Merged Silver Over 40.00 / Real and fake prices

[michaelsuede]

How do you reconcile "junk high risk products" containing "fraud" with "silver just broke 45 today."?

Since SLV is pegged to the physical price (check it), how can one (the price) be fine with you if the other (the ETF price) is not? And if the ETF price is fine too, what's exactly wrong with it?

Bear in mind that people long of it hardly want the physical metal; they want a price gain.

I thought I explained my position on the SLV trust quite clearly.

Claiming SLV is the same as physical silver is a joke.

By the way, silver is in backwardation with immediate physical delivery commanding as much as 10 dollars an ounce over spot.

Why might that be hmmm?

Possibly because more people are waking up to the fact that the ETFs are full of **** on their holdings?

 

[Francesca R]

Nope, you didn't.

SLV is pegged to the silver price. If you think it has not been, at any point in its life, prove it. (PS: the existence of backwardation isn't proof of it).

So if you think the SLV price is dodgy, you think the silver price is as well. Except you apparently don't.

So try again.

 

[michaelsuede]

Why would anyone assume anything in their investing?

Because the government tells them they are safe.

The government tells people not to worry about what their bank is investing in because they are protected by the FDIC.

The government tells people not to worry about bank runs because the Fed is there to bail out banks.

The government tells people not to worry about banks lending over their reserves because the collateral is good as gold (lol).

The government tells people not to worry about securities fraud because the SEC is on the job.

This is all what economists call "moral hazard".

 

[michaelsuede]

Nope, you didn't.

SLV is pegged to the silver price. If you think it has not been, at any point in its life, prove it. (PS: the existence of backwardation isn't proof of it).

So if you think the SLV price is dodgy, you think the silver price is as well. Except you apparently don't.

So try again.

Ok, I'll rewind and slow this down for you since you can't grasp simple concepts like:

1. the SLV is not redeemable for silver in an emergency

2. the SLV may be shut down for a variety of arbitrary reasons and investors may be paid in fiat instead of physical silver

3. no one is responsible for monitoring the quality/content of the SLV trust's silver holdings.

4. The SLV trust's inventory accounting is sketchy at best

Thus, my beef with SLV has NOTHING TO DO WITH THE PRICE OF SLV and everything to do with how it is managed.

 

[Francesca R]

Right--so it can be all of those things, and yet fail to distort the spot price of silver, in any way?

And its price still won't diverge from the price of silver?

(And most people would be indifferent to getting money rather than silver, as long as the price is true. Indeed, that's what "silver just broke $45" means--that marginal investors--those redeeming or buying SLV for instance--are indifferent* between $45 and an ounce of silver)

*Strictly, they're indifferent if the price is only just at the right level to stop them trading, but hopefully you get the idea

 

[michaelsuede]

Right--so it can be all of those things, and yet fail to distort the spot price of silver, in any way?

And its price still won't diverge from the price of silver?

(And most people would be indifferent to getting money rather than silver, as long as the price is true. Indeed, that's what "silver just broke $45" means--that marginal investors--those redeeming or buying SLV for instance--are indifferent* between $45 and an ounce of silver)

*Strictly, they're indifferent if the price is only just at the right level to stop them trading, but hopefully you get the idea

It DOES distort the spot price of silver if they are claiming that they are holding more silver than they actually are!

Which is what they are doing!

This is why immediate physical delivery is commanding such a huge margin over spot. Some investors are catching on that SLV and others like it are full of crap.

But that price difference from the naked shorting of JPM and the accounting fraud of SLV is uniform across the entire silver market.

Thus their manipulations will not display as a price difference just in SLV, it will show up as a difference between immediate physical delivery and the futures price of silver itself.

SLV does remained locked to silver's spot, but the actions of SLV are directly manipulating the spot price of silver for the entire silver market.

And no, people will not be indifferent to fiat over silver if fiat doesn't buy you a loaf of bread. - holding silver as a hedge against inflation is done for the very reason that people fear fiat will no longer be worth anything! The real money is the metal, not the paper.

