Reading the mainstream media and assorted excited bloggers and "analysts", the average Joe or Jane would be convinced that precious metals are in for a dive. Problem: we are into the peak global buying season for gold and silver. Asia is currently driving demand, and it is huge. Meanwhile, industrial use of silver is increasing steadily and predicted to increase going forward. New supply is fairly constant. Supply and demand are going to work their magic on prices.
On another note, the blatant May takedown of silver on the Comex in May, in the face of 3 ongoing investigations by the US may be a final straw leading to meaningful oversight in commodities trading. To quote Eric Sprott: "Comments from CFTC commissioner Bart Chilton acknowledging the “repeated attempts to influence prices in the silver markets,” and that, “violations to the Commodity Exchange Act (CEA) have taken place in silver markets and that any such violation of the law in this regard should be prosecuted,” perhaps have also had an impact on the behavior of silver market participants. And though the CFTC’s investigation into the silver futures and options market remains open after three years, we remain hopeful that its findings will further serve the interests of the investing public who rightly expect a fair and transparent silver market void of manipulative forces."
Sprott also notes that: "There is no doubt that speculative dollars have been flowing into the silver market. We note that in April record trading volumes were registered in the SLV1, Comex futures2, LBMA transfers, and the Shanghai Gold Exchange futures. In fact, converting the average daily trading volume in the aforementioned silver instruments to the amount of ounces of silver they are supposed to represent, there were on average, over 1.1 billion ounces worth of silver traded every day in the month of April. Truly a staggering number when contrasted against the actual amount of silver available for investment. To wit, the world will only supply about 979 million ounces this year from mine and recycling of scrap, of which it is estimated that 657 million ounces will be used up for non-investment purposes. So in effect, that leaves roughly only 322 million ounces available this year for investment purposes. Converting to days (recall that at least 1.1 billion ounces traded each day) it leaves only about 1.3 million ounces per trading day of available supply. So, we are essentially trading the amount of physical silver actually available for investment, 891 times over each day! It really begs the question; just what are people trading in these markets?"
So the times they are a-changing. Paper money become more worthless by the day, 17 US states and Mexico are considering, or in the process of monetizing silver, Asia already treats silver and gold as currency. As market manipulation is increasingly exposed in the news and on the internet, regulators will be forced to act against the rampant fraud infecting PM price discovery and movement. EBay, and other internet marketplaces are exposing the true market value of bullion to real buyers of physical metals. This last point has been completely overlooked by mainstream media! I think that the gold and silver bull run begins soon, this summer and fall. After decades of price suppression, PMs will begin to run for their "real" value, a phoenix move that will change their status from mere commodities back to their historic role as real currency and a true measure of wealth. The full Sprott article is here: http://www.gata.org/files/Sprott-CaveatVenditor-06-2011.pdf