WEEKEND WRAP: Reddit's #Silver Squeeze Silver Rush Strikes at the Heart of Gold and Central Banking

Before venturing into the main thrust of this edition of the WEEKEND WRAP, a rief recap of other financial developments over the course of the past week:

Equities, following the worst-performing week since October, staged a massive comeback, with the NASDAQ and S&P 500 closing on Friday at record highs and the Dow and NYSE Composite finishing within one percent of all-time levels.

Lagging the insatiable desire for paper holdings was the Dow Jones Industrial Average, which added a stunning 1,165 points on the week, but was up a mere 3.89%, a pittance compared to the six percent gain on the NASDAQ, which was rocketed higher by 785 points.

It was the best week of the new year, by far, suggesting that stock markets are either overheating or preparing to blast off into unknown territory once again. Considering that the US congress is knee-deep in negotiations over a $1.9 trillion stimulus package that includes payments of $1400 to millions of individuals, Wall Street's rampage to higher ground seems to be etched in stone, for now.

Despite the general slowdown from COVID-19 restrictions in a handful of states, companies - particularly those in the tech arena - posted solid, if not outstanding, fourth quarter and year-end reports. With the coronavirus crisis abating - cases are down more than 40% in some states - stocks are likely to maintain strong momentum while the market fosters more madcap episodes like those seen in GameStop (GME), AMC Entertainment (AMC), and others.

Speculation largely drives stock prices higher, and speculation with free money from the Fed (banks, brokerages) and the federal government (individuals) should keep the rally alive and well through Winter and into Spring, which is a mere six weeks hence.

Fixed income markets were less enthusiastic. The Treasury complex saw a steepening fo the yield curve, as yield on short-dated maturities collapsed and the long end sold off, producing yields on the 10-year note, 20-year, and 30-year bonds at 12-month highs.

Yields on 1-month, 2-month, and 3-month bills fell to 0.02%, 0.03%, and 0.03%, respectively, while the benchmark 10-year note yielded 1.19% at week's end. The 20-year yield was 1.79%, while the 30-year yielded 1.97%, both the highest since 2/20/2020. The 10-year was at it's highest yield since February 27, 2020, an indication that the wholesale global debt binge is well underway.

From an investor's perspective, oil had another banner week, with WTI crude rising to $57.07 in the current futures contract. However, oil futures are in backwardation, with subsequent futures contracts bid at lower prices than the up front contract. For instance, the July '21 contract is priced at $55.69 and so forth. This is almost certainly a condition caused by the recent spate of chilling and stormy weather cascading across large swaths of the continental United States, spiking demand for heating fuel.

While cold weather brings out the highest prices for fuel oil, it is essentially a short-term dynamic as expressed by the futures trading. Gas at the pump barely budged over the course of the week, particularly in the southern states, where demand is still sluggish and supply is steady.

Here's an excellent short video explaining the conditions of contango and backwardation.

Cryptocurrencies were solid, with Bitcoin getting a major boost on Friday into Saturday morning, with price topping out at $41,000 at around 11:00 am ET before taking a dip down to $38,000. As of this writing, it's recovered to the mid-$39,000 level.

Etherium made a new all-time high at $1,720 on Saturday and has since leveled off in the $1,600 range.

At last, the crux of last week's trading highlights, with the focus on the Reddit group r/wallstreetbets and its foray into the silver market.

When the redditers at r/wallstreetbets launched their assault on the silver market (remember, this is a group seven million strong, with untold number of followers), the price of silver on the COMEX was $25.26 per troy ounce. That was at the close on Wednesday, January 27. The following day, the rush was on, sending silver to $26.52 and following through with another huge gain to $27.71 on Friday. Over the two days, silver had advanced $2.45 (+9.7%).

On Monday, February 1, the COMEX price was bid as high as $29.38, with the ask at $30.38, the spread widened due to liquidity issues and also to discourage buyers. Though the efforts of the redditers was focused on ETFs, SLV and PSLV, and in the physical market, COMEX and the LBMA could hardly ignore the flows of physical metal leaving shelves of online dealers and local coin shops, but, by the end of Monday's trading in New York, they had managed to keep the price at a somwhat unreasonable (to them) $28.99.

