The Education Vault - Precious Metals & Bullion 101

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It is basic economics that when an input of production is used in small amounts, then the price of this input is very “inelastic”. To explain this without the economic jargon, I'll refer one more time to the example of polyester sportswear. As I pointed out earlier, 1,200 tons of silver is enough to fabricate 20 million tons of polyester.

This means that (by weight) silver only represents a little more than 1/20,000^th of the inputs in this product. Thus, if the price of silver were to double, this would have such a tiny impact on the final price of sportswear that demand would not change at all. In reality, the price of silver could likely increase 1000% with little to no effect on demand.

Obviously not all applications of silver use such tiny amounts of silver, but with the rapidly increasing use of silver in nanotechnology, many of these new applications will use even smaller amounts of silver. Therefore, unlike almost any other commodity on Earth, even with an extremely large and rapid increase in price there will be a relatively small decline in demand.

The world is currently facing the largest silver-shortage in centuries. Meanwhile, the Manipulators have deceived the market into believing that global silver inventories have tripled in a little more than three years – because the phony, “paper promises” of (so-called) “bullion-ETF's” are included in those inventories!

Intelligent people will soon begin to realize (in growing numbers) that with the current dynamics of the global silver market, it is totally absurd to even suggest that current inventories could have increased by 200% in 3 years. As this realization grows in size (and vehemence), several events are certain to occur.

First of all, large investors are going to start hoarding silver again. Think: “Hunt Brothers” except that now there is hundreds of times as much capital floating around – and 90% less silver.

Secondly, pressure will mount on the various forms of silver fraud currently taking place. Consider this: it is the Manipulators (the fraudulent, bullion-banks), themselves who are telling us that 2/3 of global silver inventories are held in bullion-ETF's.

Meanwhile, these same criminals are holding a short-position in the Comex market equal to more than half of global inventories (based upon the Comex "Commitment of Traders" report). This raises the obvious question: what is backing this short position? Obviously (by definition), the Manipulators cannot hold more than 100% of all silver.

If they could somehow manage to cover their own short positions, there assuredly would be little or nothing left for the bullion-ETF's – sitting there with their paper promises.

When the current surge in demand for silver turns into a frantic rush to grab as much bullion as possible while it is priced at no more than ¼ of its current value, that will be the end of the Manipulators – and the end of all those “bullion-ETF's” who don't physically possess their own bullion.

The only remaining question is whether this will occur next decade, next year, next month, or next week. Got silver?

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