Bullion Bank Silver Trading Positions Show They Suppress Silver When The Price Rises
The conversion of London and New York markets to trading promissory notes for silver and gold instead of vaulted / specifically allocated metal contracts has resulted in these real assets, that serve as a warning signal of central bank monetary inflation, being converted into virtual assets and a decoupling of ‘price discovery’ from critical supply/demand real market factors.
Since 1980, the M2 money stock has increased by more than 13x yet today gold trades in US dollars at 2.25x its 1980 high price and silver trades at just 45% of its 1980 high price.
Below, we can see the trading positions of various categories of CME N.Y. COMEX metals contract traders. The trading of promissory notes instead of physical metal in this market allows participants to sell silver contracts without limit, and containing the price with oversupply, if the price threatens to rise.
Of particular interest is the light blue line representing the silver contract net trading position of swap dealers (commercial bullion banks) that trade in the COMEX market. Each contract traded in this market is for 5,000 notional silver ounces.
Each time that the upper price curve enters a period where it begins to rise, we can see that the swap dealer bullion banks sell silver contracts into the market starting from a net neutral or positive position and ending with a sizable negative net position in the market and containment of the price rise.
Price containment of silver and gold using the trading of silver and gold promissory note metal contracts ends when metal shortage drives the issuers of these notes from the market as they face the threat of default as physical metal delivery is demanded by the contract purchasers.
Interference in markets or ‘price fixing’ always ends in shortages.
Best regards,
David Jensen