SILVER - WAS $31-$49, WAS $33-$43, NOW $44+

[Treetop]

You'll never believe this as you already said, but the derivatives market is not, not has it ever been a 1:1 allocated or unallocated physically backed market. It is a financial product that "derives" the price of the financial contract from the underlying price of the silver market".
I also trade spot prices as an OTC financial contract that mirrors the spot market. It is not fungible or convertible to physical.

I said i wouldnt believe that? I dont remember that. what is a financial product that derives its value from the price of the silver market? I was just talking about total dollars invested in silver, Im not sure what your talking about here.

Im not even sure what you mean with the rest of this.

silver was a 1 to 1 market when it was traded directly as money. Ive got no idea its full history since its been traded as a commodity, but it stands to reason if all the money invested into it wasnt leveraged it would command a higher price. If that isnt true youd have to explain why. If it is true then clearly leveraging an asset lowers its "price", by watering down the dollars invested in it.

[Jonflyfish]

You also missed the question about all those leveraged dollars invested in silver. You admitted its a small market. We know that many if not most dollars invested in silver are not at a one to one ratio. so doesnt it stand to reason that most if not all of those dollars would still be invested in silver if the market wasnt heavily leveraged? If it was the price would be much higher especially considering the small size of the market....

you didnt exactly answer how the trade of all this leveraged silver doesnt alter price either. You basically just used a lot of words to say it doesnt. I fail to see why ALL players arent driving the markets, besides just the industrial guys (miners and manufacturers) The price is made through several factors one of which is availability of said commodity to invest in. through leveraging there is simply more invested in silver then there is silver, yet this doesnt alter price?

If I could sell the same piece of land to 10-20 speculators, who all had the option to officially buy this piece of land.... the price might reflect some standard market price, but if an auction was held between these 10-20 folks so only one of them could hold the title, Im positive one would outbid the rest. If all the same dollars were somehow invested into the single claim, it would then reflect that. Just as I would assume if there was a one to one ratio of silver per dollar invested into silver, rather then the leveraged markets we have now, it would reflect that higher level of investment per amount of silver. Its simple math. with silver this doesnt happen. Most dont need or want physical metal, they trade its value on paper. On paper theres simply more silver then could be delivered. Your not accounting for any of this in your explanations, and if you are I totally missed it.

the third point is that the paper silver not only waters down the actual silver which is undeniable imo, but that the paper trade can further alter price by mass sell offs and other such things. Your saying if everyone sold their paper silver today, no matter the price that silvers value would be unaffected? I cant imagine thats even remotely close to true.

All that said, I think its clear you know your stuff as a day trader.... I just think your seeing what you expect to see here though.

Indeed I did answer all of these points. Quite a bit of effort discussing the difference of how derivatives derive price from the physical market. It matters not if there is leverage as a futures derivative. That cannot set the price in a physical market- period. The futures are not backed nor are they supposed to backed 1:1 with any physical supply. Please read all the posts here. I have explained this repetitively, No reason to regurgitate it all again.

As for the new post and your land option. This is a different type of option. In the markets, if plain vanilla European style the options would be financially (only) settled based on the strike price relative to the settlement price at expiration. There is no physical silver for 10-20 investors who assume that somehow there is. The option is a DERIVATIVE. Whole different scenario than your idea. Let's not mix apples and oranges here. Let's talk about the real mechanics of the markets.

"On paper theres simply more silver then could be delivered. Your not accounting for any of this in your explanations, and if you are I totally missed it. "- Yes you must have missed it but I don't know how. Please read my posts again.

Your third point is not only incorrect for all the reasons previously discussed, but the most important consideration is that futures markets are a ZERO SUM game. If someone is "watering down" there must be someone who is "watering up" as well. I've spent a lot of effort and time discussing my points but I'd like to hear your salient points to support all of what you have surmised here tonight.

[Jonflyfish]

You'll never believe this as you already said, but the derivatives market is not, not has it ever been a 1:1 allocated or unallocated physically backed market. It is a financial product that "derives" the price of the financial contract from the underlying price of the silver market".
I also trade spot prices as an OTC financial contract that mirrors the spot market. It is not fungible or convertible to physical.

I said i wouldnt believe that? I dont remember that. what is a financial product that derives its value from the price of the silver market? I was just talking about total dollars invested in silver, Im not sure what your talking about here.

Im not even sure what you mean with the rest of this.

silver was a 1 to 1 market when it was traded directly as money. Ive got no idea its full history since its been traded as a commodity, but it stands to reason if all the money invested into it wasnt leveraged it would command a higher price. If that isnt true youd have to explain why. If it is true then clearly leveraging an asset lowers its "price", by watering down the dollars invested in it.

