/s store nothing.

        • and you know this because…?

        • It will be a “lump” until it becomes store of value. At which time, those who are not holding “lumps” will be sorry.

        • Your scenario could certainly play out the way you mention. But other conditions can come into play. I think more people will have weapons than many think. So the act of gangs just going around taking what they want may not work out that way.
          And I also believe silver will always have some utility of use. it’s value can float because of various factors, but it will never reach a point that it is useless as a material of trade value. In the history of the world, precious metals have never been worth nothing. That isn’t going to change.

        • Mankind has seen this story before with one large exception. The cheap energy of the last 100 years has allowed the human race to over populate. The world cannot sustain the current population without cheap energy. I agree with gman on this point. The population needs to rebalance. Mother Nature will not be denied. After the rebalancing then I think you will see gold and silver take their rightful place in the monetary system. Assuming we have a monetary system. By the way..there is a reason Steve lives in a rural area outside of the large population centers.

        • gman, when things REALLY go south, gold and silver won’t help. Dollars neither. So, partly agreed, gold and silver (physical) is just a part of ones insurance policy. Diversify. Do you have something left or did you sell all of it? Just joking ?

      • If you are looking to get some utility from your kilo bars of silver, you can use them to enhance the heatsink performance of your MacBookPro. Feel for the hot spots on the desktop above the keyboard and put them there. 10oz bars are a little too small, 100oz bars are too big, kilo is just right.

        I’ve known since a young man that buying low is way better. Risk is low, and you get a bigger pile when you buy low. Near cost of mine production? Buy with each paycheck and sell your extra stuff to buy more.

    • gman.

      LOLOLOL… spoken like a TRUE KEYNESIAN.

      steve

  5. The markets can remain irrational, longer than you can stay liquid.

    • probably can remain irrational longer than you can stay alive. make sure your will is up-to-date so your kids don’t wind up fighting over all your gold and silver. and guns and nv goggles. and food, and place in the country, and bug-out vehicles ….

      • Did you receive your patent for the “Cold Fusion nuclear reactor”? Are you on track to take it “go live” as a functioning commercial facility by February 2017?

        Or how about that other backup patent of yours you were working on for “The Perpetual Machine”?

        • DisappearingCulture | December 22, 2016 at 3:16 pm | Reply

          gman is a contrarian. I like his comments. It makes one think.

          Merry Christmas, happy holidays to everyone. Drive safe, be safe.

          • “gman is a contrarian.”

            dunno … I feel like I’m watching some people playing a monopoly game, and they’re having a good time and some are saying, “I’m winning!”, and I’m pointing at a fire in the kitchen and saying, “no you’re not”, and they’re saying, “you don’t understand.”

            anyway, yeah, merry christmas.

      • go, troll. your babble falls on deaf ears here.

      • why do you feel it’s your job to make false assumptions about everyone who posts here?

        you know nothing about them. their investment portfolio. their goals.

        if you hate PMs so much, why do you bother hanging out here on SRSRocco?

        we’re all grownups. we make informed decisions. we don’t need your help. k?

  6. I just love the following paragraph Steve….. Enjoyed showing it to my wife and I will print it and show it to all my so called MATES at breakfast next week. LolLol

    Subtle…. Love that word, are you allowed to use words like DUMB, MORON and IDIOT today????

    Quote;

    “That being said, the best we can do when the fan finally hits the cow excrement, is not to tell our friends, associates and loved ones who didn’t listen, “I TOLD YOU SO.” Best to keep our big mouth shut. However, I don’t see a problem with wearing a T-Shirt that has “THANK GOD PRECIOUS METALS SAVED MY AZZ” printed on it. Nothing wrong with being respectful, but also subtle”.

    Merry Christmas to you and your family

  7. Steve,

    This is only a problem for dollarcentric PM owners saddled with the FED and our central bank machinations. Start watching the price of PMs in other currencies.

    The dollar price of silver and gold will continue to be pressured as the dollar strengthens as the rest of the world currencies collapse. The FED is the only central bank raising rates, strengthening the dollar and weakening the other world currencies. So the money is flowing into the US and US assets. Only when, nearer the end of the world credit collapse, the dollar is finally destroyed will the PMs come into their own.

    Don’t hold your breath and don’t wish your life away.

    Houtskool: Jawohl! Wir haben es nicht gesehen.

  8. Great article! However, I become worry when I see the data of Pan American Silver “Silver sold in 2004 -> 11 million, in 2016 -> 18 million. Do you feel easy if you invest in silver?

