The Digital Silver Price is Breaking-Out
The digital price of silver, set by trading un-backed promissory notes primarily in London and also in New York, is starting to break higher.
In this chart, we can see that the price of silver has completed two wedges and recently broken higher from the second wedge.
Given more than a year of elevated lease rates for silver signaling onset of physical shortage, the move higher - if it continues - was expected.
Recently, this article noted the linear correlation between the price of gold raised to the exponent 2.5 (i.e. gold price ^ 2.5) plotted against the price of silver has continued for years with disruption in the correlation lasting only a matter of days at a time.
This tight price correlation serves as prima facie evidence of price setting by algos using the trading of digital promissory notes in London and New York where possession of metal is not required to offer contracts for metal sale into the market.
What we can see below is that the price correlation between these two very different metals continues to this day.
This signals that, for now, the digital metal trading institutions (i.e. bullion banks) still remain in control of these digital markets that substitute for true markets where supply and demand would determine the daily spot price of commodities.
As with Palladium starting in 2016, shortage will break the digital promissory note price setting system for gold and silver. Artificial price setting always ends in shortage.
Promissory notes cannot substitute for metal delivery as shortage develops and that will ultimately force artificial price setters from the market.
Let’s watch as this develops with time.
Best regards,
David Jensen