I'll say this respectfully. If you want to carry on about how you think the markets and the various products work vs questioning me to prove otherwise, please learn about the financial markets. Then it will make a lot more sense. You are terrible confused about how they operate and what a derivative is- Futures, forwards, swaps, warrants, options etc...Otherwise, my "having to explain why" for any of this will continue to be confusing and misunderstood otherwise.

Cheers!

[Treetop]

Your third point is not only incorrect for all the reasons previously discussed, but the most important consideration is that futures markets are a ZERO SUM game. If someone is "watering down" there must be someone who is "watering up" as well. I've spent a lot of effort and time discussing my points but I'd like to hear your salient points to support all of what you have surmised here tonight.

No one has to water up. Lets say theres 1million invested in silver. 10 people with 100k. For the sake of argument this market is leveraged 10 times. 10 people own 100k in silver, that is worth 100k. I dont see why it would matter what venue we are talking, only that this particular market is at 10to1. Ive heard different numbers for various types of paper investing, and am not sure what it would be market wide. If they all still had their 100k invested but there was no leveraging, the value of that silver is a million. I fail to see how it could be any other way. 10 people wanted 100k invested in silver, and they did so, but sine it was leveraged out 10 times, its value was 100k. So how could such leveraging not alter price? You absolutely have not answered that.

By the way, please stop talking down to me, despite you knowing more about markets, and my deceiving poor grammar, you are not my intellectual superior in any remote way. If you really think you answered the issues I raised great, you must be using jargon that someone outside of that niche doesnt understand. I didnt even see a reference to anything that explained how leveraging doesnt alter price. gradeschool math tells me it does. You keep referring to how price is set, and thats great... but the explanation never seemed to address why if those same dollars were not leveraged, how this wouldnt mean much higher prices presuming all the same folks had the same amounts in the game.

[Treetop]

I'll say this respectfully. If you want to carry on about how you think the markets and the various products work vs questioning me to prove otherwise, please learn about the financial markets. Then it will make a lot more sense. You are terrible confused about how they operate and what a derivative is- Futures, forwards, swaps, warrants, options etc...Otherwise, my "having to explain why" for any of this will continue to be confusing and misunderstood otherwise.

Cheers!

I never even claimed to understand those things, but surely theres a way to explain to the laymen why leveraging doesnt alter price if all the same dollars would of been invested minus the leveraging.

[Jonflyfish]

Your third point is not only incorrect for all the reasons previously discussed, but the most important consideration is that futures markets are a ZERO SUM game. If someone is "watering down" there must be someone who is "watering up" as well. I've spent a lot of effort and time discussing my points but I'd like to hear your salient points to support all of what you have surmised here tonight.

No one has to water up. Lets say theres 1million invested in silver. 10 people with 100k. For the sake of argument this market is leveraged 10 times. 10 people own 100k in silver, that is worth 100k. I dont see why it would matter what venue we are talking, only that this particular market is at 10to1. Ive heard different numbers for various types of paper investing, and am not sure what it would be market wide. If they all still had their 100k invested but there was no leveraging, the value of that silver is a million. I fail to see how it could be any other way. 10 people wanted 100k invested in silver, and they did so, but sine it was leveraged out 10 times, its value was 100k. So how could such leveraging not alter price? You absolutely have not answered that.

By the way, please stop talking down to me, despite you knowing more about markets, and my deceiving poor grammar, you are not my intellectual superior in any remote way. If you really think you answered the issues I raised great, you must be using jargon that someone outside of that niche doesnt understand. I didnt even see a reference to anything that explained how leveraging doesnt alter price. gradeschool math tells me it does. You keep referring to how price is set, and thats great... but the explanation never seemed to address why if those same dollars were not leveraged, how this would mean much higher prices presuming all the same folks had the same amounts in the game.

There's no talking down to you despite what you think. The questions have been answered but without basic understanding of derivatives, the explanations would simply become "jargon". I did say with respect that you don't have a grasp on the markets and that it would help you immensely to research. There was no reference by me about your grammar either.
The leverage concept is not the grade school math that you reference, hence the nudge to learn more. The financial products mentioned in my last post is a good place to begin your research if you are truly asking for help. There is a difference of leveraging your quotational risk vs physical. 10:1 in derivatives increases the quotational risk but there is nothing to do with physical risk unless the product has a physical liability component. The best I can do is encourage you to learn more if you are sincerely trying to understand more.

Cheers

[Treetop]

By definition, yes words associated with a specific field are called jargon. I understood everything you wrote by the way. I saw no explanation for the points I raised.
<<<<The leverage concept is not the grade school math that you reference, hence the nudge to learn more. >>>>>

what exactly am I to learn? that if something is leveraged 10 to 1 and the same amount of dollars had been invested in a market that wasnt leveraged, that the asset wouldnt be valued 10 times higher? interesting. All I said was that I dont need to understand markets to see that is not true. All those folks in heavily leveraged silver ETFs, they bought into leveraged positions, that track the spot price. Had those same numbers of dollars not went into leveraged holdings, your telling me it wouldnt of brought the price up? Some of these are reportedly leveraged rather steeply. It is indeed the way most i personally know invest in silver. Imagine if all those ETFs had to actually secure metals in the open market.... your telling me that wouldnt do anything?

