Silver, Price Fixing And Market Manipulation: Is There Upside For Investors?

New York (Jun 17)  Summary: The price of silver has been subjected to considerable manipulation over the years.

•This manipulation in conjunction with the large volume of paper silver has acted to suppress the price of silver below its true value.

•Recent admissions of price fixing and changes to how silver prices are made should see prices rise as its price moves to more accurately reflect supply and demand.

With the end of the gold bull market in late 2011, precious metals became unpopular with investors and their prices remained under considerable pressure. One of the worst affected was silver, with the white metal plunging to be less than a third of its price at the height of the bull market to a seven year low in January of this year. The sharp decline in silver in part can be attributed to the ongoing strength of stocks, stronger U.S. economic growth, the rally in the U.S. dollar and the Fed's rate hike at the end of 2015.

Nonetheless, there factors alone explain the full story as to why silver not only plummeted to new seven year lows but also failed to keep pace with the rally in gold and is extremely volatile.

Let's take a closer look at silver and try to understand just why its price is so volatile and why it repeatedly fails to keep pace with gold.

The value of gold and silver are closely correlated

The prices of gold and silver share a close relationship with silver typically following the price of gold as it moves up and down but silver has repeatedly lagged behind gold, riding a roller coaster and experiencing greater highs and lows.

Source: SeekingAlpha