 

[Francesca R]

SLV does remained locked to silver's spot, but the actions of SLV are directly manipulating the spot price of silver for the entire silver market.

Then why did you start a thread celebrating the dollar price of silver?

Why do you own it if its price is manipulated (by fraud and ponzi schemes). After all--those are the reasons you won't buy (or sell) Treasuries and presumably try not to hold cash.

You seem to have unleashed your conspiracy theories on yourself. Congratulations!

 

[michaelsuede]

Then why did you start a thread celebrating the dollar price of silver?

Why do you own it if its price is manipulated (by fraud and ponzi schemes). After all--those are the reasons you won't buy Treasuries and presumably try not to hold cash.

You seem to have unleashed your conspiracy theories on yourself. Congratulations!

Because the price of silver is going up and I hold silver?

We'll see just who gets the last laugh here.

Not all conspiracy theories are false, and there is a lot of evidence to back my position.

When SLV is shut down for fraud and the price of silver explodes, I'll be LOLing all the way to the bank.

Silver has no where to go but up - into the stratosphere.

The price is being manipulated, in the DOWNWARD direction. Which means I stand to make a lot of money when the fraud finally comes to an end.

 

[Francesca R]

But it's going up because it's manipulated (according to you)

Or do you think that it is being manipulated down? That isn't very congruent with your backwardation observation

In effect you are saying "Fraudsters are pushing up the $ price of silver. I'm in that trade and I'm laughing!".

I am trying to work out the difference between your actions and the actions of those you rail against. Not coming up with anything so far . . . .

 

[michaelsuede]

But it's going up because it's manipulated (according to you)

Or do you think that it is being manipulated down? That isn't very congruent with your backwardation observation

In effect you are saying "Fraudsters are pushing up the $ price of silver. I'm in that trade and I'm laughing!".

I am trying to work out the difference between your actions and the actions of those you rail against. Not coming up with anything so far . . . .

It is being manipulated in the DOWNWARD direction.

It is extremely congruent with backwardation, in fact backwardation is an indicator that the futures price is being suppressed.

My position should be blatantly obvious given that I'm claiming SLV is holding less silver than they say they are.

 

[Francesca R]

And its in backwardation?

OK never mind . . . . I think you're flailing a bit and I have to sign off. (ETA: I guess not quite!)

 

[michaelsuede]

And its in backwardation?

OK never mind . . . . I think you're flailing a bit and I have to sign off.

If you don't understand why immediate physical is going to command a higher price if the futures market is being fraudulently suppressed I can't help you understand things any further anyways.

 

[michaelsuede]

Here's a nice article on silver backwardation, why it matters, and why it is entirely congruent with every claim I have made:

http://seekingalpha.com/article/252741-why-silver-backwardation-matters

 

[Francesca R]

It DOES distort the spot price of silver [ . . . ]

the actions of SLV are directly manipulating the spot price of silver for the entire silver market.

the futures price is being suppressed.

the futures market is being fraudulently suppressed

Make your mind up . . . (And how can an ETF "suppress the futures price"??) . . .

Like I said--flailing. . . .

I think you should just concentrate on this chart:

 

[michaelsuede]

Make your mind up . . . (And how can an ETF "suppress the futures price"??) . . .

SLV claims they have x holdings of silver

SLV actually has x-(some amount) of silver

As investors invest in SLV thinking they are getting an asset fully backed in silver, while they may be getting worthless paper.

The addition of the worthless paper to the silver market drives down the spot and futures price of silver itself because investors falsely believe there is more physical silver in existence than there actually is.

As investors discover that SLV may not be able to cover all of its paper issue with actual silver, they start demanding physical delivery.

This drives up the immediate physical delivery price of silver leading to backwardation.

JPM jumps in by naked shorting the futures markets, driving down futures prices. JPM has also sold off epic tons of silver over the past few years, which has kept the overall price low. JPM is now out of silver.

The total amount of silver in existence is going to have an impact on present as well as futures prices.

This is a classic "bank run" scenario in the making.