Overnight, in the thinly traded Asian markets, the riggers went to work in earnest, pushing the price below $28 by the time trading opened Tuesday in Europe and then, the Americas. Their payback was vicious and unmistakable, crushing the price to $26.73 at the close in New York. A small bounce to $26.91, with the spread down to $0.50 from $1.00, ended trading Wednesday, but again on Thursday, they took a knife to silver, sending it to the low of the week, $26.53. Friday's bounce back to $26.90 by the close left COMEX silver down 81 cents for the week.

Gold was likewise shunted, though the affect was less profound initially. As of Monday morning, gold was priced at $1874.00. On Monday, it was struck down to $1860.00, even as silver was higher, but the riggers at the COMEX were just getting started. By Tuesday, gold was down to $1837.90, then $1833.85 Wednesday, and finally, the crushing blow to $1794.00 on Thursday. A bit of a reprive was granted on Friday, leaving gold priced at $1810.80 for the weekend.

Through the entire episode - resembling a skirmish in a larger war - both parties may have been satisfied with the immediate results but left with lingering longer term doubts. For the Reddit Rebels, the price of physical silver had gone out of control from the COMEX. Dealers were left with empty shelves and severe shipping delays on the few products they could source. Unsure about future supply, online dealers had shed the cloak of the COMEX and left prices at levels not seen since 2011, when silver and gold had reached record highs and nearly broken the COMEX/LBMA cabal.

For the bullion banks, the COMEX, LBMA, and central bankers from the Federal Reserve to the ECB, BOJ, and the Bank of England they should have realized that the horde of commoners had nearly overwhelmed their long-standing position on the high ground of institutionalized fiat currency. Talk of hearings into the operations of the Reddit Rebels (not the COMEX, hedge funds, or brokerages) were bandied about the halls of congress.

Newwly confirmed Treasury Secretary, Janet Yellen, convened a meeting with the heads of the Securities and Exchange Commission (SEC), the Federal Reserve, the Federal Reserve Bank of New York and the Commodity Futures Trading Commission (CFTC) on Thursday, coming to a conclusion that the stock market hasd shown resilience through the GameStop frenzy and calling on the CFTC and SEC to examine the events more closely and establish a timeline for how the market mayhem unfolded.

Yellen sought and received permission from ethics lawyers before calling the meeting, along with clearance to engage on wide-ranging issues in the financial services industry.

Yellen's decision to seek the waiver followed a report by Reuters that because of speaking fees she was paid by a key player in the GameStop saga, hedge fund Citadel LLC, she would need permission to deal with matters involving the firm. That's how badly shaken was the financial services industry. Even their top regulators and overseers have been involved in deals with market participants. Yellen received hundreds of thousands of dollars in speaking fees from various firms and groups in the industry after her stint as head of the Federal Reserve (February 3, 2014 – February 3, 2018) and prior to her appointment as Treasury Secretary by illegitimate president Joe Biden.

Yellen was nominated to chair the Federal Reserve by former president Barack Hussein Obama and confirmed by the Senate in 2014 and confirmed again for Treasury Secretary just weeks ago. President Donald J. Trump removed Yellen in 2018, replacing her with Jerome Powell, the current Chairman.

Thus, Washington's elites have been shaken to their core by the commoners. The COMEX and LBMA will continue to conspire against the hopes for honest money. By keeping prices at elevated levels, precious metals dealers have registered their resistance to the onerous control that has plagued the market for decades. The redditers have neither conceded nor surrendered. The war will rage on from here, pitting hedge funds, the financial services industry, and regulators against the commons.

A full discussion on the workings and intermingling of central banks, industrial banks, commercial banks, miners, smelters, brokers, and dealers in the metals markets would take more time and space than afforded here. Interested readers can familiarize themselves with such intricate relationships by perusing this explanatory article at Bullion Star, "Bullion Banking Mechanics"

According to Blanchard and Company, a large retailer in rare coins, the six "clearing banks" that handle gold bullion transactions are: "Barclays Bank PLC, ScotiaMocatta, Deutsche Bank AG, HSBC Bank, JPMorgan Chase Bank and UBS AG."

In this extensive analysis on bullion banking mechanics by Bullion Star, many more - as many as 35 - banks are cited as "bullion banks" that handle gold, and likely, silver. Almost all of thse banking interests are members of the London Bullion Market Association (LBMA).

In a notable development, Canadian Bank of Nova Scotia (Scotiabank) decided last year to exit the metals market. Their announced departure was to be completed sometime in early 2021.

