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China’s Role In The Global (Paper) Silver Market
A recent interview with a precious metals commentator in the Alternative Media raised several interesting points. While a number of the points raised are/were worthy of discussion; the topic which will be the focus of this commentary are the remarks (and conclusions) which were presented there concerning China’s “role” (if any) in the utterly fraudulent, global paper-silver market.
Knowledgeable readers are already well aware that the global “silver market” is at least 99% paper (i.e. paper-called-silver). The analyst in the interview, Eric Dubin, observed that competing (and contradictory) rumors/theories had emerged speculating that China was either “the Big Short” or “the Big Long” in this pseudo-silver market. Dubin himself rejected both theories, and those conclusions will now be reviewed here.
The theory that China is the Big Short in the paper-silver market was originally championed by Antal Fekete. His dubious reasoning was that China (whose economy is already the real “growth engine” of the world) was in partnership with the Western banking crime syndicate, allowing its own (supposed) secret stockpile of silver to be used by the banksters in their shorting “operations” (i.e. crimes), simply as a means of generating some modest income on that stockpile.
There are several, fatal objections to this theory. To begin with; shorting destroys stockpiles. It is a predatory, cannibalistic, and entirely unnecessary form of trading, and thus an activity which cannot be justified in any legitimate market. Put another way; any perceived “problem” which is supposedly addressed by short trading pales in significance versus the larger, numerous problems (i.e. potential for fraud) which are created by allowing short trading.
We already have overwhelming evidence of this truth, in the form of the silver market itself. Fifty years of (mostly illegal) shorting/price-suppression has decimated the global stockpile of silver by over 80%, according to the estimates of the esteemed Ted Butler.
While we see the inevitable result of serial shorting; many readers (and some commentators) do not understand the dynamics itself. Serial shorting always depresses the price in any market, and thus destroys supply/demand equilibrium. Specifically, in commodity markets; it simultaneously over-stimulates demand (through under-pricing) and depresses supply.
This creates a permanent, structural supply-deficit, which can only be met though depletion of stockpiles. Worse still, in the 21st century Age of Recycling; the depressed price which results from shorting severely discourages recycling. It is in this manner that the majority of the world’s stockpile of silver – a metal – has literally been “consumed”.
Because most of silver’s (numerous) industrial applications only require this precious metal in small, or even trace amounts; at current (artificial) prices, it is not economically feasible to recycle the silver from most of these industrial applications. Thus most of the world’s silver is now dispersed throughout the world’s landfills – deposited in tiny amounts, but in countless billions of now-discarded consumer goods.
It makes no sense at all for China to have gone to the trouble of acquiring (and concealing) a secret stockpile of silver, only to become a literal “partner in crime” in an endeavour which must (eventually) consume that stockpile. Even if China’s stockpile was the last to go; its own, rapidly expanding domestic market requires all of the consumer goods which, in turn, require silver. It’s like someone operating an elephant wildlife sanctuary deciding to open an ivory store.
Beyond this; China has centuries of experience as a victim of various forms of economic terrorism perpetrated by Western governments; more specifically, the Western bankers pulling the strings of these puppet regimes. From the Opium Wars to the post-World War I destruction of the global silver market (covered so thoroughly in Charles Savoie’s The Silver Stealers); China has frequently been on the “receiving end” of this economic rape.
While it is true that China’s current government has engaged in its own (literal) “Deal with the Devil”, allowing Western oligarchs access to its economy (and huge pool of cheap labour); this was the only practical means of fast-tracking its own economic development. The stunning growth figures reported by China are a testament to the economic justification and necessity of that original Deal with the Devil.
Conversely, not only would being the Big Short in the silver market ultimately result in consumption of its own (theorized) stockpile of silver, it would mean an unnecessary partnership with the same Economic Rapists who have victimized it in the past. We can thus rule-out this possibility beyond any doubt.
The question as to whether China is the Big Long in the silver market, however, is a question which is not dealt with as easily. Eric Dubin dismissed this possibility rather abruptly, concluding that against the overwhelming market-manipulation machinery of Western bankers (the One Bank) that China could not hope to stand against such fraud, crime, and corruption.
This argument has obvious validity, but only when considered as a single strategy, in isolation of other current and potential strategies of China’s government. For example; China now sits atop the world’s largest war-chest of U.S. dollar instruments: several $trillions of its (worthless) bonds and (equally worthless) greenbacks.
