Silver Manipulation, Squeeze or Bull Market? Part 1-2-3
Armstrong report threatens of billions ounces of silver that may exists. Sure like any precious metal Ag exists.
But unlike gold it is not stored by banks in any significant quantity. I read 96 report (I beleave silver institute) on silver supply demand that stated clearly there are no new significant silver supply available at price bellow 10$. After Buffet purchase silver stocks still going down and has been going down for several years even without his purchase. Buffet just accelerated meltdown. Sure he will sell his Ag holding one day but it will not be at 6.00$.
Primary silver shortage is that there was no increase in production for obvious reason of a low price. There is few pure silver mines and Ag produced mainly as companion metal.
In fact there is no way mining industry can crank up production significantly to offset demand.
So price will go up since equilibrium was broken.
Cost of storage of one contract of 5000 oz is $18.50 per month or $0.0037 per ounce per month.
Writer forgets to add additional two zeros , his calculation is $0.37 . So for one year to keep
one contract in Comex warehouse will cost 4.4 cents. Buffet paid to ship it to Europe instead.
I wonder who has better investment track record Armstrong or Buffet.
<<In comparison, the cost to store gold is 7 cents per ounce per month or 84 cents annually - a far cry from the percentage costs incurred when holding silver. Keep in mind that silver takes up about TWICE the vault space at the SAME weight compared to gold.>>
For this same reason there are no significant Ag stocks held by institutions and average person
as was evident at Hunt days first jumps buying at the market above 10$ and significant selling was done at $20 + price.
And silver is still being drained further. Who are they (shorts) going to sue next?
In my opinion since nobody has significant quantity of silver stored (unlike gold) silver price is more sensitive to stock fluctuations. Shorts (producers and speculators) are very limited on their part to effect market because there is only so much to lend or sell forward. Backwardation
is reflection of tight physical metal market that was developing in last several years. Hardly a planed action by any group.
In any case writer notes that Buffet silver purchase was a bad investment and his advisors
failed to explain to him storage cost related with keeping metal. Poor Mr. Buffet.
I doubt before buying silver WB made his intention known. He is an old dog at trading, but word could possibly slipped out late in 1997 that he was a buyer.
<<<Our sources also tell us that selling is starting from Asia and we would expect 40 million
ounces to hit London by the end of March alone, perhaps in addition to 17 million ounces held in the terminal at Dubai. The retail public is selling silver in the United States. Handy & Harman and Engelhard refiners stopped accepting silver from the scrap metal industry during mid February due to the fact that they were backlogged with a 3-month supply. Coin silver bags crashed in value from $5,100 to $4,200 because the public was selling so much silver at $7. Even in India, (which had represented 16% of total world demand), buying has stopped since December. The public in India is now starting to sell back their silver because
given the rise in the dollar, silver has risen even higher in Asian currencies. According to Business Week, Indians are selling silver for cash while some are buying gold with their proceeds. To quote Business Week..."960 million Indian sellers vs. one billionaire buyer from Omaha.">> Does anybody believes that? Yes, silver may be there but is it for sale??
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