Contributed Commentaries
Tired of watching silver being manipulated? Here is a plan!
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
The longer you study and invest in silver, the more obvious it becomes that someone with deep pockets snuffs out almost every rally, just when technical analysis tells you that price should be rising. It turns out that traders at the futures exchanges are allowed to sell silver they do not own, and the number of (futures) ounces that are committed to be delivered at the end of a trading month, far exceed the number of (physical) ounces that are available for delivery. Because of their deep pockets, (and because they do not use their own money – thus eliminating the fear of failure), the sellers (bullion banks for the most part), have always been able to outlast silver buyers.
However, at some point the demand for physical silver will overwhelm the short sellers and those who run the silver futures market will declare: “sorry, there is no silver, here is your check”. The technical term is ‘force majeure’.
Here is a plan that can make this force majeure a reality.
1…Buy physical silver - coins or bars – and stack them in a safe place. Since 2002 the price of silver has risen by about 25% per year, so this makes it a winning trade. (Due to red-hot demand, there is currently a premium being charged – avoid paying more than 15% premium over the current melt price. If premiums rise above 15%, switch to #2).
2….Buy shares of trusts and ETFs that produce a record of their assets being audited. PSLV qualifies and there are probably others. PSLV just happens to be my favorite. At the end of the year the Royal Canadian Mint issues a detailed list of the number of ounces it is holding for the custodian of PSLV. The latest list is available here https://sprott.com/media/1060/sprott-mint-bullion-holdings-summary.pdf
3….Contact the management of any mining company that produces silver and in which you are a shareholder, and recommend that as they sell silver they should buy shares in PSLV or any similar trust or ETF, (where the assets are audited). They need to hold shares in PSLV instead of money in the bank. The shares are just as liquid as cash.
4….If you own shares in SLV (where a detailed silver audit is not provided), you might consider selling those shares, and buying shares in PSLV.
Featured is a chart that compares investing in PSLV to holding shares in SLV. During the past two years, it did not matter which of these two were in your portfolio. They both increased in price. Notice however that ‘the trend she is a-changing’. During the past 3 weeks PSLV has begun to outperform, and the supporting indicators at the bottom and top of this chart are confirming it.
5. Share this information with friends and relatives who are interested in a profitable trade.
Note: The reason this plan has a good chance of succeeding is because the amount of physical silver that is available for delivery to investors and silver-using companies (51% of silver being produced is used in industry), is dwindling! There is still time to benefit, but that time may be running out. You may have noticed that a lot of new day traders who have never owned silver, are becoming aware of a possible ‘short squeeze’, and they will help you win this trade
Featured is the weekly PSLV chart. Price is carving out a bullish ARAT formation (Advancing Right Angled Triangle). The supporting indicators are positive and the moving averages are in positive alignment and rising (green bar). The horizontal green arrow points to volume that is increasing. A breakout at the blue arrow will be quite bullish.
DISCLAIMER: Please do your own due diligence. Peter Degraaf is NOT responsible for your investment decisions.
Peter Degraaf is an investor with more than 50 years experience. Google him or visit www.pdegraaf.com
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