The Bullion Market
Everyone who collects or invests in silver or gold wants a deeper understanding of the bullion market. Understanding the market better makes you more knowledgeable and increases your chances of executing a profitable deal. In investing, sometimes it’s luck that wins you money, which reminds me of a guy on the television show Pawn Stars who acquired a few thousand troy ounces of silver for roughly $3/oz and sold it for $30/oz, making hundreds of thousands of dollars on tv.
[https://www.history.com/shows/pawn-stars/season-6/episode-11]
But that’s a story for another day; the point is that understanding the market and keep DCAing when bullion prices are low is the key to future profitability; when the bull market eventually comes back, you will make a buck. Anyway, what is a bullion market?
The definition of a bullion market is an exchange where silver and gold are traded, along with derivatives based on those commodities. The London Bullion Market is the one that typically comes to mind first when one mentions a bullion market; however, there are other other bullion markets as well.
A bullion market’s goal is to provide a centralized exchange where buyers and sellers (big bankers) can meet on an open, “transparent” system where prices are based mostly on supply and demand. Bullion markets are designed to display synchronized real-time prices currently being traded. It’s entirely up to the investors to decide whether and how much to invest, buy, or sell based on their own individual circumstances. The rules of one market may not apply to another. The London Bullion Market, for example, is always open and predicated on regulations set by the London Bullion Market Association.
LBMA Manipulation
There is always speculation that LBMA has been manipulating the price of gold and silver for a long time. The bullion banks like JP Morgan have manufactured the perception that there is no scarcity of silver despite the high industrial demand for silver. They want the general public to believe that the amount of silver is inexhaustible and that there is an ample supply of silver buried underground. Because of this narrative, both the market and the public think that storage facilities for precious metals, such as the COMEX, can be restocked with silver without any issues, and paper silver can take delivery at any moment. In point of fact, over the past few decades, there has been significant growth in demand for silver as an industrial metal. As a result, miners are having an increasingly difficult time discovering fresh depots of the metal. If the vaults at the COMEX and LBMA were to be emptied, it would mark the end for the bullion banks. However, this is all speculation.
The bullion market always top notch
The manipulation will only go so far I think pretty soon we should see the unsurpassed value of precious metals
A hundred percent👍
I think I could look at that image for a while... stacks of silver bars in a well lit, handsome wooden vault. It may be CGI, but it would be fun to make it a reality. In a bunker. Deep underground.
My thoughts exactly, it looks so fake🤣
Once the truth of the matter is discovered, and the majority of silver is in private collector's hands (unwilling to sell) then everyone will understand the true value of silver. Maybe even more valuable than gold?
If every bank vault were emptied all at once, we'd have a lot more gold circulating around than silver, which has been consumed in electronics and photography for decades. Gold's majority use (besides jewelry) is to sit in bank vaults and look pretty. Not much else. Perhaps silver is more "rare" than we know.
I believe silver is undervalued, but I don't believe it can be more expensive than gold, given that it is like 18 times more common than gold.
Silver being so common, seems odd to ever imagine it more valuable than gold. The difference is that silver has been consumed in products throughout history, especially in recent generations, while gold has been collected and horded all throughout history. There is much more physical silver than gold, but a large percentage of the silver is in forms such as old photography and electronics that are difficult and expensive to recover. Only a quarter of all silver mined from the ground is made into bullion coins and bars.
https://geology.com/articles/uses-of-silver/
With the massive demand for solar panels and batteries, we are going to see even more silver used in electronics and even less available for bullion. There's some thought that's why the US mint is limiting their production in recent years.
Without a doubt, silver is more useful than gold and always has been. I think I have written several posts about silver's high industrial demand.
Does that imply that the premium over spot for physical will keep increasing? Perhaps the real silver squeeze is not the increase in the spot price of silver, but rather the premium of those coins/rounds/bullion on the secondary market keep getting higher.
Thank you for sharing this.
Yes, at some point premiums may become higher than the "spot price". There's paper silver trading that can be manipulated, but real world demand for physical silver cannot be manipulated, except through propaganda. Right now, we're supposed to believe silver is a bad investment, not worth much, ignoring the massive demand and the increasing demand we will see in the next few years.
Yes, if the "spot price" is kept artificially low, premiums will fill that gap so it will reflect something closer to true market price. There are silver trades done on paper, then there are physical silver trades done in coin shops and pawn shops that will demonstrate real-world value. I believe we will eventually see these two economies diverge.
If silver "spot price" dropped to $5.00 /oz would anyone sell at that price?
That makes sense. I appreciate you taking the time to explain that to me. My faith in silver as an investment has grown every time I learn more about it.
Thank you for the response, I also appreciate the interactions.
It's not so much faith and confidence in silver, but a lack of faith and confidence in pieces of paper declared "legal tender". At least the silver was made by God and has intrinsic value and cannot be printed in buildings by the trillions at a time. Someday the Most High God will cause even the silver and gold to rust and become worthless, it'll be thrown into the streets like garbage... but how much more will pieces of paper made by men be treated like garbage, it'll be cheaper to burn the money in a fireplace to stay warm then pay for natural gas for the same warmth.
Real wealth is in righteousness, then health, family, kindness, charity and lastly crafts, skills and material goods.
Well said! 👍