This has given China its (economic) “nuclear option”, should the current generation of Western economic terrorists (most of whom infest Wall Street) once again seek to destabilize or cripple China’s economy – as these economic terrorists have done again and again to nearly every other economy on the planet.
Armed with this additional context; this casts a new light on the possibility that China is the Big Long in the paper-called-silver market operated by the West. It has long been speculated/suggested previously in these commentaries that (along with Russia) China is “the Big Buyer” in the paper-called-gold market.
We know that there is an entity (or entities) meeting this description, in both the paper-called-silver and paper-called-gold market, because we can (occasionally) see their “handiwork”. On hundreds of occasions over the past decade; we have seen the banksters launch one of their infamous (and endless) “ambushes” on bullion markets. The method for these illegal take-downs of bullion markets is painfully familiar to regular readers, and bullion investors in general.
With one tentacle (the Corporate media); the One Bank creates a fraudulent (and usually laughable) “reason” for precious metals prices to go lower – “cover” for the illegal market manipulation about to take place. With another tentacle (it’s beloved Big Banks); the One Bank plugs-in this “reason” into the master trading-algorithm it uses to control all the world’s markets, and bullion prices cascade lower.
On occasions where it’s feeling especially malicious (or desperate?); the One Bank will also utilize a third tentacle: the corrupt operator of these corrupt commodity markets – the CME. As the final back-stab; the One Bank will order the CME to blind-side traders in bullion markets with a sudden-and-dramatic escalation of margin requirements. Previous evidence of corruption here is equally overwhelming and conclusive.
Yet despite this (seeming) omnipotence in perpetrating market fraud, in this case price-manipulation; on numerous occasions we have seen these ambushes suddenly/instantly reverse. The ambush is, itself, ambushed. The ink won’t even be dry in the lies of the Corporate media, “explaining” to us why prices must go down that day, when we see gold and silver prices boomerang higher.
Inevitably, these “boomerang” events result in all of the day’s losses being erased, plus a token gain in price – a gesture obviously aimed at delivering a little come-uppance to the One Bank’s market-manipulating thugs. This is immediately accompanied by the painfully hilarious contortion of the Corporate media, where (in complete contradiction of its original “explanation”, minutes earlier) it now explains why gold/silver prices must go up that day.
Someone/something is producing these momentarily lapses of justice, in markets otherwise drowning in an ocean of corruption. When it comes to any “list of suspects”, China’s name must appear near/at the top.
While there is no means of proving that China is the Big Long of the paper-called-silver market, there is no more-likely candidate. Alone (admittedly) such a strategy would be like employing a fly-swatter against the West’s battery of corruption artillery. But as one of several (numerous?) counter-measures against these economic terrorists; it is a strategy which immediately gains in credence.
Ultimately, the Big Long in the paper-called-silver market (China?) is an entity only concerned with its own economic agenda, and should never be thought of as any “champion” of the small investor, even though it stands (more or less) against the corruption of the One Bank. At the same time; it brings to mind the ancient, Arabic proverb: the Enemy of my Enemy is my Friend.
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If China has any interest in silver, it would be to acquire as much physical silver as she can. Anyone who is trying to acquire as much of it as possible would love if the prices continue to remain low. So it is in China's interests for the prices to remain low. Low prices also bring out physical silver hoarded by speculators who were expecting price hikes in the shortterm. So quite likely China is playing both the sides, short in the paper silver (to suppress prices) and long in the physical silver. She has he financial muscle to and long term interest to do so.
This was one of the more thought-provoking articles I've read in some time, because it steps away from the dichotomy of CB manipulation vs. the free market, and towards the reality that there may be many paper-PM manipulators, with agendas that differ over time, even from day to day and hour to hour as certain markets open and close and various auctions take place, and that these manipulators are also at least somewhat aware of their opponents behavior. The manipulation is a bit like a chaotic war among tribes with shifting allegiances, and miscalculations as well as chance alignment of interests lead to emergent outcomes which nobody would have predicted.
At least that strikes me as a plausible explanation for the boggling technical behavior of paper PM markets. A little more digging and research in this area would be highly productive. I would do it, but personally, my PM portfolio is up so I am mostly busy putting my hand in my pants and shouting "Bitchezz".
