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Controlling Copper & Silver Prices
Submitted by Alasdair Macleod via GoldMoney.com,
There is an unwarranted assumption that market prices are always right, and represent "fair value". In the case of commodities, particularly metals, this is not necessarily true, because regulated financial markets make it too easy for government agencies and large banks to game the system.
Take the case of a country like China, which is the largest consumer of copper. Does it passively buy its copper through the market? No. Instead it strikes a price with a supplier, such as a Zambian copper mine, based on the London market price, bypassing the market entirely. If China plays no part in setting the reference price in London, the Zambians can be satisfied the price is fair; but if China or her agents suppressed the price of copper in the market before the price is set, the Zambians would be right to be upset.
Now, we do not know if China or her agents drive the copper price down, by placing a relatively small paper order so that the large off-market physical deal is priced favourably, but it is obviously in her interest to do so. Another metal where this could apply is silver.
We need to bear in mind three things about China and silver. She is the world's largest industrial user, she is almost certainly the world's largest refiner, and the government owns all the refineries. China imports large quantities of doré 1 and also base metal ores containing silver. So how she goes about this business is highly relevant to the silver price, and the following is an example of how it works.
In the case of foreign silver mines a qualified agent assesses the silver content of concentrates or doré on site and agrees a payment figure with the mine manager. Two further considerations then arise: the mine manager will want payment upfront because he has wages and other costs to meet; and the agent will look for the most cost-effective refining option. The first consideration is addressed by getting a bullion bank to advance the money against delivery of the concentrates or doré when refined, and the second will often involve a government-subsidised Chinese refiner.
There now exists a relationship between the Chinese government and the bullion bank, because the former has to deliver refined silver to the latter, or it must alternatively provide paper cover as may be subsequently agreed between them. As owner of the refining industry, China's interest is primarily strategic rather than profitability. Whether it is to subsidise the solar cell industry, or to build a strategic stockpile matters not; the temptation to suppress the price is the point.
The problem with price suppression is that it only works when buyers stand aside. But as we saw in the 30 months following October 2008 when the silver price ran up from under $9 to nearly $50, when buyers step in huge price moves can occur relatively quickly.
To the extent such price suppression does occur, today's commodities must be under-priced, just as bond and stock prices have become overpriced through central banks and other government agencies interfering with the markets. In any event investor opinion is bearish for commodities and bullish for the US dollar. Therefore, in a general market correction of valuation extremes commodities should recover strongly, how strongly will depend on whether or not prices have been artificially supressedsuppressed in the way described in this article.
Deflationists should take note: when markets crack, after initial confusion the prices of key commodities such as silver could rise more strongly than imaginable if they have been artificially suppressed, making them the only game in town.
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Oh, for the good old days, when the price of "copper" referred to the shakedown payoff you had to make at Christmas to the local police.
some say that silver is a better bet than gold because of its industrial uses. I've thought about that and have come to the opposite opinion. the price of silver will continue to be controlled because of its industrial utility.
it has been and will continue to be treated more as a commodity than a monetary metal. it is so vital in our world where electronics rule--especially in the east where most of it is manufactured--that no one will want to see its value go too high.
gold, on the other hand, has always been and always will be a monetary metal. silver, I'm afraid to say, has been relegated to a consumer commodity, like copper that was also considered to be a monetary metal once upon a time.
Interesting take but I hope silver and gold stay down as long as possible since I'm still buying. Here is a calculator I use that helps me buy the dips:
http://debtcrash.report/entry/debtcrash-metal-purchase-program
Bespectacled Gold snob .... looks down his long aristocractic .... Manhattan Dutch nose .... and pooh poohs silver ! LOL What about us poor fucks .... who hoard Sparletts bottles full of copper pennies ?
because of the inevitable inflation, silver will certainly rise dramatically in value, but think about the interested parties: the manufacuturers and consumers of all these electronics. their cost of production and the corresponding rise in price will ensure that the silver price needs to be capped.
and the only ones who will complain will be the silver holders.
Yep, gold and silver is for the rich schmoes.
http://www.wikihow.com/Hoard-Copper-Pennies
LOL! Yes and nobody can steal the Sparkletts bottles because they are now waaay too heavy to move! Got one in a bedroom closet. Smash it? What thief is gonna mess with all those pennies?
Tampons
Good as gold
What a stupidity of an article
Have you seen the 2014 world silver report ?