I also disagree, in regards to talking down to me. I feel you did. I never said you referenced my grammar. I merely said that, because my poor grammar betrays my actual intelligence level, and I rather like it that way frankly.

by the way an uncle of mine is a day trader. He deals mainly in stocks I believe. He does rather well, making well into 6 figures a year.(or so it seems) Im assuming he knows markets as well as you. He was the ones telling me not even to invest in silver because of how over leveraged it was. he thinks its a bad buy because of that, although I know hes into numismatic coins, and has some ASEs. he thinks Id be better off investing in silver mine stocks.

[Jonflyfish]

By definition, yes words associated with a specific field are called jargon. I understood everything you wrote by the way. I saw no explanation for the points I raised.
<<<<The leverage concept is not the grade school math that you reference, hence the nudge to learn more. >>>>>

what exactly am I to learn? that if something is leveraged 10 to 1 and the same amount of dollars had been invested in a market that wasnt leveraged, that the asset wouldnt be valued 10 times higher? interesting. All I said was that I dont need to understand markets to see that is not true. All those folks in heavily leveraged silver ETFs, they bought into leveraged positions, that track the spot price. Had those same numbers of dollars not went into leveraged holdings, your telling me it wouldnt of brought the price up? Some of these are reportedly leveraged rather steeply. It is indeed the way most i personally know invest in silver. Imagine if all those ETFs had to actually secure metals in the open market.... your telling me that wouldnt do anything?

I also disagree, in regards to talking down to me. I feel you did. I never said you referenced my grammar. I merely said that, because my poor grammar betrays my actual intelligence level, and I rather like it that way frankly.

by the way an uncle of mine is a day trader. He deals mainly in stocks I believe. He does rather well, making well into 6 figures a year.(or so it seems) Im assuming he knows markets as well as you. He was the ones telling me not even to invest in silver because of how over leveraged it was. he thinks its a bad buy because of that, although I know hes into numismatic coins, and has some ASEs. he thinks Id be better off investing in silver mine stocks.

Sounds like you have it all figured out then. Good for you.

Cheers!

[Treetop]

Interesting. I find this amazingly interesting. I reread the thread a few times now. I never even saw you refer to any of the points I raised, just explanations of an aspect of market mechanics. the whole time a clear disdain for anyone that doesnt have your view. going so far as to tell me I am entirely clueless for thinking that the same level of non leveraged capitol would raise the prices, a common thought of many informed folks.

you cared enough to continue in this dialogue and others like it, but Ive yet to see you explain yourself. surely you dont have to, I just find it interesting.

Never did I say or imply I had it all figured out, Im not the one who seems to be of that mind.

When you sell more of an asset then exists, if that same amount of capitol had been invested without that leveraging, that prices would be higher, and that if you sold off lots of that paper silver it would have to affect price. You gave no foundational reasons why I shouldnt believe that. Just a bit about mechanics, and then lots of innuendo and sillyness as far as Im concerned.

I asked already and was ignored, but are you actually saying that if everyone in paper silver pulled out tomorrow that it wouldnt alter the price?

further are you actually saying that if all those paper silver folks were buying actual bullion backed shares that had a 1 to 1 value and this silver had to be sourced in the market... that this wouldnt have a corresponding relationship to the price of silver? Some of those funds are heavily leveraged. arent you the one who said something to the tune of markets dont happen in a vacuum? If that was you, it kinda seems like your saying they do happen in a vacuum, and that many classes of trades have no bearing.

[Jonflyfish]

Interesting. I find this amazingly interesting. I reread the thread a few times now. I never even saw you refer to any of the points I raised, just explanations of an aspect of market mechanics. the whole time a clear disdain for anyone that doesnt have your view. going so far as to tell me I am entirely clueless for thinking that the same level of non leveraged capitol would raise the prices, a common thought of many informed folks.

you cared enough to continue in this dialogue and others like it, but Ive yet to see you explain yourself. surely you dont have to, I just find it interesting.

Never did I say or imply I had it all figured out, Im not the one who seems to be of that mind.

When you sell more of an asset then exists, if that same amount of capitol had been invested without that leveraging, that prices would be higher, and that if you sold off lots of that paper silver it would have to affect price. You gave no foundational reasons why I shouldnt believe that. Just a bit about mechanics, and then lots of innuendo and sillyness as far as Im concerned.