  9. Short of understanding all the financial instruments that make gold and silver so important. I must commend Steve on his insight and perspicacity. These insights certainly have elevated my understanding of the manipulation that convinces me a mere novice to be aware of the need to hold on to my nominal portion of the silver presently available. Merry Christmas one and all. Intelligent conversation is greatly appreciated.

  10. Thanks Steve, good work. Cheers-

  11. Great article thanks Steve, I am a PM investor and you are right, I do find it frustrating to see them basically flat lining. I particularly like the idea that ‘Energy’ is locked in. Just waiting to find it’s true value in the world. I suppose we should be grateful for that there is one investement vehicle still left open to the ordinary person that carries an ammount of sustainable value. On the upside the length of the price suppression means a bigger window of opportunity to quietly save.

  12. I look at Gold & Silver as a insurance policy! If & when the fiat currencies go down Gold & Silver will have much value especially if the new currency comes out backed by Gold & Silver. If the SHTF and it’s every man for himself and there is no food or water to be had then gman will be right Gold & Silver won’t have much value in this kind of scenario !

  13. JamesHK You’re figures of silver production increases from 11 to 18 million oz from 04 to 16 makes one wonder what kind of tonnage increases were required.

  14. When all this conclusions steve made about the energy storage of silver where right “one simple question”.

    Why does all the other countries not emptying the physical market?
    Even the complete silver market with 25 000 tonnen/year is not much money.

    • Do you mean the “real” physical market, or the virtual gold markets in NYC/London?

      I believe that the Chinese will prop up the paper markets so that they can continue taking delivery of actual metal at a low price in US Dollars (which they have too many of), until they can’t. Then, it’s game over.

      Jim Sinclair says $50 premium in SGE over NY/London vaults will set the world on fire with NetJets flying the gold East.

      Time to buy, if you can. Take delivery in-hand. If you hold the gold in one hand, and a rifle in the other, you own the things and yourself.

    • But they are, pdx is right. China is gobbling up close to 2k metric tons of aurum this year alone; it that’s not sucking up all a single country can, then I do not know what is! This flow of metal is not sustainable, so hang in there, the BRICS put is active and in play. In that regard the “when” becomes irrelevant and “when” is likely, when the least people expect it, when the last weak hand has become discouraged and sold their bullion or mining shares. They have a full insight into the paper and fizz markets, so they likely know when, but they don’t tell. But the smoke signals are there, just look at the latest COT report; they bought (paper) to the tune of +50 tons of aurum and this is just what they let us know… How barbaric !!!

      A great thanks goes out to Steve for his great and insightful work. I wish him and all a wonderful Christmas time and all the best for 2k17.

  15. I thought the article was excellent. It is not intuitive to think of a price discovery mechanism being determined by leveraged futures contracts instead of supply/demand. However, no previous system in the world has managed – in the long term – to repeal the laws of economics with respect to supply and demand. As silver is an industrial metal it is used up. Supply has to match demand (which cannot go away or be mediated by futures contracts). Ultimately inventories, (or lack of them) will mandate a divergence of deliverable metal and futures contracts and their derivatives. I expect to see a growing deliverable premium over spot price. This will eventually become run-away as futures of non-deliverable trend to zero.
    I think that we need to think systemically about equilibria. There are unstable and stable equilibria. If you have a market with a price discovery mechanism based on cost of production (supply) and demand (consumption), although the price can go up and down it is a stable discovery mechanism. What we currently have is an UNSTABLE mechanism. I say that because all major fiat currencies are carrying large amounts of unrepayable debt and because they are all in the same boat, appear relatively stable in respect to each other. PM’s should upset this delicate balance by inflating their price accordingly as fiat currencies debase. The banksters realise this and are manipulating the PM spot prices to hold together an unstable equilibrium. I think an analogy better than the dyke holding back the sea would be a dam holding back a river. It is an equilibrium of a kind – but unstable and unsustainable.
    The only serious question is “How long can the dam hold?”

  16. The asset classes are normally in compedition.Today the italian Bank Montie de Pascha is broken.
    The european layws normally don’t allow an bailout.But like always they break the law.

    And now my question:”Why should a bank buy silver, when speculating(risk) is for free”?
    Silver and gold are only usefull when inflation occurs.The small, normal investor didn’t buy silver and gold in the amounts, that where necesaary to dry out the market.This was always drifen by hedgefonds and ETF’s.

