The pair exchange industry insights on the ongoing wholesale physical silver bullion shortage and address the implications of dwindling open interest in the Silver Futures (SI) market.
For a detailed look at the impact of a breaking officially-run algorithm on the silver market, have a watch of Talking Gold’ from Episode 12 of Kinesis’ Live in the Vault.
Wholesale physical silver bullion shortage
Over recent weeks, multiple industry sources have reported widespread physical silver bullion shortages throughout the wholesale market.
Major suppliers across European bullion markets are restricting any supply of silver bullion 1000 oz bars, including the Loco London and Loco Switzerland markets.
Otherwise reliable refiners are doubling down on delays, pushing back postponements from a few weeks to several months. A reputable retail precious metals dealer stated he was struggling to source 100,000 oz of physical silver bullion, with all contacted suppliers unable to fulfil the routine order.
So, with physical silver bullion in desperately short supply, why isn’t the silver price soaring?
Why isn’t the price of silver rising?
JP Morgan, and other major players, are using every trick in the book to control the Silver Futures (SI) market and prevent the silver price from increasing.
The very same tactics these major players have repeatedly deployed to rinse the silver price while building up long physical silver market positions. However, in the flux of the current silver market, these industry insiders are meeting uncharacteristic resistance.
Huge reduction in open interest
The latest numbers show open interest in the Silver Futures (SI) market is evaporating, making it increasingly difficult for insiders to employ their historical wash and rinse cycles.
The total number of outstanding contracts held by market participants at the end of each day recently fell as low as 135,000, where it has typically rested at well over 200,000 over the last few years.
The Federal Reserve, U.S. Treasury, Bank of International Settlements (BIS) and the major bullion banks use open interest in the paper market as the vehicle to halt any potential rallies in the price of gold and silver.
What does the future hold for the silver market?
The significant reduction in open interest and the widespread physical silver bullion shortage foreshadow the delivery of a physical solution. With all indicators pointing to real physical supply, it appears the industry insiders’ firm grip on the silver price is finally loosening.
Andrew Maguire’s parting thought:
I think a physical solution is inevitable because the physical market is drawing liquidity out of the paper markets.
This post is a summary of Talking Gold – a fortnightly update from Kinesis Director and precious metals expert, Andrew Maguire, providing a detailed round-up of the recent action in the gold and silver markets – a regular feature from the Kinesis Youtube show Live from the Vault.
For the full analysis into the gold and silver markets, presented in illuminating detail, have a watch of Talking Gold in Episode 13 of Kinesis’ Live from the Vault.
Upon graduating Cornell University in 1969 Bill became a starting wide receiver for the Boston Patriots. After leaving football he went on to a career in the futures industry as a commodities broker. Early on he worked for Shearson Hayden Stone and Drexel Burnham before starting up his own introducing brokerage on 5th Avenue in New York. His past experience in the futures arena, and valuable market connections, led to his understanding of the gold/silver price suppression scheme, and what it would mean for future prices.
The Gold Anti-Trust Action Committee was organized in the fall of 1998 to expose, oppose, and litigate against collusion to control the price and supply of gold and related financial instruments. The committee arose from essays by Bill Murphy, a financial commentator on the Internet, and by Chris Powell, a newspaper editor in Connecticut.
Murphy’s essays reported evidence of collusion among financial institutions to suppress the price of gold. Powell, whose newspaper had been involved in antitrust litigation, replied with an essay proposing that gold mining and investor interests should act on Murphy’s essays by bringing antitrust lawsuits against financial institutions involved in the collusion against gold.
The response to these essays was so favourable that the committee was formed and formally incorporated in Delaware in January 1999. Murphy became chairman and Powell secretary and treasurer.
GATA financed the federal anti-trust lawsuit of its consultant, Reginald H. Howe — Howe vs. Bank for International Settlements et al. — which was pursued in U.S. District Court in Boston from 2000 to 2002. While the Howe suit was dismissed on a jurisdictional technicality, it yielded valuable information at a court hearing in November 2001 and became the model for Blanchard Coin and Bullion’s anti-trust lawsuit brought the following year against Barrick Gold and J.P. Morgan Chase & Co. in U.S. District Court in New Orleans, whose settlement appears to have included Barrick Gold’s decision to stop selling gold in advance.
Using the U.S. Freedom of Information Act, throughout 2008 and 2009 GATA sought access to the Federal Reserve’s gold-related records, eliciting an admission from the Fed that it has gold swap arrangements with foreign banks and insists on keeping them secret. To obtain the records at issue, in December 2009 GATA sued the Fed in U.S. District Court for the District of Columbia. In February 2011 the court ruled that most of the Fed’s gold records could remain secret but that one had to be disclosed: minutes of the April 1997 meeting of the G-10 Committee on Gold and Foreign Exchange. The minutes, released by the Fed two weeks after the court’s ruling, showed G-10 member treasury and central bank officials secretly discussing the coordination of their policies toward the gold market. The court ordered the Fed to pay court costs to GATA.
GATA has collected and published dozens of documents showing Western treasury and central bank efforts to intervene both openly and surreptitiously against a free market in gold. GATA has held four international conferences: in Durban, South Africa, in 2001; in Dawson City, Yukon Territory, Canada, in 2006; in Washington, D.C., in 2008, and in London in 2011.
GATA is recognized by the U.S. Internal Revenue Service as a tax-exempt educational and civil rights organization under Section 501-c-3 of the U.S. Internal Revenue Code and is grateful for donations to sustain its work.