Back in 2017, Scotiabank tried to sell ScotiaMocatta, the world’s oldest gold trader owned by Scotiabank.

Unable to finalize the sale, however, Scotiabank ended up keeping its precious metals trading business but downsized it at the beginning of 2018. ScotiaMocatta’s history goes all the way back to 1600s when Moses Mocatta partnered with the East India Co. to ship gold to India. The operations were set up in London in 1684. In 1997, Scotiabank acquired Mocatta Bullion by purchasing it from Standard Chartered.

At the end of all the mayhem lies gold, central banks, and debt-based fiat currencies which dominate life in the 21st century. What the redditers have accomplished, first, through their dealings in the stock market, and, secondly, via their assault on the price of silver, is open wounds into the central banking facade of infallability.

The physical (market) price of silver has now decoupled from the spot price established by the LBMA and traded upon the COMEX. Gold is also moving towards a similar disconnect or decoupling. What have commonly been referred to as "premiums" over spot, have, thanks to r/wallstreetbets, are now so far apart as to engender the need for dual prices, one for the 5,000-ounce contracts traded on the COMEX (spot) and one for physical, finished products (market).

The war, and the story of the century, will continue.

As has become customary every Sunday, here are the most recent prices for common gold and silver one-ounce coins and bars sold on eBay (numismatics excluded, shipping - often free - included):

Item: Low / High / Average / Median
1 oz silver coin: 33.00 / 53.49 / 41.76 / 40.48
1 oz silver bar: 30.00 / 54.95 / 42.15 / 40.50
1 oz gold coin: 1,906.00 / 2,033.34 / 1,990.27 / 2,000.44
1 oz gold bar: 1,897.00 / 1,992.98 / 1,956.07 / 1,955.63

Last week, Money Daily unveiled a benchmark market pricing mechanism for physical silver, based on our weekly surveys and strict methodology. See the current Single Ounce Silver Market Price Benchmark (SOSMPB), set this Sunday morning at $41.22.

There was no shortage of market commentary from the usual (and unusual) sources; so many of them in fact, that only links can be provided in this space.

Here's two by Jake Ducey, from I Love Prosperity, the first with noted analyst, Alidair Macleod of goldmoney.com:
https://www.youtube.com/watch?v=sQwQoMnCq8c

The second with David Morgan from themorganreport.com
https://www.youtube.com/watch?v=qT1QIsULi6U

Here's Max Keiser and Stacey Herbert explaining how Fed policies contribute to the racial wealth gap:
https://www.youtube.com/watch?v=L9iSeJa996I

Best-selling author of the Big Reset Willem Middelkoop tells Daniela Cambone how the silver squeeze may affect the gold market and central banking:
https://www.youtube.com/watch?v=qeY1n67LUOg&feature=push-fr&attr_tag=5DPdjODOrXZa21UD%3A6

At last, we defer to the genius of Ted Butler in a deep dive into the silver market, via an interview with Pallisades Radio (47 minutes):

There are many more opinion pieces and videos out there. Readers are advised to do their own due diligence.

At the Close, Friday, February 5, 2021:
Dow: 31,148.24, +92.38 (+0.30%)
NASDAQ: 13,856.30, +78.55 (+0.57%)
S&P 500: 3,886.83, +15.09 (+0.39%)
NYSE: 15,069.60, +94.17 (+0.63%)

For the Week:
Dow: +1165.62 (+3.89%)
NASDAQ: +785.60 (+6.01%)
S&P 500: +172.59 (+4.65%)
NYSE: +672.40 (+4.67%)

Big Fail: US Non-Farm Payroll Adds 49,000 Jobs in January; December Revised To -227,000

The US economy is in really (fill in blank with appropriate reality) shape.

According to the stock market, things could not be better. The S&P 500 and NASDAQ each closed at new all-time highs, while the Dow Industrials and the NYSE Composite are each within one percent of breaking out to record heights, surpassing those made just a couple of weeks ago.

Meanwhile, back in the alternate universe some people call the "real world," the Labor Department released the jobs data from February, which had non-farm payrolls up just 49,000 versus +105,000 expected and a revised -227,000 for December, from the reported -140,000 in the original report. Somehow, it seems the irrational exuberance in the stock market has slipped over to the "real world" side as the unemployment rate fell to 6.3% versus 6.7% expected and 6.7% in December.

