Supply and Demand states that Silver must rise in the long term?

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Sounds like it is mostly talk/political rallying at this state. This is curtesy of the Washington Post.

http://www.washingtonpost.com/blogs...and-democrats/2012/03/06/gIQA7geouR_blog.html

 

Unless there is a definition of "doomsday" from their perspective, then it doesn't matter. People toss this word around these days to describe situations such as loosing their credit rating.

 

That's a big assumption. Nobody knows whether or not it is naked shorting. It is just as likely that some contracts were closing out long positions and others were for basis trading for holders of physical silver to earn an income from their physical holdings. This silver doesn't have to beh held by Comex.

 

When this occurred, it was on the first day (or maybe the day before because of leap day). Once those notices are put out the it is required that the silver be delivered to the comex warehouses as the contract has to be settled by March 30th. (Comex rules) This is the reason for knocking out the longs before this happens as the CME has to match up longs (buyers) with shorts (sellers) so the longs can get their physical delivery and the shorts their money. If all those contracts were allowed to stand, I'd say there would be pandemonium since, IMO, there isn't enough monetary silver available to fill those orders.

Of course some do allow them to stand because they know this and will hold for delivery knowing the alternative is they will be paid a great deal more in a cash premium as an alternative.

Of course there is no direct evidence of this and what I post is an opinion only. The reader can decide the worth of it. I do agree with you that Ron Paul and Bernake's dog and pony show at Congress little to do with this. Congress hasn't done anything to fix any of this and isn't likely to do so, so Paul and Bernanke can continue to do their dance. It matters not.

note: monetary silver = bars I don't know if they accept standard bank bags of silver coins.

 

This gets repeated so often on the internet that it is generally believed. I'm not so sure about it. It is equally possible that large quantities of silver are held in non-public vaults [e.g., government of China], and that this is the real backing for many of the contracts. Of course the metal will never be physically delivered and never reported except as required by regulators. But this seems more likely to me than stories of wild naked shorting. But as you say, it is all opinion because we have no way to know.

 

Why would we have less silver on the planet ?

We don't have less silver on the planet. We have the same number of silver atoms (or moles, or whatever) at all times. For all practical purposes, silver atoms are neither created nor destroyed - but they can be found in different forms.

We have MORE refined metal, not less; as ore is refined, we have less ore and more metal. But we have the same amount of silver; it merely changes form (ore to pure metal to coin and jewelry back to pure etc...)

Market price is not determined by how much silver exists in the world, but rather by how much is actually on the market at any given time. Since silver comes in many forms (raw ore, pure, sterling flatware, jewelry, US 90%, world mix, big bars, small bars, etc), your price will vary depending on what form you want and how much of that form is available relative to demand for that form.

 

We know this. A short or long contract belongs to a named individual, company, or corporation. If said party part puts up the silver for sell on the comdex, then it's expected they have the physical silver to sell, or it's a naked short. Since governments don't speculate on the comdex, then we can also assume that any silver they hold, out of the public's eyes isn't being used for this purpose. They would have to lease it (validates my topic on PM leasing) or there is illegal activity taking place.

We are talking about ~7800 US tons of physical silver. To put this much silver into perspective, this is equal to the all the ASE's produced by the US Mint from 1988 - 2010. i.e. 23 years of American Silver Eagle production. it's the same weight as 3,500 Ford F-150s. Yet the Comex has shorts equaling this amount of silver dumped into the market in just a few hours. (assuming the figure above is correct)

Unless there is a reasonable explaination such as this amount of silver on some corporate balance sheets, I'd say there is naked shorting taking place.

 

I suppose you are right that the contracts are not naked since they do exist. However the silver is naked, since it doesn't exist. Whether that is naked shorting or not, I don't know. Somebody does know whether it is naked or not though, they're just not talking about it. The fact that the silver doesn't have to be held in order to be sold is the concept I was referring to as naked shorting, maybe incorrectly by the letter of the definition, but it is still a fake market.