  17. Second example.I’am from germany.Today they announced the penalty 7 Milliarden Dollar(german notation).

    At he same day a new message from betraying Dt. Bank arrived.In total 5000 legal proceedings.
    Don’t think Dt. Bank is the one and only.It’s maybe the most worse……

    Do you begin to see the light?

  18. I dont think that you’ve proved anything. Precious metals are priced in a fractional reserve system on the comex. Silver and gold are not traded by supply and demand. Moneys supply and demand is measured by the rate of interest in a free market. We dont have free markets, fiat is required to pay tax bills etc. Silver and gold are held by people by and large, who dont worry about the day to day necessities. The have investments and gold and silver are reserves, They invest where there is scope for making profits and for these investments they use liquid cash, the sort that pays for tax etc. If gold goes up or down in value this has little to doewith the profitability of the miners. The gold prices are determined in a rigged market which is driven by fear of the central banks. The dollars price has to been maintained. Things will change when trust is lost in the current system. Arbitrage will be its undoing. After all a dollar has zero value. Dollars are used be people that need to put food on the table. A store of value is a spurious notion, a hole in the ground may take a large amount of energy to create bit it has zero value to most. Gold has been demonetised and until people feel they need it there will no big rush to buy.
    For traders as long as they can make money in the markets and buy gold as a reserve asset they will keep playing the game. The game is over when it runs out and that will be because of fear.

    • After all, if things were priced on cost, the cost of manufacturing a dollar is less than 3 cents? So why is it worth a dollar? and why gold at 1100$ or thereabouts?
      If you took the us monetery base and divided it by the us gold reserves, its been valued at somewhere between 10000$ and 50000$ There is no free market for the dollar and there is no free market for precious matals.
      Supply and demand verses production cost. There are numerous questions are posed here. Demand causes production costs to rise. Services supplied rise along the profitability of the product being supplied, as profits are squeezed, workers want more pay, productivity rises costs rise, costs of supplies rise So wealth spreads. This is the supply and demand dynamic that creates innovation and is he basis for the division of labour, in a free market.. The idea that manufacturing costs are set in stone is proof that there is no free market thoughout the entire industry.
      Pricing is dynamic in a free market, FREE MARKET.
      If costs are pegged at manufacturing cost, there is no free market, and a cartel is in force.
      So in summery if as you say the cost of manufacture is the price precious metal prices are priced at, then they are fixed by government or a cartel and by implication the government must be involved because of the price manipulation in the comex.
      So do you think that the government is going to de-regulate them and put the criminals who rig these markets in prison?

    • They are priced by paper supply (which for “them” is infinite) and demand, but the east, by means of cash for fizz, are slowly but surely putting an end to these paper-pricing shenanigans. When it dawns on the herd that only miners can “make money” and that they are holders of big bag full of worthless paper… …then all hell will break loose; unfortunately, the herd has already gone over the cliff and are just treading hot ri$ing DOW-air…

  19. Steve: Don’t worry. You should hear Tom Cloud’s recent commentary: 1.6 billion Muslims will be available
    under Sharia Law to buy silver, with gold problems in India, the Indians will rush to silver, there is
    only 5 to 7 years of silver left to be mined, China’s commitment to solar will raise industrial usage,
    manipulation by over 100 banks are now investigated and on and on. Put it all together and we are
    looking at silver priced like gold by 2020. You just must hear his commentary.

  20. production costs are not relevant for buyers: only factors: how badly is it needed and what price do I have to pay somewhere else. production costs determine obviously, at what price there will be any production… as for sellers: production costs are irrelevant as well: they try to get the highest price, even if zillions times the production costs.. obviously…

  21. Steve — This was a very well researched article. Thanks for sharing! I agree that the manipulation must eventually end, as no market can remain manipulated forever, however, I fear that nothing is stopping the manipulators from going on like this for another, say, 40 years, which is long past the point where most of us would hope to retire. It seems more likely that there would be some kind of “precipitating event” (financial crisis, war, currency crisis, etc) which would have to come out of nowhere and rattle large swaths of investors enough to overwhelm the manipulation. Now THAT would end the manipulation. As long as the general public remains basically content, able to buy a 30-pack of beer from walmart for a reasonable price, there won’t be enough investors who care about silver, gold, and other precious metals. IMHO.

  22. Thanks for another great article, Steve. Thanks everyone for the comments.
    I thank G+d for precious metals. Silver, colloidal, is the base of my natural medicine kit. When the neo alchemists get a handle on producing the ORME metals, gold will elevate my life. Gold and silver are in the Bible; fiat, not so much.

