Can someone explain what the government did to stop the Hunt borthers from buying all the silver? I know some laws were changed. Perhaps someone knows.
PS I added to my paas long postion again today after watching the dollar get spanked.
"So it must be they (any forward sellers) are just dumber than anyone else, pure and simple"
Have you considered that the people in control of the entities that will be left holding the Silver short bag do not have most of their wealth invested in those entities?
If entity ABC has a huge Silver short position and a couple of people that control the investment activities at entity ABC have a small part of their wealth invested in it do you think they care much? All they care about is figuring out an excuse/scapegoat and be ready to get fired (maybe with a nice severance package). Meanwhile if they are really sneaky they simply have other people/entities purchase Silver indirectly for them since they know the bombshell that will eventually occur.
Basically the shorts are playing with other people's money!
The longs are mostly playing with their own money. Buffett, Soros, Gates, Tisch, and all the savy small investors.
Good Investing :-)
My only thinking is this (and I've said this before): it's my opinion that in any market of size, there are almost ALWAYS those participants who seek to control or manipulate it. DeBeers comes to mind in the diamond market, the big oil companies and cartels in the petroleum industry, the central banks and bullion houses in the gold market, etc., etc., etc. In the end, however, the forces of supply and demand nearly always win out. The fact that the silver market is probably controlled by a very few doesn't make them immune to the forces of nature. Sooner or later, if there's TRULY a supply deficit, the silver price will move upwards to correct it. So the question becomes "When?". To that I have absolutely no answer. For a possible answer, see my last post from LeMetropoleCafe's "Midas" commentary today...
<<I am struggling to find the truth>>
The truth is quite simple. The market for paper silver is much larger than the market for physical silver. Thus the paper market tends to set the price, and the paper tail wags the physical dog. If you believe that markets are efficient, and if you believe that contract obligations will always be fulfilled, then the current price must be right. If you believe otherwise, then there is potential for the price to correct, perhaps dramatically, when the paper markets fail and the physical market sets the price.
I really do appreciate your thoughts on this because I am struggling to find the truth wherever that leads me. But when I pose these devil's advocate questions to the silver bull crowd, I just get more of silver's glorious fundamentals which it would seem are well enough known (after a decade or more of preaching) that dealers or tech funds or whomever would know about also and would stop the selling. Someone will be left holding the bag if silver takes off bigtime as many think and they are caught short. So it must be they (any forward sellers) are just dumber than anyone else, pure and simple. I have a hard time believing this - it seems just too self-agrandizing. When I bring this up, I just get sent more comments from "Super Ted" (Butler), the self-appointed silver swami, in answer to my challenges.
So, is that it? Are silver bulls just smarter and everyone else who manages money for a living is ignorant and/or more devil-may-care risk taking for shorting silver?
P. S. Wasn't Ted Butler the anchor guy on the old Mary Tyler Moore show? ;-)
What got the Hunts in trouble was their use of margin, plus the high price of silver (close to $50). When silver began to fall, after the rules were changed, the Hunt's had trouble raising the margin needed, and their broker (Bache) sold them out.
What is different NOW?
1. The supplies of silver are much much lower--government is almost out of silver, and the exchange stocks are much lower.
2. Price of silver is only 10% of price in early 1980---meaning that much less cash (10%) could buy the lower available stocks.
3. Interest rates are MUCH MUCH lower (3% vs 15% in 1980), meaning that margin loans are MUCH MUCH cheaper, and more silver can be bought.
4. The super-rich are MUCH MUCH richer--in 1980s, the Hunts were worth at most $1.5 billion---now probably 200 individuals have more than that, and several have more than $10 billion, and a couple have more than $25 billion. Therefore, the silver stockpile is much more easily bought by the super-rich, even without use of margin.
5. Silver has been found to have many more uses, eg. in medicine, etc., and electronics.
6. Bullion coinage is MUCH MUCH greater---U.S., Canada, etc. etc. have introduced popular silver coins, as well as reintroduced commerative coins.
