IT CAN NOT HAPPEN TO ME. GUESS WHAT? IT WILL!!!
Chapter 18
The SHADY SIDE OF SILVER
While everyone seems to ignore the casino atmosphere of the securities markets worldwide, there is a time bomb about to explode.
The volatility of the silver futures market is like bungee jumper without a rope.
It seems a complex game, but when you break it down, we all going to pay the devil. We all know it is wrong, but few speak up.
For starters , The Federal Reserve Board of the United States and other central bankers around the world are keeping their funds which they transact business with other member banks artificially low. This was done during the banking crisis, but they have failed investigate the abuses.
One glaring abuse is a major bank can “borrow” a million dollars and with high frequency trades [i]and short the silver contracts on the COMEX .[ii] They are selling contracts that they do not own. Another scheme is to place factious orders to sell to scare the buyers away. This drops the bids temporarily low. In an nano second the computers cancels the sells and instead buy at the depressed prices. These trades place an artificial cap on the price. Now the computers , some instances are trading among themselves with no human benefit.
AS is the case of silver, the industrial demand far outstrips the world’s supply. The total amount used is 755.7 million ounces. Here is the breakdown for industrial uses. One can quickly observe that over half is for industrial use.
Silver has unlimited applications in science, industry and art plus investments. Total demand in 2010 was 487.4 million ounces for industrial use only. 167 million ounces were used for jewelry and 101.3 million ounces were used in medals and coins which were probably increased in 2012 because of the Olympics. Silver is used 1000 ounce bars for industrial use. There is about 1.25 billion ounces of silver in the entire world in 1000 bars. These bars are not just floating to be plucked out of thin air. They are often broken down for use in computers and solar panels and mirrors just to name a few.
J P Morgan Chase was reported to be short 95 million ounces as of August 18, 2012. The 8 largest silver traders are short 40.9% of the entire COMEX future trading on a net basis. These contracts are in 1000 ounce bars. This will take over 100 trading days for them to cover(buy back) their shorts sales. This could be the straw that broke the camel’s back as far as inflation is concerned.
When industrial users discover they might have a delivery problem they more than likely double order. This in itself will put added pressure on the shorts and send silver on a par with gold. There is three times more gold around than silver. If silver ever reached the price of gold, forget the Euro and everything else. Heaven Forbid!!!
What one can do. Own silver for cash only. NOW
What the authorities must do worldwide.
Raise Interest rates NOW.
Abolish margin rates NOW.
Bring back the uptick rule NOW.
Reinstate the usury laws NOW.
Hire outside Law firms that will sue or try violators ona contingency basis. There only fee will be a fee based upon a predetimined percentage of the judgement. If they loose – no fee. This will give would be violators second thoughts of breaking laws.
Finally go back to chapter one and review every chapter that I have written so far
Cheerio !!!
COMEX(Commodity and metal exchange) offers gold, silver, copper and aluminum contracts as well as FTSE Eurotop 100 and 300 stock indices.
[ii] High frequency trades (HFT) are done by computing an allogrintem into a computer program that will trade silver contracts in nano seconds. This can also be done by posting factious offerings to scare away would be buyers causing the security to drop in value quickly. Then in a nano second it will buy back the security. The difference in sale price and buy price is the profit. Using a million dollars on margin; fractional change in price can be a tidy sum. It is estimated that 80 to 90% of all trades are now HFT’s.