  23. Second comment…
    So intriguing that JPM and GS never named in the manipulation game. I guess it is a tell as to where power lies. Until JPM gets full to the vomit point, the price will stay down. Hopefully, that great regurgitation will come in my lifetime ?.

  24. Its a big club and you ain’t in it.

    Countries repatriate their gold.
    China is being abandoned by the moneychangers; their debt/gdp ratio has become unsustainable and they don’t deliver net energy.
    India is filled with 1.3 billion ‘useless eaters’; time to cull the herd by taking away the poors last straw
    Islamist terror in Europe; prepare the herd for closed borders to prevent the inflow of tens of millions as soon as things go south
    Trump kuddling with Russia; natural resources
    China dumps US treasuries; no more mister nice guy

    ‘They’ are in the know. Preparations are being made to de-globalize. Trade however is needed. Together with Russia they will manage MENA. Plans for a new financial system lie on the shelves.

    I’d like to sneek into the barn and see what’s under the maids blouse.

  25. Excellent article, Steve. It makes the same points made in a fine little 89 page paper back in my library entitled Stored Labor: A New Theory Of Money, by Hugh A Thomas (1991). I am now reading it for the third time, even though it was published 30 years after my enlightenment on money in 1961. Have you read it? When I saw silver coins disappearing from circulation, I took appropriate defensive action. Back then, I was reading about 50 books like The Legalized Crime Of Banking, by Adams, The Story Of Our Money, by Dwinell, Alexander Del Mar’s A History Of Monetary Crimes, Coughlin’s Money! Questions and Answers, Gold Swindle by George Racey Jordan, Money Creators by Coogan, Money Made Mysterious, American Mercury reprint, The Federal Reserve Conspiracy, by Mullins, Lincoln Money Martyred, by Search (pseudonym) probably Colonel E.N. Sanctuary, and God and the Goldsmiths by Wilson.

  26. Virginia, I echo your comment on when the regurgitation occurs since I am 83. I am currently using the colloidal silver generator sold by The silver edge which they claim is much superior to my first one in that it produces a much finer nanno solution which they further claim is much more effective and lasts longer.

    • Just eat your fruit and vegetables. And buy physical silver and gold. You’ll be fine.

      And stop trolling, your alternative medicine crap to mistify silver doesn’t work anymore.

  27. Above ground supply is up to a couple of years, the longer prices stay where we are at the longer prices will stay flat. I think gold price is in part driven by the cost of inflation. Silver just rides along, and the big boys play it like they do all asset classes. But, it seems the PM bubble might finally be settling, i think ETFs kept it bouyed until over production due to profitability factors finally caught up to it. I think we are stuck with a big pile of silver with nowhere to go.

  28. All human events can be visualized in hindsight on an X Y axis, with X being Intensity of the event and the Y axis being the duration of the event. As it pertains to the future we can only project. The worst case scenario as described as a Mad Max event will certainly place the highest utility on the basic elements of survival such as food, housing and protection.But the more optimistic can project a spike in the X (intensity) with a shorter Y (duration) followed by a quicker re-establishment of a more orderly human society. In this case gold and silver could emerge quickly as a highly valuable high utility asset. My personal opinion is that the human desire for order within any less densely populated geographic area will dominate as local authorities and people of good will self organize. Not so in the larger metropolitan areas.

  29. Hi Steve,

    Avid follower, first time commenting…

    If the price of Oil determines the silver price… Then as we have the thermodynamic oil collapse, I take it that you believe this correlation will be broken?

    I would be interested in the point at which you think this Oil prive vs Silver price correlation will disconnect?

    I somewhat disagree with the predicted price forecast of the thermodynamic oil collapse gurus… I believe that the price of Oil will go to the moon as supplies dry up. Which would continue the correlation between Oil Vs Silver….