Astonishing developments!

While this blog and most of the world was focused on the antics of the Reddit crew from r/wallstreetbets, the price of GameStop (GME) stock and the divergence in the price of physical silver from the COMEX and LBMA spot price, there were other developments elsewhere in the world of finance.

We've heard that Google and Amazon and most of the Big Tech giants posted knockout fourth quarter 2020 results. There's also been significant, perhaps troubling developments in the bond market.

The 10-year note is quoted this morning with a yield of 1.17%. The 30-year note closed Thursday at 1.93%. That's a 12-month high yield for the 30, (1.97%, 2/20/20) and an 11-month high for the 10-year (1.18%, 3/18/20).

All of that leads into what looks to be a boffo opening for the stock market, with futures modestly higher. There's a big football game this weekend also, featuring the main participants being some old guy (Tom Brady) against a flashy kid (Patrick Mahomes). Maybe that's what's keeping the world spinning.

Being Friday, the staff left early (8:00 am ET?), so check back here Sunday morning for the WEEKEND WRAP and the SOSMPB (Single Ounce Silver Market Price Benchmark), which looks to be higher than the initial reading last Sunday of $37.60.

See you then...

At the Close, Thursday, February 4, 2021:
Dow: 31,055.86, +332.26 (+1.08%)
NASDAQ: 13,777.74, +167.20 (+1.23%)
S&P 500: 3,871.74, +41.57 (+1.09%)
NYSE: 14,975.43, +136.38 (+0.92%)

Silver Spot, Market Price Decoupled Thanks to Reddters r/wallstreetbets, Overwhelming Demand, Supply Delays

Silver is mispriced.

It doesn't matter whether you are buying or selling in the futures market on the COMEX, through an online retailer or on eBay. The price you are buying or selling for is wrong. And it is wrong because of decades of intervention and suppression by the financial industry, international banks, central banks, bullion banks, their agents, and sympathizers in the media.

The recent foray into the silver complex by the Reddit group r/wallstreetbets accomplished one great thing. Forget about exposing the short sellers in the COMEX, the incestuous nature of the LBMA daily price fix, the inflows to ETFs like SLV and PSLV, the wild gyrations in the futures market. None of these matter in comparison to the successful decoupling of the two prices for silver, spot and market.

Since the so-called "Reddit Raiders" call to action, supply of physical silver in the form of finished products - coins, bars, jewelry - has vanished from the shelves of internet retailers and local coin shops. Most are now either out of stock or down to bare bones in denominations of 1, 2, 5, and 10 troy ounce items withe shipping delays ranging from eight days to a month or more, reminiscent of prevailing conditions in March, April and May of last year as the pandemic spread worldwide.

The difference is that in 2020, the price for physical silver items at retail plummeted. In 2021, they skyrocketed. The dealers apparently have awakened to the cruel, corrupt scam being played at the wholesale end by the COMEX players and members of the LBMA. In 2020, they played along. In 2021, they decided to revolt. what began as a plot to disrupt the COMEX market and do damage to big money participants - as wallstreetbanks group did in the stock market with GME - resulted in a demand imperative for precious metals retailers.

It seemed to be their only choice.

Silver on the COMEX rose close to $30 an ounce on Monday. By Tuesday's New York close, the price was $26.48. Wednesday's close was $26.65. Meanwhile, if any could be found, silver eagles, maple leafs and other one ounce coins and bars were selling for $37, $40, $45, and higher with delivery delays of up to 30 days. One reliable place to find silver items for immediate delivery is on eBay, where independent sellers are quick to ship, demonstrating the marvel of efficient modern markets. Current supply is slim. Competition in auctions is fierce.

The prices have decoupled. Spot or Futures price: $26.65. Market or Retail price: $37.60 (as of the Sunday Money Daily SOS Market Price BENCHMARK) to $45 or higher.

Neither price is correct and they will remain uncorrected until position limits are imposed and enforced on futures contracts and are settled in physical metal rather than paper currency, which is the routine practice on the exchanges. It's known as "force majeure" (unforeseeable circumstances that prevent someone from fulfilling a contract) and is employed not in extraordinary circumstances as intended, but as standard practice.