A bit of history might be apt. In the 18th and 19th centuries, Europe developed a huge appetite for China's silks and ceramics. Fabulous profits could be made from a shipload of these brought to Europe. But China refused to accept anything manufactured by Europe - they wanted only Gold or Silver (Silver was the basis of China's currency). The trade with China was so rich that Europe was drained of Silver and faced a financial crisis. So, Great Britain started peddling opium to China. The Emperor of China outlawed the drug trade, so GB went to war - The Opium Wars - forcing China to let the colonial powers (GB, Germany, France, Belgium, the USA, etc., import opium, and forcing China to hand over Hong Kong in perpetuity and the New Territories on a 99-year lease (ending 1997). GB forced China to pay GB's war costs, in Silver, and to hand over its customs revenues. Then GB and the other colonial powers debased the value of Silver to increase the amount China had to pay. China's Silver was cleaned out. Opium was allowed in via specified ports and specified traders, and there are some "aristocratic" old-money families whose wealth originated in the Opium Trade into China.
The Chinese have a long institutional memory for the colonial era, and the economic and social devastation it produced. Hong Kong remained under GB's control and constantly reminded China of the abuses of the Colonial era. British PM went to China in 1982 seeking an extension of the lease of the New Territories, without which Hong Kong would not be viable. Deng Chiao Ping insisted on the whole of Hong Kong being returned to China, and GB agreed, but forced China to accept a British-style government in HK. HK finally returned to China's control in 1997. So the memory of colonial occupation is still fresh in the minds of the Chinese leadership.
The Chinese are shrewd and patient, and no doubt they understand the value of market manipulation, and are quick to turn market manipulation against the manipulators if possible. Gold and Silver have great social and economic significance in the traditional Chinese mindset, and the present Chines government is known to be aquiring large amounts of each PM. If the Western banksters want to push down the price of PMs, the Chinese are only too happy to buy at the artificially reduced prices. Or if they can push down the prices, they are no doubt happy to do so. To denounce them for doing so is childish, given the previous and present behavior of Western parties. But as China looms ever larger on the World stage, the leaders of China must be laughing their asses off (in private) at the stupidity of the Western banks and PM traders.
This is pretty fucking interesting:
http://www.tfmetalsreport.com/blog/6443/comex-institutes-trading-collars...
Agreed. Thanks for the link.
http://www.zerohedge.com/news/2014-12-11/what-do-they-know-cme-implement...
Let us assume that all the players in this sorry scam know exactly what is going on. It should be quite obvious to all that China is in the position of strength, while the banksters in the position of weakness, and never forget that the Chinese are as corrupt as the day is long. This quickly adds up to an excellant blackmail opportunity.
The Chinese go long in the paper market each month and close their positions at the last moment, if they get what they want; likely the lions share of any physical available for delivery. For months now, Harvey Organ has been whining in this fashion,
"For the past year, we have been witnessing massive liquidation of contracts despite the fact that it cost nothing to roll. This makes no sense and it smacks of cash settlements which are totally illegal. Since I have been following comex data, I have never witnessed such a massive liquidation in both gold and silver."
But the threat is real. If the banksters don't perform as demanded, the Chinese just might stand for delivery. And no doubt that monthly, they recieve cash settlements at a premium to the bogus paper price. Harvey is wrong in his conclusion that, "it costs nothing to roll." Blackmail is much more lucrative than saving on exchange fees.
If they then settle for a higher, unofficial price at the contract end, they can then go out and source fizz Ag elsewhere. With a large enough contract/cash settlement, they could use the COMEX bucks to offset the premium price!
Maybe I am the only one, but I have had delivery slowdowns of two bars recently. These were 50-oz or better. If you want a few ounces or coins, there still seems to be some.
But, larger ingots seem to be starting to get scarce.
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tl;dr: We are seeing intraday outside reversals in silver. Therefore the Chinese are long. I had to read this whole thing for that?
http://www.kitco.com/news/2014-12-11/Industrial-Demand-For-Silver-To-Gro...
The West has dominated the Silver Dialog for the last 200 years and due to it's predatory actions has placed itself in a very perilous strategic position.
First the Chinese cornered the copper market, then the rare earths, so why wouldn't we assume that silver and platinum would be next? China is printing money (Expanding Credit) faster that the US and it is easy for them to use this to buy up the remaining global silver stocks. With expanding military, expanding technological reach and expanding wealth it is only logical to own all the silver in the world. Aided by the selling of all the bullion banks the feat is well within reach.
"Donny, you're out of your element. Dude, the chinaman is not the issue here!"