I asked already and was ignored, but are you actually saying that if everyone in paper silver pulled out tomorrow that it wouldnt alter the price?

further are you actually saying that if all those paper silver folks were buying actual bullion backed shares that had a 1 to 1 value and this silver had to be sourced in the market... that this wouldnt have a corresponding relationship to the price of silver? Some of those funds are heavily leveraged. arent you the one who said something to the tune of markets dont happen in a vacuum? If that was you, it kinda seems like your saying they do happen in a vacuum, and that many classes of trades have no bearing.

First, there is no clear disdain for anyone with a different view. Nice stab, but I have expressed many times how a community of differing views and a variety of knowledge is what strengthens a forum like this.
When the term "derivative" is used, it has a specific meaning. It is NOT paper silver. It isn't necessarily selling more nor buying more of an asset that does or doesn't exist. Please consider that there are financial instruments out there that are not buying or selling silver, but merely are a zero sum contract that references the underlying PRICE of silver. I can't explain any further.
An asset that is constructed to be backed 1:1in physical is not a derivative, just like gold and silver certificates were not leveraged collars or asian options. If it is 1:1 then there is also no leverage.
The question of selling ALL paper assets is irrelevant unless you do understand the mechanics of convertibles strips, warrants, options, swaptions, futures, forwards and swaps. Some have quotational risk only and some have physical risk exposure. Some sales would, by their own mechanics create physical demand. Further, who do you sell anything to, someone who buys? Of course there would be a reaction because of both quotational and physical triggers. What the effect would be is completely unknowable. The question as a whole is rubbish and makes no sense.
You can casually say that my comments are nothing but "lots of innuendo and sillyness" if you want. It doesn't bother me. I'm not here to convince you that you don't understand the financial markets. You have already proven that. What is amazingly interesting is how you seem to flippantly say that I don't answer your questions that are full of "jargon" that if you understood, would help you realize that your questions have been answered, some multiple times. But you also said that you understand everything already so what's the point of badgering me and casually tossing negative comments and false accusations and comments loaded with negative connotations? I could barrage you with a load of questions just the same as you have with no other motivation than to ignore the points you make then repeat the same questions ad nauseam, charging that you did not respond to my questions and maintain that whatever you say doesn't matter anyway because I already know.

Bottom line is your self described simple math example is how you believe the markets are operating. The reality for market participants is far different. I only say that not from a casual thought to badger you about all night, as you have with me, but someone who is an institutional trader and a commodity trading and risk management consultant to several of the largest energy producers and consumers, as well as metals trading divisions of top tier investment banks. Some practical experience in the markets using exchange traded instruments as well as over the counter exotic financial "paper" derivatives, day in and day out, can be useful knowledge to someone who insists on arguing about a randomly incorrect basic math idea to describe the gearing in the market.

However, I will just end this conversation by admitting that you are right with your math models to describe the markets because that is what you want to believe. No need for you to actually trade or understand the vehicles used in the markets. Your reality is what you believe. My reality is very different.

Cheers

[beauanderos]

Maybe a simpler way of phrasing the intent behind the question (disregarding the concept of leverage) is... do you feel the physical price would be higher if investors were limited to the option of actually purchasing the physical form of metals, rather than having a multitude of instruments with which to "play" silver? Does the existence of SLV and others divert real money from physical, and thus cause a downward distortion of what the true price might be? As well, those entities who claim to store the buyer's physical, or who offer unallocated pool storage, and yet have been found to be disingenuous in that regard (Morgan Stanley?)... are they not having a deleterious effect on the silver price by funneling monies that would otherwise help to raise silver's price by putting demand pressure on the commodity by offering a "paper silver" alternative?

[timmus0382]

I like the way you phrased my question beauanderos, I simply don't know enough to put it so eloquently. Let’s see if the responses change now.

Also the million dollar question... Why is silver not trading at or around its historic 1:16 ratio? And what needs to be done to bring that back? Why is silver so underpriced or gold so overpriced?

The physical qualities of the metal are the same as it was 4.5 billion years. Today it is consumed more than gold which is historically a place to store your wealth. Perhaps the disconnect has come from the demand. Where something is in limited supply and there is great demand price is usually driven higher. Here we see the demand at an all time high and the price compared to historic ratio is much lower. Could this be because companies who use silver cannot afford to buy silver for their products if the ratio was back to 1:16? Imagine how many products would be much more expensive if silver was $93 an ounce. Is industry stripping silver of its "precious metal" tag and quickly making it an industrial base metal. Can silver ever be considered a PM again if it is continually used to make things? Perhaps in a very long time when there is much less silver on the planet than gold the two will flip. But the perception that gold is the most valuable is do deeply ingrained into our minds that we consistently fail to see it any other way.

[Treetop]

First, there is no clear disdain for anyone with a different view. Nice stab, but I have expressed many times how a community of differing views and a variety of knowledge is what strengthens a forum like this.

