Is there anyone who would be willing to summarize the above in normal English?
Yes, someone please explain to us peasants.
How I see it:
Paper price = broker has it somewhere for you
Physical Delivery = you hold it in your hands (people don’t trust the system)
I’ll give it a shot.
There is a lot of contracts in silver out there—more than can be satisfied if they are all redeemed at once.
Companies selling the futures contract are being exposed for not having enough physical silver on hand to meet redemption requirements.
If that is exposed, the whole merry go round stops, and silver will go much much higher.
There are folks out there who have been saying this for awhile.
They tried to prove a point by accumulating 5,000 contracts and requesting redemption in physical silver.
To avoid being exposed COMEX offered to pay them 80% above the price of silver on Friday Feb. 25th in exchange for their contracts.
Why do that? Why not just deliver the silver?
Because evidently, there was not enough silver on hand to meet the withdrawal request.
Silver contracts are traded like oil contracts. Doesn’t always mean there is enough silver on deposit to meet the value of all the contracts in circulation.
If there is not enough silver, the price must go up. The price is kept artificially low by the appearance that there is enough physical silver to meet the total amount in the contracts.
The theory is, there is not. And if that is exposed, the price of silver will soar to its real value, whatever that is.
To avoid that, these guys were offered 80% above spot to go away and redeem their contracts with no delivery of silver.
Appearances stay normal and everybody is happy.
Until someone else threatens the same thing.
Some people invest in silver and think they are a contract for delivery (if they request it) of physical silver (silver bullion).
What many are actually trading are silver futures, which are contracts not for physical silver but paper “deeds” to silver, but the physical silver does not actually exist.
Something to bear in mind is that some investment portfolios are invested in gold and silver and the people who are investing in these also think that if the equities markets, the mutual funds, the bond and treasuries markets and the dollar itself plummet and crash that they at least have the gold and silver in their investment portfolio.
This is a fallacy. They do not. They have been trading the same as what this article is talking about, ETF’s, which is really just trading on the future price of a commodity (in this case silver). As such, it is merely speculation on the near trend for people who want to buy and sell and get out with a quick profit (in dollars).
Silver is really going up in cost. Whether it will drop back down and, if so, when, remains to be seen.
But you can bet it will be very difficult for it to drop back down under $20 an ounce, because so many people are in tune with what is happening with these communists running our country and the banking system and how pathetic is the fiat currency they are using.
When/if the cost of silver begins to drop for other reasons, the strong demand will keep the cost high.
Silver is a decent investment, not, as most people falsely assume, because if you buy a thousand dollars with today in a couple of years you’ll be able to sell it for $2000, but because it, like gold, retains its purchasing value.
If today $1000 can buy $1000 loaves of bread and if the government prints itself into an inflationary spike, that $1000 may only buy 500 loaves of bread in a few years. However, if you took that $1000 and bought $1000 worth of gold or silver and held on to it, in a few years when that $1000 of fiat currency is only worth $500 in purchasing power (500 loaves of bread) you’ll be able to sell that $1000 worth of silver for $2000 dollars and with that $2000 you can buy the same 1000 loaves. This is why it is a good investment, to maintain purchasing power when a fiat currency is losing its value due to inflation.
By the way, I have no position in anything. I’ve been studying monetary science and monetary policy and economics from the Austrian-school perspective. So, take my information with a grain of salt and verify all of it.
If you buy a contract for silver, you can get silver or cash when you sell the contract. Today silver spot price is 35 bucks per ounce, but the COMEX is willing to pay people 50 plus bucks per ounce if they are willing to settle for cash in lieu of the physical silver metal. In theory every contract sold by the COMEX should be backed by silver, but there is 100 ounces on paper contracts sold to and held by investors for every ounce of physical silver in the COMEX vaults. What happens when more people want the physical metal in lieu of the declining value of US dollars??? That is starting to happen as more people are concern with the devaluing US dollar. COMEX may not have enough silver on hand to meet its customer demands.
The current spot price of silver is based on numbers 100 times the actual physical supply available. Imagine what the price of silver would be when the public finally understands that the actual number of silver available is 1/100 the numbers quoted by the COMEX and banks.
This is on their website. Care to guess which year!:
“When December contracts in gold & silver are demanded to be satisfied via delivery of the metal, it will be clear that the COMEX is running a scam. A default is highly likely.”
Find a local coin dealer and buy as much physical silver as you can possibly afford. That's the long and the short of it.