 

[michaelsuede]

Also, if you believe your own chart:

[qimg]http://www.internationalskeptics.com/forums/imagehosting/127464da880ed4a0c1.jpg[/qimg]

Then you must believe inflation is spiraling out of control at a rate of nearly 10% a week.

 

[Francesca R]

SLV claims they have x holdings of silver

SLV actually has x-(some amount) of silver

If you think that iShares/Blackrock are lying on this page, you can blow the whistle. I will assume your suspicion is groundless until I hear about it in the press.

As investors invest in SLV thinking they are getting an asset fully backed in silver, while they may be getting worthless paper.

It has been explained (post 90) that if investors think that they are wrong. You don't buy ETFs from the operator of the trust, as the "E" in the name suggests you buy them on an exchange. That is, you buy them from other market participants who are selling. Other participants may have borrowed the ETF to go short, and if they have borrowed it then someone else who is long has lent it out (or authorised their broker to do so). And if they have lent it, they can't redeem it before they call it back.

ETFs are derivatives. Calling foul on them because all the long positions in the market (which is quite different from all the shares in issue) are not being backed by underlying is complaining that they are not something that they never said they were.

The addition of the worthless paper to the silver market drives down the spot and futures price of silver itself because investors falsely believe there is more physical silver in existence than there actually is

If by "worthless paper" you mean synthetic long positions (longs where the ETF has been lent out) and synthetic short positions (where it has been borrowed and sold), then (i) there is nothing worthless about them because they are synthetic [Recall you said: "There is nothing inherently wrong with private debt products or shares of ownership." in post 114], and (ii) there is--funnily enough--always an equal value of synthetic longs and shorts. There cannot not be. Therefore you have not justified why this would depress the price, spot or forward. Market sentiment is what lifts and depresses prices. I have a hard time believing that sentiment is pessimistic.

As investors discover that SLV may not be able to cover all of its paper issue with actual silver, they start demanding physical delivery.

Investors who are long SLV but who have lent it out (or allowed their broker to do so) can't do that anyway.

Beyond this, your assertion that the $ silver price is some kind of artificially depressed "inverse bubble", which is what I understand you to be saying, seems to veer into extraordinary claim territory.

 

[Francesca R]

Also, if you believe your own chart:

Then you must believe inflation is spiraling out of control at a rate of nearly 10% a week.

Why? The chart says that the price of an ounce of silver (in ounces of silver) is still 1.00. If the value is in the metal, rather than the $ price, ["The real money is the metal, not the paper."] then that's about all you have to say.

 

[roger]

Why? The chart says that the price of an ounce of silver (in ounces of silver) is still 1.00. If the value is in the metal, rather than the $ price, ["The real money is the metal, not the paper."] then that's about all you have to say.

Now now, don't mock his glee at getting all of this worthless fiat money. It's going to be worth a fortune someday!

 

[mhaze]

Make your mind up . . . (And how can an ETF "suppress the futures price"??) . . .

The point michaelsuede is making is terribly simple, so if you cannot understand it, go back to kindegarden. We'll wait.

ETFS can on ocassion create an excess of supply, which lowers price (assuming that the consumer believes the ETF is roughly equal in value to the physical metal or other alternatives and they do, largely).

Thus, ETFs can distort a commodity price.

If ETF such as SLV was shut down, then the propaganda by numerous interests aligned with the US government would be (A) those precious metals are risky! (B) put yer money in safe tried and tested treasuries. If people believed that, that would be a factor calculated to move metals interest and prices down....eg "pop the bubble".

But the move into metals is a reaction to distrust of government policy, so that ain't going to happen. As a side note the UT college system just put $1B which is about 5% of their investment into physical gold bullion. Precious metals, as a result of bad US government fiscal policy, have became a mainstream, accepted investment.

Eliminating SLF would lower the quantity of "silver like" investments, thus driving the price UP. But that does not happen in isolation, alternatives intervene. For example these people trying to grab that silver likely would say "Hey gold isn't looking too bad, let's do that instead". As Julian Simons noted, alternatives always come into play when something gets expensive.

Silver is unreasonably high right now because it was being touted about 6 months ago as an alternative to gold which was being said to be overpriced.