Hunting Margin Buyers to Extinction

by Walter

The paper short market will end when the large paper short sellers of silver run out of investors who are willing to buy their empty paper promises. There is a pithy quotation by Captain Spock of the popular Star Trek Movie Series that applies to large monsters: "It is illogical to hunt a food source to extinction."

It is well known that the short silver sellers have no problem with margin requirements, but by comparison, the long silver buyers on margin experience frequent margin hikes which force many of them to sell their leveraged contracts. But, think of how counterproductive a margin hike on the longs is to the monster cartel. Every time a margin hike is used to force liquidation of a long sale that was on margin, it forces the longs to go ever closer to buying physical.

Now, here is the important idea that springs from the above logic: According to several silver analysts, only about 1% of the silver investment group are buying physical silver and holding it. That mentality means 99% of the silver investors are buying silver on paper. 99% of the silver investors are the present herd, or food source for the monster cartel of shorts. But, what will happen to the silver investment herd when another 1% of then convert to physical buyers? That would mean 2% of the silver investor herd start to want physical silver? I think it is fair to say that if the physical demand for silver goes from 1% to 2% it would be a doubling of physical demand. That would initially mean that we are speeding twice as fast toward a silver delivery delays and shortages or even a silver default. That of course causes real prices of silver to go up, which accelerates the silver manipulation which causes more of the herd to convert into physical buyers.

I cannot think that it should be too long past the time when 10% of the silver investment herd is converted to physical buyers that the manipulation will end, because by that time there will be an acceleration of converting margin longs into physical longs. I admit that the conversion of another 9% of investment silver buyers into physical buyers is just a number out of the air, but think of what that means?

It means that the physical demand from silver investors will be 10 times more than it is now. It means that the price of physical silver will get high enough that the margin buyers will be effectively shut out of the market because silver will become too expensive, and also margin will increase their risk of losses from margin hikes. I believe that everything that frauds long margin investors only has the tendency to convert them into physical buyers.

Another allegorical story comes to mind to show how this manipulation ends from the opposite point of view, too. It is from the perspective of the long silver investors looking for a new kind of food, physical food.

The story is of two Russian sausage shops across the street from each other. A woman sees two prices on the window signs of both stores. One store price sign is really cheap and the other is really high. So, looking for a bargain she goes to the cheap price store and orders some sausage. The attendant says he has no sausage to sell. Sadly she goes to the other side of the street and orders some sausage, and the attendant brings out her order. She asks the attendant why the price is so high in this store when the store across the street can sell it for so much lower. The reply of the attendant is classic. He says, "Lady, if we didn't have any sausage we could sell it for that price too.

In silver manipulation will end when their empty promises look like the sausage store with no sausage. When the silver investment herd converts into physical buyers, the food source of the empty promise sellers will have been hunted to extinction. The silver manipulators will find no buyers of empty promises anymore. Let them sell silver for nothing, but who will buy from them if they cannot deliver? The silver store with the real silver will be able to charge anything they want, and the empty silver shop across the street will have to close their operations.

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Sep 09, 2015
Kylie NEW
by: Anonymous

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Apr 21, 2012
Silver Manipulators
by: Vern

IRONIC!! GREAT STORY. I have written to a few of the silver guro's and told them that they should be able to figure out a way to stop the manipulators, not one of them have answered my emails. Thank You

Apr 20, 2012
Paper or food
by: Davy

The atory was good. Perhaps I will use it on my family. Physicals will take off when the general public break-up with the all mighty Reserve Note. Most people do not realize that a "note" is a debt of some sort. Precious metals after purchase have no debt, you owe no one. Now let's think about that for a minute or two. I love the butcher shop story.

Apr 20, 2012
Sausages story
by: Bhargav

I liked the point driven home by your sausages story. Back in India, we sell air-conditioners and sometimes my competitors sell these at prices way below what we sell. When I questioned this, my friend quipped: Yes, we too could sell at that price, provided we have no air-conditioners in stock! How true!!

Apr 17, 2012
Margin changes help to fleece players
by: Tommy

My feelings regarding the recent lowering of required margin percentage is this. With the recent slamming of the silver price by the manipulative shorts has taken many players out of the market. After being burned in the past more and more people are reluctant to get back into the game. Couple that with the higher margin requirements and you have less fish for the canabalistic shorts to devour.

By lowering the margin again, more people will be suckered back into the pool and take the bait of buying paper silver again. Only to be slammed again next time the shorts feel it is to their advantage to do so. Buy only physical and stay away from the paper charade if you want to as Spock would say "Live long and prosper."

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