Silver And The Mechanics Of False Reality

September 2, 2015

“All truth passed through three stages: First it is ridiculed. Second it is violently opposed. Third it is accepted as being self-evident”.    -- Arthur Schopenhauer

silver bullion

Once the truth about silver value becomes evident, it will probably be time to move on. 

For now, watching price action can be torture. 

How many of you over the past 4, 5, 10 or more years have experienced the following?

Every time you buy - the price gets clobbered. 

If you are new, it’s more likely that you are happy. 

Happy to be here - at this low level. Happy accumulate at this once in a lifetime moment. 

Yet, once you’ve followed these markets for a while, you find yourself experiencing a series of tests. Every long-term investor pays dues. 

The powers that be would want to protect the markets at all costs. 

Thousands of years and one monetary cycle after the next reveals those who holding power over money are also on a quest to poison the canary.

In the old days, coin clipping was enough. Confiscation might be eventually employed. Or simply removing it from the system all-together was an option. 

Modern trading and speculation make it much easier. Open cry futures markets gave way to pure electronic systems. Regulators were captured. Now, no one knows the value of anything. 

For the new investor, enjoy the temporarily low prices while you can. 

World silver prices currently arise from the futures market. Specifically the COMEX, run by the for-profit CME. 

The participants are not who you think they are. The days of real producers and users are long gone. 

The primary players who are left consist of big commercial banks and hedge funds. 

Big is an understatement. These commercial traders are among the largest multinational financial institutions in the world. They are too big to bail, too big to fail. 

They broker the trades for the collective group of speculators, or hedge funds they snooker. 

There are two levels by which these traders game the price. 

The first level can be observed in the week-to-week action detailed in the Commitment of Traders report. We can see the footprints left behind and the evidence that the managed money traders act as one collective entity - following price momentum blindly - and as directed by the big banks. 

The big commercial banks have access to the most sophisticated trading tools available. They can move the market in any direction they want without clearing an order. 

They also happen to be the prime broker for the very same managed money traders they control. 

In the past, 1 or 2 — and sometimes more of these big traders have been able to amass a very large, concentrated selling position - adding even more inertia to it’s ability to influence price. 

This is of course, first and foremost, a profitable operation. Illegal, but profitable. Secondarily it serves the needs of government and the currency. 

The second level of manipulation occurs on the day-to-day action. Usually it’s in the early mornings, when the bulk of world traders are away from their desks. 

Thanks to forensic trade analysis, by the likes of NANEX, we can see the moment by moment action - the actual volume spikes indicating fake orders - false dawns.

The assumption is that these distorted market conditions give rise to a fair price.

And this price drives commentary. It tells the story of fundamentals - instead of the other way round. Yes, it 'works' the same way across all markets. Until it all ends in disaster. 

Our unique advantage is that we can see it all developing in real time. 

And we are early. Everyone else will see the same thing we do — just much later. 

The belief is that these traders - these managers of others people’s money — with their open futures positions, can see or anticipate some hidden truth. 

As if they have clairvoyance by virtue of their status and power.

But fiduciary 'standard of care' dictates the opposite. They have an obligation to conform.

Subjective description or commentary arises from attempts at objectification, via technical analysis - in the name of this fiduciary responsibility.

The heard of speculators trade as one, using cheap leverage to game positions - (naked derivatives) - and follow pure directional momentum with no intention of taking delivery.

The initial move (up or down) is dictated by the largest players. The brokers of the brokers.

Again, the irony is that it is all documented. Out in the open - free for all to see.

Instead commentary will ramble on with rationalizations of a false reality.

Can we utilize the probability this intervention creates? Can we game these cycles that appear as a result of such predictive behavior?

Unfortunately, once enough of us recognize it, it will be too late. 

By the time the normal buying starts — the price could easily be far out of reach for the average investor. 

And given the action of one of the biggest commercial banks, JPM - in obtaining an unusually long physical position, as they control price, that time may be closer than we think.


For more articles and commentary like this – to explore and find some piece of mind in the space between actual price discovery and the reality of the macro-financial state of things – visit us at

The melting point for silver is 961.93 °C - 1235.08 °K

Silver Phoenix Twitter                 Silver Phoenix on Facebook