Until there are honest markets populated by honest players rather than the criminal cartel currently - and for many years prior to this - in control, price discovery will be difficult, if not impossible. The price of silver will be whatever one is willing to pay at whatever price sellers are willing to sell. With the spot and market prices interoperable, criss-crossing each other at various nexus points, expect to experience wild price volatility, which can be localized or widespread, dependent on conditions, participants, volume, availability, market forces and other variables.

It's the Wild West all over again. Enjoy the show.

Silver futures were flat on Wednesday, along with stocks.

Etherium, the second-largest cryptocurrency by market cap, posted a new high at $1,699. Bitcoin continues to trend higher, topping out at $38,769 overnight, chasing the all-time high of $41,986.37 from January 8 of this year.

Stock futures are modestly higher with less than an hour to the opening bell. The Labor Departed reported 779,000 initial unemployment claims for the prior week, less than the 830,000 expected by mainstream media's paid shills.

As an added off-topic-on-target bonus, here's the Robin Hood of Wall Street, Gregory Mannarino, with the Mouth that Roared, Alex Jones, discussing the global financial system, exposing the establishment's assault on the people of the world and offering some solutions.

At the Close, Thursday, February 4, 2021:
Dow: 30,723.60, +36.12 (+0.12%)
NASDAQ: 13,610.54, -2.24 (-0.02%)
S&P 500: 3,830.17, +3.86 (+0.10%)
NYSE: 14,839.06, +70.48 (+0.48%)

Reddit's r/wallstreetbets, LBMA, COMEX Can All Claim Victory; Initial Single Ounce Silver Market Benchmark Released

For the past week or so, and especially over the last two days, there's been significant activity and interest in the silver market, spurred on in large part by the crowd over at the Reddit forum r/wallstreetbets, which famously, for better or worse, parlayed their experience with heavily-shorted stocks (GME, AMC, the most glaring examples) into a foray upon the price of silver in the spot, futures, ETF, and physical markets.

The primary idea was to rattle the short sellers in the futures markets by buying up shares of ETFs like SLV and PSLV, buying physical silver from online dealers, local coin shops, and exchanges like eBay to spike demand and elicit a response in the spot price - set by the LBMA - and in futures trading.

With the dust settling, we can ascertain that there is a winner, actually two, as both sides can claim victory. The redditers managed to drain inventory from dealers and bump up the price for finished goods, while the LBMA and futures pit traders managed, after some initial shock treatment, to keep a lid on the price of their 5,000-ounce contracts. Rising from about $25.50 per troy ounce to as high an ask price of $30.50 or thereabout, futures participants smashed it back down into a range between $26.20 to $27.80, with the market makers initially increasing the bid-ask spread to a highly unusual $1.00, now back down to a 0.50 spread.

It will remain to be seen which side will eventually claim victory if it's assumed the LBMA and establishment players in futures want to keep the price of silver low and the reddit public wants it higher. That will work out over time, but for now, the dealers and the public don't have to rely on spot and futures prices when buying small amounts (1, 10, 100 ounce bars and coins), because a market price is available and actually has been in place for years. It's called eBay, where silver and gold coins, bars, bullion, jewelry, and other objects have been selling for years in a very robust marketplace.

Money Daily has been tracking prices since April 2020 consistently with the same methodology and the results are now providing a solid market pricing mechanism. Forget about "spot" and "premium." Think rather, spot price and market price, which are two distinct, separate pegs which may or may not correlate.

The LBMA sets the spot price, or "fix" as they call it, which is then further refined via futures trading on a continuous basis, with the exception of the weekly period beginning each Friday at 5:00 pm ET and ending Sunday at 6:00 pm ET. Their standard unit is a contract for future delivery of 5,000 troy ounces of silver, which is normally settled in cash, which actually eliminates physical silver from the equation and sheds doubt on the veracity of the process. In essence, they are trading paper (silver contract) for paper (FRNs, euros, yen, etc.)

The market price is determined via a weekly survey of completed sales on eBay of 1 oz. silver and gold coins and bars, performed every Sunday morning between 7:00 am and 9:00 am ET, numismatics excluded, shipping - often free - included, to derive a price for delivered silver product paid in paper currency.

Thus, the two pricing mechanisms are distinct and either or both can be ignored or followed at the buyer or seller's peril. There is obviously a price differential, being that the spot price is first set by the fix and then traded upon in the bulk amount of 5,000 ounces, whereas the market price is determined using finished goods (bars, coins), using a blended, transparent average (the sum of average and median prices for coins and bars for silver and gold separately, divided by four), universally settled in an exchange of US$ (FRN) for specific goods. The price, or "peg" is set only once per week. The market determines adherence, rejection, or any divergence from that price until the next survey.