SUUUUURRREE, youve got no disdain for others who dont agree with you. geez this is getting silly.

When the term "derivative" is used, it has a specific meaning. It is NOT paper silver. It isn't necessarily selling more nor buying more of an asset that does or doesn't exist. Please consider that there are financial instruments out there that are not buying or selling silver, but merely are a zero sum contract that references the underlying PRICE of silver. I can't explain any further.
An asset that is constructed to be backed 1:1in physical is not a derivative, just like gold and silver certificates were not leveraged collars or asian options. If it is 1:1 then there is also no leverage.

Whos talking derivatives alone? Ray went on to ask a similar question. Perhaps you understand his wording better.

The question of selling ALL paper assets is irrelevant unless you do understand the mechanics of convertibles strips, warrants, options, swaptions, futures, forwards and swaps. Some have quotational risk only and some have physical risk exposure. Some sales would, by their own mechanics create physical demand. Further, who do you sell anything to, someone who buys? Of course there would be a reaction because of both quotational and physical triggers. What the effect would be is completely unknowable. The question as a whole is rubbish and makes no sense.

The question is irrelevant? But then you go on to say it does have an affect, then say that its unknowable and the whole question is rubbish and makes no sense? This is just getting silly. Earlier, you had said this made no difference to price.

You can casually say that my comments are nothing but "lots of innuendo and sillyness" if you want. It doesn't bother me. I'm not here to convince you that you don't understand the financial markets. You have already proven that. What is amazingly interesting is how you seem to flippantly say that I don't answer your questions that are full of "jargon" that if you understood, would help you realize that your questions have been answered, some multiple times. But you also said that you understand everything already so what's the point of badgering me and casually tossing negative comments and false accusations and comments loaded with negative connotations? I could barrage you with a load of questions just the same as you have with no other motivation than to ignore the points you make then repeat the same questions ad nauseam, charging that you did not respond to my questions and maintain that whatever you say doesn't matter anyway because I already know.

Dude this is an internet forum. We were having a simple back and forth. Youve had this weight over your posts from the start, and do it every time anyone questions you. Im hardly the first one. Without a doubt you talked around in circle instead of answering my questions, as you have when others posed the same ones. then youd say something about if they only understood markets. Your probably the only arrogant poster Ive even seen on this forum. I did understand all you wrote, as I said I did,(the framework that is) which is why I know you danced around my questions. What I cant figure out is why. I never said I understand everything, in fact just the opposite. I never barraged you. I reiterated you hadnt yet answered my questions. You seem hell bent on re framing every word I write. Personally I think its funny. I never said what you say doesnt matter, I said you bypassed answering my questions and you have. You yourself have said lots of these paper types of investing dont affect price, and when I suggest that if they had to source physical on the open market it WOULD affect price you said it was a meaningless question, essentially answered yes it would, then said the question is meaningless? Of course your talking in circles. Many people with as much expertise as you, raise the same points I did. which is why I raised them. You are of the opinion markets cannot be manipulated nor watered down. Yet there is a massive amount of investing dollars in forms of silver that dont affect price? Its meaningless to ask if these investments were sold if it would alter price? ooook.......

Bottom line is your self described simple math example is how you believe the markets are operating. The reality for market participants is far different. I only say that not from a casual thought to badger you about all night, as you have with me, but someone who is an institutional trader and a commodity trading and risk management consultant to several of the largest energy producers and consumers, as well as metals trading divisions of top tier investment banks. Some practical experience in the markets using exchange traded instruments as well as over the counter exotic financial "paper" derivatives, day in and day out, can be useful knowledge to someone who insists on arguing about a randomly incorrect basic math idea to describe the gearing in the market.

I never said "this is how markets operate".... I simply pointed to some of the ways people invest in silver, and the types that dont have full backing. Had they invested into something with full backing, simple math would imply this would of driven up the price. PLEASE show me the post where you explained how this doesnt happen. I reread the thread a few times, I dont see you even touch on the subject except when you said the question is irrelevant and rubbish.

However, I will just end this conversation by admitting that you are right with your math models to describe the markets because that is what you want to believe. No need for you to actually trade or understand the vehicles used in the markets. Your reality is what you believe. My reality is very different.

Heres another of your "not" disdainful paragraphs. So in some investments into silver there are multiples more dollars per ounce of silver then the silver involved is worth. This doesnt alter markets? Had those same folks all invested at one to one, how much more silver would of had to of been sourced? Oh I know markets arent set up that way, which literally is a point Ive been making here. Seems rather convenient. I was honestly looking for YOUR reasoning of why these things dont correlate together. A claim youve made to many other posters here in related talks. I was very curious your stance, because your obviously a skilled day trader.... although you said you know many of the big players... perhaps they just tell you. ok the last part was a joke, but Im rather surprised by our talk here. You told me reams about your motives without realizing it perhaps. Youve got no time to be bothered, but have all the time in the world to reframe others posts, and just tell them theyd understand if only they studied. when if you knew the field as well as you do, explaining to me why multiples invested into something in ANY form that isnt backed one to one doesnt water down the investment should be easy. Ive never seen a single explanation for this, and have seen many well seasoned (including my uncle) traders who say what I have been.

