Take the current gold to silver ratio. If the ratio were an actual reflection of true supply, it would be very different. In fact, it would likely be reversed. There is much less available silver in proportion to demand—both above and below ground—than available gold.
The current (modern) ratio, however, suggests that there is sixty times more silver than gold available. Therefore, in many ways, silver price history (spot price based on “paper” futures traded at the COMEX) is the ultimate paradox.
For over the last 30 years, the silver price has been maintained illegally by a small number of banks who use short-covering to make a profit. This is no simple task and the organizations behind this are very powerful. Yet, we see the price of silver slowly rising as the general investment world expands in scope and the basic (extremely bullish and historic) market characteristics of silver become known.
This is especially so now, as the financial crisis creates legions of new investors seeking safety as well as alternatives.
To understand the banks’ reasons for manipulating prices, start by imagining what would happen in the economy when the real crash happens, which it certainly will. Alternately, consider what would happen if we, the consumer as a whole, were to actually begin saving money.
This is why the large banks alter the silver prices downward every chance they get–they don’t want you to do something sensible, like saving your money.
When you buy silver you protect (save) your wealth, which is a big no-no as far as the banks are concerned. They need money movement in order to keep bank profits growing.
This is a significant reason why the silver price history is fraught with suppression, and great efforts are taken to continue to suppress pricing. This is also a reason why the levels of derivatives have exploded
Read about the identity of the master planners here.
It’s taking increasing effort to keep silver prices contained, as reflected in the growth rate (40% annualized) of derivatives.
According to Tod Butler, "While there were other factors, it was the introduction of SLV that exerted the most influence on the price. Prior to the SLV
The major events impacting silver price history have been:
1. The U.S. decision to remove silver from silver coins and sell the remaining stockpile into the industrial sector
2. The Hunt Brothers’ failed attempt to corner the market in the early 1980's
3. The last thirty years of growing short concentration
4. The recent inflationary era
The current trend is in the beginning stages.
After some time, you learn how to deal with the day to day volatility in silver prices. It is an emotional battle that long-term investors understand boils down to value - and no matter the price swings up or down, silver will never entirely lose value, go bankrupt, or be nationalized.
If you look at how history has dealt with fiat currencies it is easy to see that the dollar will continue to weaken.
In the mildest of scenarios, a gradual dollar decline will place additional and slow upward pressure on the price of silver. Extreme dollar debasement, which seems more and more likely given the macroeconomic conditions in the U.S., would flood the silver market with safe-haven buyers—more people like those of us who tend to hoard silver.
But again, what history has not seen is the gradual and potentially explosive surge that will happen as industrial supply and investment demand converge. When this will happen is very difficult to predict, but it is not unreasonable to assume that this convergence will take place soon.
There is irony in the fact that the continual bailing out (nationalization) of the economy through money creation—which puts downward pressure on the dollar, causing inflation—will continue to fuel an industrial depletion or shortage that may have been averted if "normal" cyclical patterns were allowed to play out.
Now this makes the case for any amount of silver as investment.
SO many factors will potentially influence the silver price history -- 10 years hence.
Will we find a hidden stock pile?
A new vein in the Earth's crust?
Will demand for physical silver finally eclipse the futures market?
Will the dollar be worthless 10 Years from now?
Will we get a 1980's-style blow-off, leading to a bear-market slump?
Let us know what you think about the future of silver prices?
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