There's no need to update pricing by the minute, as is the case in the futures trading. The market price is self-determinant.

For the present time, this weekly survey is sufficient to gauge the price of finished gold and silver (we're experimenting with silver first and will get around to gold as time and developments in the market persist), until a better system is devised, possibly incorporating prices from participating dealers and/or coin shops.

With a reasonably-calculated market price, there's little need for the spot price in the general operation of the open market, unless one is trading in larger amounts, though it makes perfect sense that items weighing 10 ounces, 100 ounces, and beyond would warrant a discount to the single ounce market price, while fractional amounts (1/2, 1/4, 1/10 ounce) would be priced accordingly higher on a per ounce basis.

The premia or discount is entirely a function of market participants. Some dealers may offer discounts to repeat buyers or pay a bit more from steady customers. Each market participant will have his or her own methodology, likes, dislikes, plans, and schemes, all of which makes for a vibrant, open market with a transparent benchmark.

Going forward, every Sunday morning around 9:00 am ET, Money Daily will release its Single Ounce Silver Market Benchmark, using the proven methodology and timing. Bear in mind that any price discovery carries a significant caveat emptor. Preliminary results from prior surveys can be found HERE.

The initial, current Single Ounce Silver Market Benchmark is now available.

Money Daily and Downtown Magazine (dtmagazine.com) bear no responsibility for sales or purchases based upon its posted prices and has no relationship with eBay other than as a casual seller. As developments proceed, the methodology and process may change.

One final thought: Through all the ups and downs, the real winners may have been the silver miners, some of which experienced significant gains in the price of their stock on the NYSE and NASDAQ, and they're always amenable to higher prices for their product, be it spot or market.

Let the games continue!

At the close, Tuesday, February 2, 2021:
Dow: 30,687.48, +475.57 (+1.57%)
NASDAQ: 13,612.78, +209.38 (1.56%)
S&P 500: 3,826.31, +52.45 (+1.39%)
NYSE: 14,768.58, +172.39 (+1.18%)

Don't Be Fooled By The Silver Short; Success It's Time For A New Standard Benchmark Pricing Mechanism

It's 4:00 am. Most people are still asleep at that hour, and while they slumber, thieves are stealing their gold and silver.

Well, they're not exactly stealing physical gold and silver, and they're not exactly thieves, either. What's happening is that on global futures exchanges, the value of gold and silver is being diminished by a consortium, or a cartel of bankers, traders, assayers and bullion dealers whose objective is to get the best price on gold and silver for themselves and the worst price for you.

As the r/wallstreetbets crowd trundled into the precious metals space last week and with more effort on Monday, they managed to crack open a Pandora's box of trickery and deviousness that still remains largely outside the public's view. Like Las Vegas, what happens on futures markets largely stays in futures markets, because, as comedian George Carlin suggested years ago, "it's a big club, and you ain't in it."

The redditers, fresh off the smashing success in routing short sellers in GameStop (GME) and other names like AMC Entertainment (AMC) and American Airlines (AAL), issued a challenge to the silver futures market controllers, rallying their troops to buy up shares of silver EFTs, SLV and PSLV, buy shares of miners like First Majestic (AG), Endeavour Silver (EXK), Hecla Mining (HL) Fortuna Silver Mines (FSM) and to purchase and hold physical silver.

At the start, wallstreetbets appeared to be winning. The futures market in Asia opened with a bang, sending silver up about eight percent, from $27 to $29. As day dawned in the US, the bid was wavering between $29.00 and $29.50, before the traders in the futures pits executed one of their classic smackdowns, sending the price reeling below $28 by mid-morning. By the close of trading in New York, silver stood at $28.55, an apparent, but eventually, phyric victory for the redditers.

However, since the reddit horde is mainly US-based, their influence waned in the overnight Asian market, as the controllers send the price of silver crashing as low as $26.30 the ounce. As markets prepare to open again in the US, the silver price hovers again around $27.00. It's apparent that the redditers have bitten off more than they can chew, for now.

It's understandable. They're up against a consortium of central banks, bullion banks, commercial dealers, commercial banks, institutional traders, and establishment operatives who've been at this game for decades. These people are not about to be upended by some upstart social network of millennial punks.