Cheers

If you could jon, Im very interested in what posts you answered me multiple times. We could leave the dialogue at that if you like. I know which posts in the beginning you thought answered me, but I didnt see an answer there. I saw you explain an aspect of how the markets set price, nothing about why all this money not in a direct one to one relationship with silver doesnt. I understand those are plays on silvers price, not directly in the arena prices are set. which really, when you break it down IS the point. Its a fiat fantasy investment. not to far off from a pyramid scheme.

If such investment vehicles didnt exist, and presuming all those same folks wanted to put the same amount into silver, there wont suddenly be extra silver to buy, so this would HAVE to drive up price. though you mock me, it really is simple math. If you have an explanation as to why this isnt true, or one of your posts did touch on it, I really would love to see it. which is why I asked you to begin with, because youve shown your skill at calling market trends. In the short term anyway.

With or without "markets" prices go up when more then one person wants something that is in limited supply and are both willing to bid on price. I think wed all agree this is the free market at work. when an asset can be traded in such a way that multiple more of it are "invested" in then exist within that investment form, then by definition its a watered down market. or perhaps Im a simpleton. If all those folks had the same cash, and the silver was in a pile in front of them, true price would be realized. Again, if you addressed this, as you said you did I cannot find it. If you could take a minute, or someone else could I really was curious as to why you think as you do. seems rather bizarre to me. You being someone who always says markets set price. but also having essentially said some of these dollars arent setting price. which literally is my point.

[TXBullion]

Went to go grab my wallet to buy something and silver is up almost a dollar since that moment

[Treetop]

Maybe a simpler way of phrasing the intent behind the question (disregarding the concept of leverage) is... do you feel the physical price would be higher if investors were limited to the option of actually purchasing the physical form of metals, rather than having a multitude of instruments with which to "play" silver? Does the existence of SLV and others divert real money from physical, and thus cause a downward distortion of what the true price might be? As well, those entities who claim to store the buyer's physical, or who offer unallocated pool storage, and yet have been found to be disingenuous in that regard (Morgan Stanley?)... are they not having a deleterious effect on the silver price by funneling monies that would otherwise help to raise silver's price by putting demand pressure on the commodity by offering a "paper silver" alternative?

Yes thats exactly what Im trying to ask. I DO understand the framework of what jonfly wrote, and markets in general. but its only been recently Ive been delving into them. so its all rather new to me. Ive yet to see an explanation that explains how this isnt a watering down of the markets. It would be with anything else. Ive actually looked for such explanations in online searches, and have yet to find one, that doesnt dance around the issue. Everything I found seems to amount to "because", and your silly to question it.

[TXBullion]

Went to go grab my wallet to buy something and silver is up almost a dollar since that moment

and now almost back down that dollar

[Treetop]

dang, I bought back in at 37 a ASE a few days ago..... Looks like I should of waited.....

[Jonflyfish]

Maybe a simpler way of phrasing the intent behind the question (disregarding the concept of leverage) is... do you feel the physical price would be higher if investors were limited to the option of actually purchasing the physical form of metals, rather than having a multitude of instruments with which to "play" silver? Does the existence of SLV and others divert real money from physical, and thus cause a downward distortion of what the true price might be? As well, those entities who claim to store the buyer's physical, or who offer unallocated pool storage, and yet have been found to be disingenuous in that regard (Morgan Stanley?)... are they not having a deleterious effect on the silver price by funneling monies that would otherwise help to raise silver's price by putting demand pressure on the commodity by offering a "paper silver" alternative?

Indeed. I like your suggestion. It's also a question without any knowable answer. Once can only speculate. Unfortunately, the other demanding individual is simply here with jovial frolic and has a determined bombastic ulterior motive behind the deaf tone and flippant badgering. There is a clear tone of dogmatic pontification and utter rubbish in response to any reply I have given. Unfortunately, understanding "everything" I said without any effort, nor desire to understand what the different "paper" derivatives are and how many are simply a reflection of the silver price and that the investor is "investing" NOT in silver, but a product that reflects the price of silver and what the price of silver does, either as a basis of the current vs future point in time, monthly averages, or otherwise.

treetop- There is no need to explain anything further because the point of your attacks are simply to badger, and purposefully heckle for self edification until the point of being satisfactorily and sufficiently sophonsified with empty rhetorical self-satisfying ego-boost, not engage in dialog. That is something I have no interest in. Let the egocentric self amusement continue ad infinitum, but without me.
Cheers!

