Paper trading and manipulation in precious metals
By Vin Maru
Tuesday, 20 March 2012
Forget about “Give me a break”, it seems like you can’t even buy a break with precious metals this past week. The metals still trended down as I suspected they would and even went a little lower than my down side possibility with gold. The recent activity around precious metals and the quick draw down days where the metals get hit hard does reek of manipulation and intervention. I have been asked many times in the past about manipulation in precious metals and the price action we see around key price levels. I feel most markets are manipulated in one way or another and precious metals are no different.
In fact silver is probably the most manipulated market in the world, I really can’t think of any other market that is so easily manipulated. In a market that has approximately 30 million ounces of silver in warehouses available for delivery, there are days such as February 29 where you can have 255M traded in hours (the total for the day was estimated at over 500M oz traded). Such a concentration of positions by a few key players can and will move price to a key level, at which point computer trading can further extend the move which is what most likely happened on February 29th of this year. Here is some information and perspective on how much silver was sold in the paper market during that one day:
One Comex contract for silver is for 5000 ounces.
Average inventory of silver available for delivery is 30M ounces.
Silver production for the year is about 800M ounces a year.
Supposedly more than 45 thousand contracts traded on Feb 29 or about 255 M ounces.
In a matter of hours, paper silver sold 8.5 times more than inventory for available for sale.
So do I believe that the silver market is manipulated?