However, the battle has been engaged and it's doubtful that the reddit crowd is going away any time soon. What's more likely is for their roster of players and supporters to expand now that they've demonstrated the power of an organized crowd with a unified purpose.

Perhaps the attempt to smash the silver market was premature and a little bit of chest-thumping bravado. What appears certain now is that weaker hands will sell their silver at a loss to the "diamond-handed" reddit crowd that will remain engaged to some degree. At the very least, what wallstreetbets did for silver was empty the shelves of bullion dealers around the world. Shortages of metal and shipping delays are now common among online dealers like Provident, Scottsdale, Apmex, JM Billion and others. Coin shops in various locales report being sold out of common silver items like Eagles, Maples, and one to ten ounce bars. Many dealers are expressing concern over sourcing future supplies. Some suspended buying on their sites altogether while most list the bulk of their inventory as "out of stock."

A passing glance at the roster of members in the London Bullion Market Association (LBMA) evidences just how tilted the playing field in the precious metals space is towards those who produce and procure gold and silver at the fountainhead as opposed to those who buy them at retail, and this is what wallstreetbets, gold bugs, and silver stackers are up against.

The LBMA, which conducts auctions, "fixes" prices, holds symposiums, and helps to regulate the global trade in gold, silver, platinum, and palladium, are in the business of price control to their benefit and also to serve their ultimate masters, the central banks of the world, particularly the US Federal Reserve, ECB, Bank of England (BOE), Bank of Canada (BOC), Bank of Japan (BOJ), People's Bank of China (PBOC), and the Swiss National Bank (SNB).

The LBMA and the COMEX futures markets seek to ensure that precious metals, especially gold and silver, which are real money, don't become too competitive with the fiat currency of the central banks, which is why gold and silver have been suppressed for many decades and why, as long as the LBMA issues dialy "benchmarks" or "fixes" and futures prices are used as valuation standards, true price discovery in precious metals will never be achieved.

According to LBMA's chief executive, Ruth Crowell, "The LBMA is the world’s authority for precious metals. We’re the standard-setting organisation that defines how precious metals are refined, as well as traded around the world. It’s our job to ensure the quality and the integrity of the metal itself, as well as the market participants."

In other words, the LBMA's job is to control the flow of precious metals, largely to the benefits of their members, of which the general public is not one of them. They are the successors of the London Gold Pool, which collapsed in 1961.

From Wikipedia's entry on the London Gold Pool (emphasis ours):

The London Gold Pool was the pooling of gold reserves by a group of eight central banks in the United States and seven European countries that agreed on 1 November 1961 to cooperate in maintaining the Bretton Woods System of fixed-rate convertible currencies and defending a gold price of US$35 per troy ounce by interventions in the London gold market.

The central banks coordinated concerted methods of gold sales to balance spikes in the market price of gold as determined by the London morning gold fixing while buying gold on price weaknesses. The United States provided 50% of the required gold supply for sale. The price controls were successful for six years until the system became no longer workable. The pegged price of gold was too low, and after runs on gold, the British pound, and the US dollar occurred, France decided to withdraw from the pool. The London Gold Pool collapsed in March 1968.

The London Gold Pool controls were followed with an effort to suppress the gold price with a two-tier system of official exchange and open market transactions, but this gold window collapsed in 1971 with the Nixon Shock, and resulted in the onset of the gold bull market which saw the price of gold appreciate rapidly to US$850 in 1980.

Even Wikipedia is using words like cooperate, interventions, price controls, and even "suppress" in regards to the activity of the defunct London Gold Pool, so can you say, COLLUSION, CONSPIRACY, CARTEL?

After 1980, the gold price was suppressed well enough to get it below $300, but there was a bit of a void, insufficiently filled by the Bank of England. A new, official benchmark organ was needed. Thus, in 1987, the LBMA was formed by the Bank of England (big surprise!). From the LBMA website:

LBMA was established in 1987 by the Bank of England, which at this time was the bullion market's regulator. LBMA took over the roles previously carried out by two separate organisations, the London Gold Market and Silver Market, whose origins date back to the mid-nineteenth century.