[Treetop]

Maybe a simpler way of phrasing the intent behind the question (disregarding the concept of leverage) is... do you feel the physical price would be higher if investors were limited to the option of actually purchasing the physical form of metals, rather than having a multitude of instruments with which to "play" silver? Does the existence of SLV and others divert real money from physical, and thus cause a downward distortion of what the true price might be? As well, those entities who claim to store the buyer's physical, or who offer unallocated pool storage, and yet have been found to be disingenuous in that regard (Morgan Stanley?)... are they not having a deleterious effect on the silver price by funneling monies that would otherwise help to raise silver's price by putting demand pressure on the commodity by offering a "paper silver" alternative?

Indeed. I like your suggestion. It's also a question without any knowable answer. Once can only speculate. Unfortunately, the other demanding individual is simply here with jovial frolic and has a determined bombastic ulterior motive behind the deaf tone and flippant badgering. There is a clear tone of dogmatic pontification and utter rubbish in response to any reply I have given. Unfortunately, understanding "everything" I said without any effort, nor desire to understand what the different "paper" derivatives are and how many are simply a reflection of the silver price and that the investor is "investing" NOT in silver, but a product that reflects the price of silver and what the price of silver does, either as a basis of the current vs future point in time, monthly averages, or otherwise.

treetop- There is no need to explain anything further because the point of your attacks are simply to badger, and purposefully heckle for self edification until the point of being satisfactorily and sufficiently sophonsified with empty rhetorical self-satisfying ego-boost, not engage in dialog. That is something I have no interest in. Let the egocentric self amusement continue ad infinitum, but without me.
Cheers!

What an interesting post. Youve got major mental issues my friend. You should reread the thread, and your last post here. seems you need a mirror.

"attacks" ... from me? I could of been wrong about you having disdain for me, but thats hardly an attack. this is my favorite... "Let the egocentric self amusement continue ad infinitum, but without me." From a guy that takes himself as seriously as you do, I found that hilarious. Im not the one who painted you as ignorant, Im just a guy new to the field, who understands the basic components, and literally asked exactly what ray did with a less seasoned wording. Im rather positive everyone knew what I was trying to ask. I never claimed to understand the full mechanics of the markets, but I did understand what you wrote. Had to look up two words for verification.

So I ask the same question as ray did, but he named specific investment vehicles, and suddenly this changes things? You just say you dont know? Im sure everyone knew what I was talking about well enough. this isnt my field of expertise but I know the shape of how things move, just not fluent in the language yet.

I wish I could say it was a pleasure to talk to you. but it really wasnt. I guess its my fault for not realizing "my place" since Im not fluent in the language of the markets. I should of waited for ray to ask the SAME thing and waited in the corner. Instead I persistently worded the same question as many ways as I could. gee Im so sorry. If only I had "studied" I could of worded it as ray did, and it would of then dignified a "I dont know" from you. How flippant of me, with my meager understanding to expect an honest answer. Clearly i just wanted to badger, for the purpose of self edification. If you knew me youd realize how funny that actually is. You got me entirely wrong. Oh well your not the first. you saw 100 things that werent in my posts, and nothing that was. Im a amateur asking exactly what ray asked, with superior wording. I would of thought my intent was actually clear but I guess not....

either way have a good time.

[beauanderos]

My thinking on this is, perhaps Jon is correct in the regard that an answer to the question in the framework of which I posed mine is virtually unknowable, but I suspect that the presence of these paper alternatives to investing in "silver" do retard the advance of the commodity. Surely, if everyone had only recourse to buying the physical, the spot price would be much different. In any event, there is a clearly attributable effect on the silver and gold mining equities, noted by any number of knowledgable analysts, who maintain that the miners, which traditionally have outperformed physical bullion as they provide a form of leverage to the metals, have actually counterintuitively underperformed GLD and SLV since their inception. Perhaps investors feel more secure being vested in instruments which purport to track the price of the physical (irregardless of whether those entities hold the metals or track through some other means), and certainly, they have no concerns regarding having to store the metals safely. And, in this regard, the question is again unknowwable. Were the millions of shareholders of these suddenly to sell there shares en masse, their might be a temporary price disruption, but someone would have to buy those same shares... so zero sum game as you have pointed out. The flow of funds would not ensure the purchase of physical in any greater numbers than already exist. I think we've beat this topic to death. Shall we move on?

[Treetop]

My thinking on this is, perhaps Jon is correct in the regard that an answer to the question in the framework of which I posed mine is virtually unknowable, but I suspect that the presence of these paper alternatives to investing in "silver" do retard the advance of the commodity. Surely, if everyone had only recourse to buying the physical, the spot price would be much different.

