I've watched videos online and still don't understand it very well. Can someone explain it in very easy terms how this works and why silver is at a low right now? This was the video I watched earlier. [youtube]https://www.youtube.com/watch?v=Gl47z2g2EvI[/youtube]
I can't really because its a very strange business. It's a rigged market and it suits insiders for it to be that way. Contracts to deliver silver in the future determine the price. But the amount of these contracts far outweigh available real silver. The big money, the commercial traders, can apparently generate at will these promises to deliver silver in the future and swamp the market with sells. All the speculative buyers are saddled with the obligation to settle their obligations to buy at the transacted price while the silver price is forced lower and lower. This cause the speculative buyers to sell to limit their losses thus amplifying the effect as it increases selling. At the same time other buyers will step back and not bid in a falling market that they know is rigged by big players. At some point the big fjkers reverse their stance and start buying everything back that they've sold but at a lower price. And it's all done with electronic contracts on an exchange - little or no real silver is exchanged, but this perverted process does determine what real physical silver outside the process is paid. These lowlife frking scumbags then .... I don't really understand it myself, and I first bought silver in 2003 .... Here's your Youtube vid: [youtube]http://www.youtube.com/watch?v=Gl47z2g2EvI[/youtube]
They put out massive amounts naked shorts (sell) in a millisecond which drives the price down. They then withdraw the naked shorts in another millisecond before they can be "purchased" and swoop in and buy at the lower prices that trigger computer stops of others. (Price at which their computer is set to sell at should the price decrease to that level) The why is because the banks are in the fiat business where they can make exponential profit over the PM market so by keeping gold and silver down it helps prop up the fiat.
Sounds like pretty standard trading strategies for High Frequency Traders, which are just as active in futures markets as equity markets Whether you'd call it manipulation or not is another question....... but it does occur
THE TRAIN IS LEAVING THE STATION! IT'S GOING TO DA MOON! LAST CHANCE TO BUY AT $50! Money for nothing club grabs profit. OMG DEFLATION! Drama. FRIGGIN' MANIPULATION BY THE CARTEL! OMG 2008 WILL COME BACK! I'M OUT! Panic selling. Money for nothing rushes back in. WOW! UPTREND! I FEEL IT'S TIME TO BUY!
^^^^ That definitely happens in the share market. They use special order types, get closer to the exchange and use faster computers to get their orders generated and to the market before other people are even getting information on the state of the market to make decisions about. Your talking about systems that buy and sell the same stock multiple times a second. They make millions by eating tiny fractions of a cent off massive trades over and over. It works pretty well but every now and again something goes wrong and you get a flash crash. Whether this is actually happening in metals hasn't been talked about as much as the stock market but there's no reason why this shouldn't be the case. The well documented manipulation has to do with investment banks and big funds using their size to kick the smaller silver market around in ways they couldn't in bigger markets. There is also some discussion about how much silver and gold is backing the paper contacts. Some people say the ratio is 1:100 on the comex and is getting lower, possibly as low as 1 ounce for every 400 bought and sold. I've read articles where they discredit this sort of thing so I can't really comment. The new shanghai exchange is supposed to fix some of these issues though. What I do know is that when people are buying and selling what they think is actually physical gold and silver electronically they often aren't. People have won class action law suits against big firms that were charging vault fees for gold that people thought they owned. As it turned out there was no gold and they were just settling any profit or loss difference in the price at the time of clients sale in cash and pocketing the vault fees for the imaginary vault. This is important because it means there is less gold and silver around than people think and less gold and silver than is being traded. The most basic law of economics is supply and demand and if there is less of the product than people want to buy then the price should go up. If those people had bought physical gold/silver instead of unknowingly just trading on the price of gold/silver they would have taken metal out of the market and the price would have gone up to reflect the smaller pool of available supply. If everyone who trades paper bought real physical metal there wouldn't be enough to go around and the price would jump higher to reflect the actual level of demand. Is that manipulation? Sort of, but then how many of those people actually prefer trading on the price of silver or gold instead of actually trading silver or gold? It probably doesn't matter much to most of them, although I'm sure there are enough of them out there that would choose to actually own the metal even if it's held in someone else's vault, that it could positively impact the price. In that respect it's a form of price suppression.
Which paper contracts? Shares from ETFs that track the price along simulteanous purchasing / selling of the commodity (not derivatives like futures), have a silver stock whose size corresponds to the amount shares. They publish the bars serial number lists. That all sounds like 1:1 to me. Futures? A 1:1 stock, or any stock at all, is just irrelevant there, a mere percent of the contracts ends in a metal ownership change, most just end in dollar ownership change, which was the intention from the beginning and also the reason for futures. Allocated is pretty much the same as ETF's, only that you actually own the metal, which isn't the case in ETF's. So, which paper contracts do you refer to here?
This is what a flash crash looks like. We might see one in metals one day. Possibly even a whatever the opposite of a crash is (flash rally? ): [youtube]http://www.youtube.com/watch?v=86g4_w4j3jU[/youtube] Documentary on how high frequency trading shears the market: [youtube]http://www.youtube.com/watch?v=aq1Ln1UCoEU[/youtube] Mike Maloney isn't exactly impartial or universally accepted but he goes through some of the more common silver manipulation ideas here. Not saying he's right about everything he says but it gives you an idea about what a lot of people are arguing about: [youtube]http://www.youtube.com/watch?v=pB_aZo5emio[/youtube] Here's a piece on people thinking they are buying physical silver held in a vault buy aren't. Skip to 23:45 for that specific bit (whole thing is worth watching though): [youtube]http://www.youtube.com/watch?v=Dt7hTCeoXUM[/youtube]
Contracts don't need backing - they are mere contracts, and do not pretend to substitute for phys. The only ones who take issue with this are the PM bugs, as the argument suits their cause.
Conspiracy theories provide a comforting veil over the harsh reality of a world in which we are all participants. We want to believe that someone is in control and that there is always someone (else) to blame. In most cases, the reality is not so clear cut.
It depends on which kind of paper contracts, as I asked in a previous post. The only ones that are ignorant are the wrcmads, as the lack of clarity suits their misleading.
ETF's are not contracts. Nor is allocated. So there was no "which contract" in your previous post. Ignorant stares itself in the mirror. Learn about the markets before you blah blah.