The world’s trade in bullion is London-based with a global reach of activity and participants. The roots of the London Bullion Market can be traced to the partnership between Moses Mocatta and the East India Company, who started shipping gold together towards the end of the 17th century. Shortly afterwards, while Sir Isaac Newton was master of the Royal Mint, gold in England was overvalued so it became more freely circulated than silver. This increased circulation quickly led to England having a gold based coinage, whereas the rest of Europe remained silver based until the 1850s.

This is what the redditers ran into as they attempted to force the price of silver higher and damage the short-sellers. While they succeeded to some small degree on Monday, overnight Tuesday, the suppression commenced full throttle, sending silver down as low as $26.30 an ounce.

It's worth noting that the price of entry into the silver futures market is a single contract representing 5,000 ounces of metal, or, on a cash basis, about $135,000 if silver is $27 an ounce. The reddit people don't have that kind of money (some may), but the bullion banks, who hold the bulk of short interest, have billions. While this imbalance is daunting, it's going to take more than a few days for the commoners to even put a dent into the institutional money. Any attempt to break this market is going to last months, if not years.

Other methods should be employed, the most evident to be the establishment of another standard, representing the price of gold and silver on the open, public market, like on eBay or through a network of online dealers and local coin shops. Such a standard or benchmark need not be updated in real time. While the price of 1, 10, and 100-ounce silver and gold coins and bars may vary by location, it should be a little more stable, as are the London "fixes", if only to afford some degree of comfort to retail buyers and dealers alike.

A standard valuation metric needs to be established for the common investor, as opposed to the mega-banks and central banks which deal in tonnage rather than ounces. Money Daily has been tracking prices on eBay as a kind of counter-balance to the LBMA and futures markets. The prices tracked every Sunday morning here are taken as a survey of most recent sales and are indicative of prices paid, including "premiums" and shipping, which is often free. when adding the premium over the LBMA's spot price, one can readily see that the prices actual people and dealers are paying and receiving are well-separated from the institutional spot prices. It's actually even more complicated, accounting for the 10% or higher fees taken out by eBay, but that's the game, and plenty are playing.

Circling back to the charges of collusion and conspiracy surrounding the LBMA and futures trading, history suggests that the interests of central banks and their agents are not well aligned with those of the working class or even the investor class.

If the price of an ounce of gold increased from $35 to $850 from 1971 to 1980, what should the price of gold (and silver) really be today. Let's give the gold and silver riggers some credit and "benchmark" the prices of gold and silver to where they were at the end of the Great Financial Crisis of 2007-2009.

Gold advanced from $800 at the start of 2009 to $1400 by the end of 2010. For convenience sake, let's take the middle of that range $1100, as our starting point. Silver took a similar path. On January 8, 2009, silver was $11.12 per troy ounce. On December 28, 2010, silver was pricing at $30.30. The midpoint of those extremes is $20.71. That's our reference point.

So, now we're talking about 11 years of price suppression, longer than the nine years (1971-1980) from Nixon's closing of the gold window to the peak price of $850, a period in which the price of gold increased by more than 24 times.

Applying that 24X increase to prices from 2009-2011, gold should be priced at $26,400 and silver should be $497.04. Adjustments can - and should - be made to have silver recalibrated to aratio of 16:1, 12:1 or even 8:1 to the price of gold, which would render the following silver prices:

Gold/Silver Ratio: Silver Price @ $26,400 gold
16:1 ..... $1650
12:1 ..... $2200
8:1 ...... $3300

Suggesting a GSR (Gold-Silver Ratio) of 16:1 or 12:1 dates back to Byzantine times and even recently. Those are established norms which have been tossed aside by the suppression of the central banks and LBMA. The 8:1 ratio is suggested by the authority of First Majestic CEO, Keith Neumeyer, and others, who attest that to be the current ratio of gold to silver being pulled out of the ground. For every new ounce of gold, eight ounces of silver are found.

It should be clear to everybody that gold - and even more so, silver - is massively undervalued and that the intention of the central banks and their agents of suppression in the LBMA and futures markets is to keep silver priced extremely low because it is money, it is plentiful, divisible, easily recognizable, and has been used as a store of value for thousands of years, just as has gold.

This story is far from over. In fact, this chapter has only just begun.

At the Close, Monday, February 1, 2021:
Dow: 30,211.91, +229.29 (+0.76%)
NASDAQ: 13,403.40, +332.71 (2.55%)
S&P 500: 3,773.86, +59.62 (+1.61%)
NYSE: 14,596.18, +198.98 (+1.38%)