<<<Did I really word my questions so poorly it wasnt clear this was what I was getting at? These types of funds are legion, and though all silver plays, they seem like convenient means to water down total dollars invested into silver to me. Is it manipulation? Hard to say, but I fail to see how this doesnt suppress price. Which is what I said the whole time.>>>>

Were the millions of shareholders of these suddenly to sell there shares en masse, their might be a temporary price disruption, but someone would have to buy those same shares... so zero sum game as you have pointed out. The flow of funds would not ensure the purchase of physical in any greater numbers than already exist. I think we've beat this topic to death. Shall we move on?

Sorry, if the topics beat to death just ignore me then..... But theres another point Id like to address here. If these shareholders were to sell off en masse, it would of been related to the market in general of course, but then all forms of silver would be being sold. Im not even sure what zero sum game even means. If it was the paper holders specifically the reason would presumptively be related to the fact these are not actually backed by real assets fully. In which case they may be officially "sold" but at what price in relation to silvers value? in that case there "value" could easily reach zero while silver itself took a brief hit, or even rose in the end. I really do wonder what this would do to the price of silver. Id assume it would take a hit, and this is obviously a scenario outside of the topic, but interesting. If there is just a lack of public support for various paper forms of silver investing, this might not directly alter the price, but that lack of support could still easily mean lower prices, since those who do drive markets would see that lack of demand. I really dont see how it could be otherwise, because if the markets demanded higher prices, do to other factors, like simple mining costs.... then the investor demand wouldnt be lacking. Like oil for instance, if investors in "paper" oil sold off all at once, the price may plummet, but in time the simple expenses from collecting it would drive the price by itself.

the premise I was given said that many of these paper silver investments do not alter the price of silver. yet I fail to see how it doesnt water down dollars invested per actual ounce of silver. The other premise was that these paper investments can not be used to alter price, which is the claim of many who think markets are manipulated. Yet when worded in the right way the answer the forum seems to of come to is its unknowable? or a temporary hit? I know price is set outside of those vehicles, yet the market as a whole seems to respond to demand or lack of it. Couple that with all the dollars that are invested in paper not directly altering the price, and it seems rather clear we arent having "true" price discovery. Ive not seen the slightest bit of info here or when I looked elsewhere to imply anything different. Just people who were obsessed with my wording over my meaning, as if my intent wasnt clear. I found this thread very very interesting indeed.

[68Camaro]

And, after one more early morning crush, silver claws its way back up, again, slowly...

Regardless of the recent debate above, which I'm tired of for the moment, this is the oddest behavior I've ever actually personally witnessed in a trading market. As far as I am aware it is a singular event. But if there are any other similar examples, I would like to hear of them, so I can try to understand other possible underlying reasons, and find out what happened in the other cases.

[beauanderos]

My guess? I DO think the markets are "guided" in the direction that most benefits the players with the most heft to push the price around. And my bet is that they're (JPM, either at the behest of the Fed or the Chinese) trying to replicate, as much as possible, the 1980 event so as to further instill in the public's subconscious that silver has "had its day" and only fools would invest in such dangerous/volatile - subject to rapid ascents and even more dramatic waterfall plunges - commodities as silver and gold. If it's the Fed that's behind this, it erodes faith in PM's as "safe havens" and extends, just a bit further, their reign as paper printers extroadinaire. If JPM is performing their nasty tricks on behalf of the Chinese, who probably do hold a great amount of the bullion that's being shorted, then its so that they can repeatedly buy their own dip, manufactured though it is, through the bullion divestments of a cadre disheartened investors, who unfortunately let greed lead them to utilize margin for its leverage, and thus they are characterized "weak hands" when the margin calls wipe them out. One further item... CME's counterpart on the Shanghai Exchange has now raised margins on silver futures for the third time in a month. Very interesting times we live in. Hard to piggyback trading strategies on the big boys (Paulson, Sprott) when even they are being bullied.

[68Camaro]

Seems to me that intermediate positions in the midst of this craziness are not good. Either have to take Jon's approach and work the technicals hard, minute by minute, make your profits on the small changes with leverage. Or focus on physical at dips, hold to convictions, and ride it out.

For paper silver, my 401K trading account doesn't have the fidelity to be able to use even an intermediate semi-technical approach well. We're in a 24/7 world, and the market can shift on a dime during a time when my positions are frozen, and by the time I can trade, the moment has passed. I will be okay, will come out of it fine, but I can't do with it what Jon can. And I don't have the time to focus on another account with other money using his approaches. Big learning curve, would take me an unacceptably intensive amount of time to start in that, and I've got too many other irons in the fire.

[Jonflyfish]

By design, markets crush the weak into submission.
In a zero sum game, if you don't know how to feed then you are the feed.