Conclusion--SILVER IS POISED FOR A MASSIVE RALLY---perhaps not $50, but $25 easily.
I have heard these arguments and they all seem quite plausible to me. The price of silver stays low despite all of this however. The reason given of course is derivative-based price manipulation. Think about this though. People capable of doing this successfully, in spite of overwhelming fundamantals against them, are obviously sophisticated marketwise folks. What do you think is their exit strategy so they don't get clobbered when this inevitable price rise comes? They must have a plan. Can they really play with fire as many bulls suggest without thinking they will ever get burned? I can't believe they are just dumb and that we bulls are just flat out smarter than them? That would be too convenient a validation for us for me to swallow. Your thoughts.
Find this article on the web and read it
<<By HARRY HURT III September 1980 Playboy
IN THE SUMMER of 1979, an invisible hand reached out from an island in the Atlantic and quietly began tightening its grip on the worlds supply of silver. The fingers of that hand extended to London, New York, Dallas, Zurich and Jidda. But the only visible clue to its existence was a newly formed Bermuda shell corporation called International Metals Investment Company Ltd. That dull-sounding little trading company was not just another offshore tax scam but the operating front for a secret partnership seemingly capable of controlling the world price and supply of silver.
Appropriately enough, two of the principals in that cosmic alliance were Saudi Arabian businessmen with connections to the Saudi royal family. But another principal, the real genius behind the deal, was an American oil billionaire, the head of a clan sometimes referred to as the royal family of Texas. Though not quite as rich as the Saudi royalty, this man was one of the few private individuals in the world capable of playing in the same league. ...>>
Comex changed the rules to allow LIQUIDATION ONLY of existing futures contracts on silver. So the Hunts could not buy any more contracts, and neither could any other new bull. Only existing positions could change hands, meaning open interest could only drop.
There's no bull market without new bulls and more volume.
The COMEX stopped the prior silver rally this year by increasing margins. They did that too back in the Hunts' time.
have heard that buffet only bought 130 million ozs. in london as this was all they would let him have. have also heard that the comex warehouse will only ship a total of 7.5 million per month. any comment would be appreciated. also have heard that when , say, a person wants 100,000 ozs. the warehouse will suggest that he take delivery of 33,000 per month for 3 months instead of the whole thing at once.
Could you please post a link to the information that supports the claim that Buffet could not buy all the Silver he wanted?
I have read that more than once on these boards and I don't believe it for a second. It is just a rumor to get everyones hopes up.
Besides, it doesn't make a bit of sense. Buffet wants 200 million ounces of Silver because he thinks the price is a bargain and will rise. But Buffet is told he can only have 100 million because that is all there is and if given more prices would rise.
Buffet setteling for this scenrio defeats his whold purpose of buying Silver in the first place.
That said, I am willing to believe this story if given proof. He/she said doesn't cut it.
1) True, Buffett had trouble receiving delivery of all of his 130moz. on time: http://www.berkshirehathaway.com/news/feb03981.html
2) Comex will ship 7.5 moz per month? What is that supposed to me I am not sure but I can tell you the Comex stockpiles have held steady at a little over 100 Moz. for a long time. I speculate that the shorts keeping the total over 100 Moz. is more important to them then keeping the price below $5. If stockpiles drop below 100 Moz. there are a bunch of people that would rush to take delivery thinking the big Silver shortage is finally at hand (and they may be right). But for now I don't see a reason to assume 7.5Moz per month will leave Comex
3)It is not difficult to purchase 100,000 so far. It's only 20 contracts. A group of people are looking to take delivery of over 1,000,000 oz. this month. Next week is the last week shorts of this 1+Moz. can wait till to make delivery without trouble. It is odd that they have waiting till the end.
I think it may be difficult to buy 1Moz. and receive prompt delivery. So maybe the rumor you heard was correct when multiplied by 10.
Good Investing :-)