Subject:Silver on the See-Saw By: Charleston Voice
Overview: As we pointed out to you last week, the Commercials had just then started to go net short. This week they added some more, and are now net short 29,221 contracts. They will be able to add any number without risk as the CFTC looks the other way while the bullion banks underwrite any losses which they may incur. The banks' risk, of course, is underwritten by us.
"They will be able to add any number without risk "
This statement ignors the simple fact that miners must make enough money in order to operate. Without sufficent income from the sale of their product, in this case real silver, they would have to close the mines. It is not the objective of the cartel that controls the silver price to close mines. Their objective is simply to control the price of silver so that mines do not become too profitable. This they do in the paper markets by shorting the metal, but to "add any number" is not an option for them - mines would shut down and no new silver would come to market. As the cost of mining operations rises so will the price of silver. Costs will rise as the dollar falls in value and this will be refected in the dollar price of silver. If their is ever an increase in investment demand for real silver the only thing the cartel could do is to increase price volitility, but they could do nothing to undermine industrial demand. Then their is the possibility that dollars could become worthless and no one in their right mind would exchange silver for paper that had already been written on. What good is paper if someone has already used it? It is only good for burning.
Last edited by AHolbroke; 23rd September 2007 at 18:03.