  30. First of all from mining industry sources the cost to mine silver is over $7oz but this is misleading because this only pertains to those mines that are pure silver mines and this are far and in between. The majority of silver mined is a by-product where companies are looking for more valuable base metals so the actual cost is extremely low.
    Mining companies are notorious for being poorly managed. The better managed firms like most firms who produce a physical commodity like metals, wheat, cotton, crude, sugar, etc. hedge their production on a futures exchange like the CME, Comex, ICE, Chicago Board of Trade, etc. with speculators taking the other side of the trade. When prices of the underlying commodity rise they sell their physical production with the hedge expiring worthless and make money. When prices fall they exercise their hedge, settle in cash and still sell their production and still make money. This is what the futures markets are for.
    All commodities trade the same way and when price gets to a certain point demand falls and then price. As the dollar hits record highs and the US is a huge exporter of commodities, this causes these products to be too expensive in foreign markets with demand falling then price and this is actually what we have been seeing for months. The FED wants and needs a weaker dollar not only to help exporters but banks who have lent over $9 trillion in dollar denominated loans to foreign entities and a strong dollar makes these to difficult to service. So the theory that some “cartel” is smashing metal prices to instill dollar confidence is simply not true when the FED wants the opposite to happen. Why? To crush exporters and banks?
    The silver price is more sensitive to demand than gold as 70% of demand is from manufacturers, (electronics, autos, solar panels, TVs, appliances, etc.), and retail jewelry. With retail sales collapsing the demand is going down not up.
    Equity markets are not overvalued. The S&P P/E ratio peaked in the 87 crash at 50/1, dot com bust at 46.5/1 and in 2008/9 crisis 122/1. Today it is 24/1. The Dow cannot collapse with the S&P at these ratio levels. If the Dow closes above the 19970 reversal; level at Decembers close the market will keep rising to 20,000 then to 23,000. If price close below, the market may have a normal correction before moving higher which is what a lot of traders and investors want so they can buy on the cheap. All collapses are caused when there is a high retail participation in markets, they get spooked, prices fall which triggers HFT algos sell orders and off we go. Today we do not have that concentration of retail traders in the markets.
    The price rigging was actually by a handful of banks using the twice a day London metals fix where they were lowering price fleecing miners and then raising price gouging wholesalers. They were helped by the bank’s traders who were moving price down and then up taking out other traders stops in the cash or spot market. The Deutsche Banks docs show that this was not taking place in the futures market as so many metal promoters have been claiming.
    Now if you trade currencies you would have notices something interesting for months. Up until about 10 weeks ago the HFT algos on the Comex were driving the price up not down consistently to the 1362 bearish reversal level adding shorts and then riding price weakness back down. About 10 week ago currency traders in London started monkey hammering the EUR/USD and GBP/USD crosses and driving up the USD/JPY cross all causing additional dollar strength. This moved price from the 1362 level to the 1240 level where the algos were then moving price up consistently to around the 1300 when New York was creating short term dollar weakness when London closed, then adding shorts and riding price weakness back down when London was at it again the next day. London did not let up and this drove price down thru the 1240 level to where we are today at around 1130. As London has over twice the volume of New York and this involves 4 of the 5 world’s reserve currencies the daily volume is in the trillions.
    Gold did not break the 1362 reversal at July’s close, nor August, nor September nor the quarterly close all indicating price weakness which we saw. Nor did it break the October close nor the 1272 bearish reversal level at Novembers close all indicating additional price weakness which we are seeing now. Gold is going under $1000.

  31. Nice article Steve;
    You put forth a lot of pertinent facts, but your conclusion doesn’t add up to the facts presented..
    You CONTINUALLY KEEP HARPING on your “”EROI””
    Get over it, and get on with your life…
    It ain’t going to play out in your lifetime,,,I assure you
    If your EROI were the case in point, why the heck does Pan. Silver bother to stay in business..
    Think of all the EROI put forth for an Ounce of Silver…
    You just defeated your EROI theory …
    Happy Holidays to you…
    Take Care

  32. @houtsskool
    Your ignorant remark about therapeutic silver needs to be shared with bandage makers, hospitals,and especially burn centers. Seems they have wasted their time and a lot of money on worthless silver compounds and treatments. And continue to find new worthless therapeutic uses.
    It must be tough to know more than those chemists and scientists combined.

    • Hi Gary, colloidal silver has some good uses.

      This is about societal collapse through thermodynamic and eroei issues. So stay on topic, there are too many trolls out there trying to undermine the real issue. By going full keynesian, full retard or by changing the subject.

  33. banford hunkerfordly | December 25, 2016 at 6:33 pm | Reply

    treasury must stop munipulation of gold and silver. the exchange stablization act of 1934 is being abused and their are no free markets in anything due to their illegality

  34. Just recently visited a growing resort area on beautiful beaches in Mexico. This is one country with silver mining as one of their leading industries.
    Within this affluent community on the coast there are a number of silver shops which sell all kinds of beautiful pieces of hand made jewelry . Very recently one of the shops was jacked close to 30 million U.S. dollars worth in the physical. Seems to me that the ones doing the heist knew well and good the value of something that stands for more than ” no utility, no value “.

    Better rethink that one gman.

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