Unfortunately, unless the physical market can be squeezed, at some point the bullion banks like JP Morgan and HSBC – with help from the Central Banks and the BIS – will be able to regain their grip on the pricing of gold and silver using derivatives – paper gold and silver.
I hope this latest move in the silver price is sustainable but I don’t think it is. That said, hopefully it will elevate the awareness of the criminal manipulation of the metals by the big banks and shine a spotlight on the degree to which gold and silver, as well as the mining shares, are extraordinarily undervalued.
That said, the physical market can be squeezed, but it requires that big investors take delivery of gold and silver on the Comex and the LBMA and remove their bars from Comex/LBMA vaults for private safekeeping. Short of that, the Comex and the LBMA can perpetuate the manipulation scheme by continuing to lease gold from Central Banks – gold that the Central Banks obtain via swaps from the BIS – and continue the illusion of “delivery” through hypothecation.
While the paper silver short position of the bullion banks is their Achilles’ Heel, the real squeeze will start when big gold investors remove gold bars from bank custody. With gold and silver, ownership is defined by “possession,” not custodial “safekeeping.”
Buying physical gold and silver – not GLD or SLV – should be your first priority in seeking shelter from the eventual fate of the dollar. But mining stocks offer the potential wealth enhancement as well “optionality” upside to the prices of gold and silver. If you would like some ideas for investing in mining stocks, take a look at my Mining Stock Journal.