Poor China, the ashley wilkes(passive victim of circumstance) of theG20......
What a bullshit article. I stopped after this nonsense:
"To begin with; shorting destroys stockpiles. It is a predatory, cannibalistic, and entirely unnecessary form of trading, and thus an activity which cannot be justified in any legitimate market."
Anyone who believes the quoted phrase has no business commenting on capital markets.
Feeling a bit short these days?
You are right ... This is pretty harsh for The Bear to hear
I'd also like to know if JPM had unwound their huge silver short position before China bought them or does china now have an even larger short position?
There's no reason to believe that JPM has a short position on the books for its own account, rather than a short position it holds on behalf of industrial clients. Industrials are supposed to short, and JPM would be one of the expected clearing brokers for such a position. There is so much bullshit spouted by PM bugs about manipulation (as if it only occurs in 1 direction, and bankers only want to make half of their potential profits). Buy gold if you like, and buy silver, but at least have reasons that make sense. In a collapsing economy, a decline in the silver price is exactly what one would expect to happen.
Exactly, silver is acting like copper in the 1930's pre rearmament.
Still useful to have some for day to day needs in a SHF situation, but for wealth
preservation, I'm going with gold.
Winston Churchill- Still useful to have some for day to day needs in a SHF situation, but for wealth preservation, I'm going with gold.
If you're going for wealth preservation why wouldn't silver work as well? The SG ratio is 1/71 so if gold is expected to go up just imagine the magnitudes of increase. Yes it's volatile but the economy is on life support and the lack of industrial demand shouldn't necessarily mean negative things for PM's. Worldwide demand for bullion should be enormous and when the scramble begins the preservation of wealth will happen with gold and silver. JMHO
From the article: "Conversely, not only would being the Big Short in the silver market ultimately result in consumption of its own (theorized) stockpile of silver, it would mean an unnecessary partnership with the same Economic Rapists who have victimized it in the past. We can thus rule-out this possibility beyond any doubt."
Well, OK, but I don't think the Chinese oligarchs necessarily always have the best interests of their peasantry in mind. The Chinese elite will deal with the devil if that means they can own a swankyenda in Vancouver, NYC, London, Paris, Sydney, etc.
The Silver steelers is a great article. It is very very long but worth the time. Usually on the throne after thanksgiving or Christmas dinner after a cup of joe. Total concentration. I know TMI. Seriously though it's a great historical understanding and gives a perspective on what to do.
China's History, paper money, and when they had gained so much Silver via Trade, thus prompting the Z/Brits to force OPIUM, coincidental article today from VetsToday...a Keeper
http://www.veteranstoday.com/2014/12/10/china-and-the-jews/
If you're not aware VeteransToday is a hack bs propaganda site. Oh and add snopes to that. JTYSK.
the couple of times i've seen people on zh link to veteranstoday, i did indeed get the impression that it is a site for people playing with a few cards short of a full deck; along the lines of infowars or whatnot.
I don't know much about VetsToday rep, but visit when an article pops up that I google.
So, can you tell me if the article I posted is Factual and Historically correct. I have seen similar info before, just curious as to your opinion on the article, not the website
it is not factually correct.
any article that suggests "the jews" or any particular group of people are all united in purpose and acting as one front, conspiring to "take over" china or any other area, is not accurate.
i reject 100% any notion of collective guilt. specific people can be guilty of specific crimes, but to say all the jews, or the muslims, the mexicans, or whatever, are all guilty of something as a people is complete nonsense.
The article emphasizes the power of the manipulators but the power they don't have is the power to deliver beyond their stockpile. How many times over could China buy all the silver available to deliver at these prices?
So many theories so little data to back them.
China is inscrutable and the bankers hold their cards close to the vest so we must resort to speculation to try to figure out what is coming next. It's a sorry state of affairs we have here with no facts, dubious inventories and phony COT reports.
I know this much, if they keep shipping the metals out of the country, they will lose all pricing authority at some point. I hope the new boss is better than the old boss.
Keep stackin it.
Interesting article, thanks. A link to the Silver Stealers is below, it looks interesting.
http://silverstealers.net/tss.html
Too long, didn't read, still stacking silver.
Too long. Too little info. No sense.
Big Long = Big Apple
Apple a day keeps the price of paper silver down, allowing it to accumulate the physical.
Seeemples!
It seems as though china will use gold to back the yuan/renimbi
On the govt debt side and silver for its people. I could be Wong but if most CB's store gold ( accept us) but why not diversify.