 

What you are missing is that the short isn't naked if they have the silver no matter where it is. And they don't have to deliver anything if they plan to buy offsetting contracts and notify the regulators of their intent. Nobody knows what goes on between the regulators and market participants, but you are assuming that you know. To just state the the silver doesn't exist isn't good enough when all of the evidence is to the contrary.

 

You don't know that the silver doesn't exist and neither does anybody else who is not involved in the transaction. We know that the silver isn't being delivered, but that is the extent of it. Everything else is speculation.

 

Well, being really technical, there probably is less silver on the planet due to space exploration and its use in space equipment.

But I think what JCB is talking about is the silver that is ending up in landfills, buried in the ground (ie dropped coins), and other unlikely-to-be-recovered instances that I can't think of right now.

 

I'm not missing it. If they had the silver, they would not be paying off people a handsome premium not to take delivery or trading 23 years worth of US Mint production in a single day.

For the purposes of this topic, "Supply & Demand states that Silver must rise in the long term?" I think this example makes the answer to that question obvious. Answer being NO. As long as the banksters are allowed to create infinite amounts of paper contracts, then the mint could sell 10X the amount of ASEs and it wouldn't make any difference.

 

I suppose if you take the question in it's literal sense, but how many durecell batteries are at the bottom of landfills?

 

David Morgan said there were only 30 million oz of silver in the COMEX vaults in an interview with Jim Puplava this week. So we do know how much exists in their vaults, and it is much less than they are selling. If they are selling silver that isn't in the vaults, I guess there's no way to ever know whether they have it or not. Is that what you were getting at? The shroud of secrecy alone is enough reason to give me pause. Good deeds don't need the cover of darkness.

 

It wouldn't make a difference until the effect of paper contracts keeping the price artificially low causes the supply to diminish to the point where industrial demand cannot be met, and then no more iPads, laptops, or cell phones. At that point, over the long term, I think that the price must indeed rise. Short term, no it doesn't have to.

 

^Ultimately, this is the end result. Whenever the banksters pull this stunt, some silver does leave their hands. Knock down the price of silver and those looking ot aquire the physical stuff have a great opportunity to force delivery which they can then cart off for their own uses. It's the reason, IMO, that are not seeing $17 silver like we had a couple of years ago.

If, on the other hand, the banksters gave the same incentives to PMs, instead of disincentives, like they do to the US stock market, then PMs would be at least 2x-3x higher than they are now. They don't get a free ride there either. Inflate the stock market and the price of oil gets inflated. Revolution comes next.

What's the problem here? Giving this power to the banksters in the first place instead of letting the free markets deal with it. There are of course markets that are described as being free but they are hardly that.

 

I would bet relatively speaking very little silver ends up in landfills. In fact I'm inclined to believe that 80% or more of all the silver ever mined is in the hands of mankind and exists in its pure form or is only a few simple processes away from being so.

 

Bid volume and prices of gold coins in auctions have increased in last week or so. Not sure if this indication of spot prices raising in the future or blind euphoria.

 

Regarding whether the price of silver HAS to go up long term, I would say yes since we are in a economic systems where the preferential movement is towards mild inflation. Therefor mild inflation will always be the goal of all regulators, and this will cause all assets to inflate and go up over time. I don't think it has a lot to do with supply/demand other than the assumption that all inputs to production will also go up.

Regarding the big bad evil sellers of silver. Did you ever stop and think that most buyers would not wish to BUY as many ounces as they have contracts for either? You are correct that not all contracts could be delivered if required, but on the flip side the vast majority of contract buyers would not WANT delivery.

If they went back to physically delivery on every contract, they could. However, that market was so very manipulatable that we would have 100 times as many threads on how people are manipulating the market than we have now. My company participates in a market with physical delivery. The largest firm in this industry has lots of reasons to keep prices down, and punk the market intentionally anytime they wish. If you want a market where a Kitco or someone could drive prices down to $10 an ounce at will, buy up stock at those prices, then allow it to go back up, please keep pleading for a physical only market. There are a lot of excellent reasons why the current market is the way it is, although many are ignorant of that, and then post on their blogs how its all "manipulation".