A silver price that almost constantly rises and ends its few corrections in a very short time shows not only that the buyers in this market phase are absolutely decisive for the price action. It also shows that the power of the Wall Street banks is broken. They are currently being overrun and pushed against the wall in a matter of days when they try to replay the games that worked so wonderfully in the past.
Compared to other financial and commodity markets, the silver market has always been a relatively small market and still is. As is well known, in smaller markets a certain market power has a much greater effect than in larger markets, which are characterized by a consistently high trading volume. The silver market has therefore always lent itself to market manipulation.
In the late 1970s, the Hunt brothers began taking silver off the market, driving the price to previously unheard-of heights. Subsequently, the prices for silver were manipulated, especially in the opposite direction, because the big banks quickly realized that they could make high profits if they bet on falling prices in phases with rising silver prices and let the market crash from a certain point.
The old mechanisms for suppressing the silver price no longer work
These crashes rarely came out of the blue, as they were usually well orchestrated and well planned. Popular times for such an attack were Fridays. The attack usually began in the afternoon, U.S. East Coast time, when the Asian traders were asleep and the European colleagues had already left for the well-deserved weekend.
The volume was significantly thinner at these times than on normal days, and it offered the manipulators an easy target by placing a series of larger sell orders into this thin volume. They immediately put the price under pressure because there were no buyers to absorb this unexpected offer. The offer also consisted almost exclusively of paper silver. Real silver coins or bars were usually not sold.
The resulting cascade of falling prices immediately triggered stops in the market, which further increased the selling pressure. Algorithms that had not yet been switched off picked up the movement, interpreted the events as strong selling pressure and also bet on falling prices. After the close of trading, there was a weekend ahead, which, even without an additional holiday, was long enough to put further pressure on over-the-counter trading with small volumes, to feed the media with comments about a new wave of selling and to further frighten unsettled investors.
A rogue who thinks evil of it
All this usually happened without much physical silver actually changing hands. It was solely the paper silver that triggered this price avalanche. If, in the following week, they also succeeded in building up a sustained negative sentiment towards silver and maintaining it for a few days and weeks, the basis for a long-lasting downward trend in the silver price was usually laid.
The profits were high and the risk for the banks was low as long as the physical demand for silver was comparatively low and could easily be covered by the silver available in the warehouses. However, these two conditions no longer exist today. For more than five years, the demand for silver has significantly exceeded the silver provided by the mines and from recycling, and the warehouses are comparatively empty.
In the past, banks fought with paper against unsettled small investors and institutional funds, who were also only interested in making money but certainly not in physical silver. Today, however, the banks are facing industrial companies such as Tesla, First Solar or Samsung and investors who want to acquire real silver as a hedge and also have not the slightest interest in paper silver.
The real physical silver breaks the power of the banks
Both buyer groups have a need for paper silver that approaches zero. For them, only the physical silver counts and they demand it more and more often at the end of the term, when the futures contract is due and the seller has to deliver the promised silver.
If you also know that for every ounce of silver that actually exists physically on the Western metal exchanges, there are well over 200 ounces of paper silver, then it quickly becomes clear why the banks have suddenly run out of steam on the silver market. The once so powerful and sometimes untouchable banks are left with pretty empty hands pretty quickly if even just one percent of the buyers suddenly insist on receiving the real silver and are no longer willing to be fobbed off with money.
It is still too early to make a final judgment. But we could just be witnessing the decisive battle in which the many small silver buyers bring down the once so powerful banking cartel by simply doing what they have always done: buying real physical silver and permanently taking it off the market.