The reason the world does not need and cannot use a bimetalic standard is found in Gresham's Law. Bad money drives good money out. When gold and silver prices vary one will be saved and the other used. It messes up the structure of the monetary system.
The world has selected gold as the preferred store of value. Silver's fate will be tied to it's industrial use. Look at every single central bank...gold, gold and only gold.
Gresham's Law is a special case of a state price control as applied to currency. That's all. Eventually the state will not be so powerful as to continue it's price control on silver and it will find it's true market value. That is unless a different state picked up the baton. But even then silver would need to rise quite dramatically in value.
Gold and silver are both money and can be used effectively as such, but a "bimetalic standard," such as when the US government attempted to set a fixed rate of exchange between the two, will obviously bring Gresham's Law into play. Gold could be the money with silver floating against it. They are both stores of value.
Silver is not money. It is a money substitute. One could just as easily trade warehouse recepts for coffee or sugar as trading silver coins.
On a bimetallic system, either silver or gold will be hoarded vs transacted, depending upon the relative differences between the face value of the currency and the intrinsic value of the metal.
they(gold and silver) simply became to valuable relative to the fiat valuation. therefor it became unpracticle to have a dime pre 65 in circulation. backing currency with pm is a responsible honest system in a hishonest system run by cream of the crop sociopaths, ha, we are sooo fucked, ha...
"Silver is not money. It is a money substitute. One could just as easily trade warehouse recepts for coffee or sugar as trading silver coins."
LOL. I won't even touch that one.
"On a bimetallic system, either silver or gold will be hoarded vs transacted, depending upon the relative differences between the face value of the currency and the intrinsic value of the metal."
This is why we do away with "face value" and simply have a free market based on weights of metal. Then the price is the "intrinsic" value.
But by definition, nobody will transact in silver unless the face value is higher than the intrinsic value. That's Gresham's law.
Didn't you read, "That is why we do away with Face Value?"
You believe in the fraudulent system of Paper Dollars. It is time you abandon it.
If you do not start thinking about what you need now in terms of Gold and Silver (without US Dollars as a yardstick) you will be totally unprepared to do so WHEN this current paradigm ends and the US Dollar has died the ignomious death which it deserves.
If you do not abandon the Dollar willingly then, sooner or later, you will abandon it as your ability to transact will be hampered. That is only an oncoming certainty.
Now I am not going to force you. But AFTER the US Dollar has DIED you can be assured that I will not be trading any of my assets for US Dollars.
And if you insist, by any means of force, in a vain attempt to make me take your Shit Currency in trade for my assets then I reserve all rights of self defense.
In a truly free market (haha...I know) for money, Gresham's Law wouldn't exist. There would be no "bad" money to drive out the good as only coercion can put such "bad" money into circulation in the first place. There would just be fairly valued money. Your mind is stuck in the fraud paradigm.
http://fofoa.blogspot.com/2013/05/what-is-freegold.html
http://fofoa.blogspot.com/
Please, spare me the "freegold" nonsense. I read Another, and friend of Another, ages before long winded FOFOA came along.
Freegold is based on the fantasy that a debt based cancerous fiat currency can exist in a world with transparent price discovery in Gold. Apparently, free market principles won't apply to the price of unmanipulated Silver, just Gold. Does not compute. We're also told that "the people WANT easy money." I call bullshit on that. The people have had easy money foisted on them whether they wanted it or not. I think you'll find, in reality, most people would prefer a world without usury, boom and bust cycles, malinvestment, environmental degradation on an epic scale, perpetual warfare, the ever growing disparity between the rich and poor etc etc etc... Freegold is just more of the same, except somehow you can save in Gold. Uh...okay.
If you subscribe to this crap, that is your lookout. I'm sick of hearing it. Every forum gets bombarded with FOFOA advocates who seem to think they've discovered something amazing, and the rest of us just don't get it. Truly the Jehovah's Witnesses of the monetary world.
upon reading this article i have another reason and confirmation gold and silver are fringe investments. no better than that term life insurance policy you will never benifit from. sorry, but your fellow mankind can control the monetarty equilizer until its value becomes meaningless(life probably will not be worth living based on the recent past- a relative measure of my last 58 years of existence :) ). just a false hope. disclosure: i have a little at the bottom of a lake near by :)...
"The Enemy of my Enemy is my Friend"
So many enemies...so little time...