Last year it was mined a COLOSSAL amount of silver !
Almost 1 BILLION OUCES.
Silver is not being manipulated, it is being destroyed by its own success.
And how many TRILLIONS of fiat money printed....
May that success drive the spot price to $0.50/ounce and keep it there for a year.
The amount of minded silver last year was due to the miners all targetting their best despoits to drive their costs down in an effort to prevent closing. Most mines are so in debt at this point that it's only a matter of time before everyone has to start closing their gates.
Link? anything to back up your " Opinion " or are you one of those " Stocks are the only game in town " shills.
Russian Troll .... just mucking up the market !
Hey Dickhead.
Yeah you...dickhead.
You might want to re-take basic English composition - unless you're some imbecile trying to make others think you know something.
PROVE your claim as to this mis-spelled "1 BILLLLLLLLION OUCES" - Mister Spell Check.
I mean; if you're going to use CAPITALS...dickhead....at least....check what you typed..unless it's with your pecker...
OR...try typing your shit in a translator, and converting it to English before you post on here.
...dickhead
This is 2013 supply/demand
https://www.silverinstitute.org/site/supply-demand/
See the minus
2014 stats i can't find
Alasdair Macleod, of the clan Macleod, we love you but everybody already knows markets are manipulated and rigged. Sigh. Can't spell Alasdair with alas. There can only be one.
Not sure about this article; copper futures look like a cracking short right now at $2.94.
When it all falls apart, gold and silver will be the only game in town. Don't chase the puck, go where it will be... (or something along those lines, wisdom of some random ice skater)
Exactly .... the philosophy .... of a "Stage Door Johnny" ! LOL
The central banks either directly or indirectly now manage the prices of all assets whether they are stocks, bonds, or commodities.
It's a centrally planned economy with stealth wage and price controls.
Running out of zinc as big mines close.
http://www.kitcometals.com/charts/zinc_historical_large.html#lmestocks_5...
wow. maybe our quarters will actually be worth something soon.
that would really piss off the central bankers.
It is very sad that ZH is infected by so many govt. (mind) controlled trolls such as the 2 twerps spouting utter twaddle about the quantity of AG mined each year on average. The usual figure quoted by RESPONSIBLE commentators is c. 270 million ounces. It is probable that there is now less silver on the surface of the planet than gold!!! Just let that sink in, first, as you ponder the second important fact that you need 71 ounces of silver to buy one ounce of gold.
The price of silver has not had a bearing on its demand-supply 'metrics' for a very, very long time. It was, is and, hopefully, is to be no longer, a political and economic 'football' because it has a role to play in the 'machinery of war'. However, it has NEVER STOPPED being a monetary metal (just ask the Chinese and Indians), therefore anyone who claims that it isn't is either very stupid or a paid disinformation agent. It is as simple as that!
There will always .... be a place at the dinner table .... for silver .... as long as Beulah .... keeps it polished !
imo silver is the best for monetary exchange
I'm so tired of the antics on the silver charts I can't write a decent comment about it, only a string of profanities, so I will just go back to my under-the-bridge lair and wait for your children to pass by..
Buwahahahaha.
Totally on point with this one ZH.
I would just like to add an additional point regarding the current state of affairs.
The economic rationale for futures markets includes the following:
1) The provision of orderly and liquid present and future price discovery for suppliers, consumers and controlled speculators that provide liquidity.
2) The transfer of legitimate businessman's risk of commodity prices from suppliers and consumers to controlled speculators - as a way of increasing investment and efficiency in the industry, and the spreading of price risk to those parties that legitimately desire to absorb that risk in exchange for potential profit - SUBJECT TO CONTROLS TO PREVENT TRADING ABUSE.
My understanding is that these are really the only legitimate justifications for the existence of a futures market.
Nowhere does it say that central banks or their money center proxies (or any other party not connected with the commodity's trade, for that matter) have the right, in an uncontrolled manner, to execute large futures transactions to move the price of a particular commodity for ulterior motives. In the case of silver, where a commodity may compete with fiat currencies as a proxy for value, the ulterior motive being either to prop up fiat currencies by artificial means for political or other purposes, or to accumulate physical at suppressed prices - the exact practices that controls were designed to prevent.
Where are regulators? Where is moral outrage? When will it end?
It will end when the criminal cabal is no longer manipulating markets for the benefit of themselves and their cronies,
and not before.