Why did silver DIVE?
I've had quite a few people contact me and ask; "Why did silver take a massive dive on Friday?" (April 7th). The big question should be; while qold also went down some, it didn't go into the negative loss column; only silver. WHY???
People know my knowledge and position on Silver and Gold. First thing that I need to make clear to you, my readers, is: The silver drop on Friday was 100% a PAPER DUMP! This has nothing to do with the physical metal. And as my readers know; the only thing we care about is the PHYSICAL SILVER. So; how could silver take such a big dump Friday?
The first thing to know, if you don't know already, is that when it comes to these PAPER METALS, the price is based on what a person is willing to pay to buy and what someone is willing to accept to sell. That's pretty obvious; but in the paper world is more important. Let me explain with an example:
Back in the 2010-2011 time frame, not only was the price of silver going up, but more importantly, the PHYSICAL SILVER was almost impossible to buy. NO ONE WAS SELLING IT!!! Yes, paper was being sold and bought daily. But the REAL SILVER wasn't being sold. I was in Albuquerque visiting family, and I took a trip downtown to "Old Town". Beautiful place, with many native americans selling home made silver, turquoise, etc. jewelry in the market square. I noticed that there wasn't a lot of silver jewelry for sale. Much less than normal. I asked one of the ladies selling why there wasn't much silver jewelry. "Was the price of silver TOO HIGH" to buy and make jewelry? She said: "Of course not. Jewelry markup is great enough that it doesn't really matter what the price of silver is. We can still make a profit." So I asked; "Then why isn't there a lot of silver jewelry being sold like normal"? Her answer simple was: "We can't find any silver to buy, to make the jewelry". At the time, silver was around $30-$35 an ounce and on the upswing. People simply weren't SELLING. Remember; YOU CAN'T MAKE JEWELRY, SOLAR PANELS, ELECTRONICS, etc. with PAPER SILVER!!! So I asked this lovely lady. "I know you prefer the silver beads/pellets because they're easier to melt, but if I had silver bullion (Bars), would she be interested in buying it"? She said "MOST DEFINITELY". I asked how much she'd be willing to pay. She said that because she simply can't get ANY, she'd pay ALMOST ANYTHING. I sold her a 100oz Academy Bar of silver. She paid me $75 an ounce for it. (SHE SET THE ORIGINAL PRICE). I didn't get greedy. I simply said: "OK". I went home, got her the silver bar, and everyone was happy. She said 100 ounces would keep her in business making jewelry for a a month or two.
That example is to point out that in the PAPER WORLD, people would NEVER be that desperate to pay 2X Spot Price for silver. However, in the REAL WORLD of Physical Silver, where it has industrial uses, the price can definitely be more flexible. So, why did the price of silver take a nose dive 2 days ago?
Well, there are only 2 ways to sell paper derivatives.
1. You can sell with a "LIMIT ORDER"
2. You can also sell with a "MARKET ORDER"
This is important to know. A LIMIT ORDER is the normal method. It means that you, the seller, are trying to get the best price you can. You set a limit, so that if the price reaches a certain point or higher, you are willing to sell. Thus, making the profit or higher that you want.
The other way; the "MARKET ORDER", no one in their right mind would do. (UNLESS THEY HAD ULTERIOR MOTIVES. A Market Order simply says: "I have this for sale, and I will take ANY PRICE YOU'RE WILLING TO PAY!!!". Now, for an individual selling a hundred ounces of silver, because they ran into hard times, this is understandable. But for someone selling a large enough volume, that as it's being sold, the price continues to drop, and more of it is getting sold, this is ridiculous. We're talking a SHIT LOAD of silver being sold. And again; no one in their right mind would be willing to sell such a LARGE POSITION of their silver derivatives with a MARKET ORDER; meaning, AT ANY PRICE. But that's exactly what happened.
So, the question is WHY??? Well, there's only 3 possibilities when dealing with sells of this magnitude. Either:
1) The holder is wanting to manipulate the price; hoping it will drop even further after their sells are done; and thus be able to buy back the silver at a lower price than they sold it. Or for some other manipulative purposes, such as the government trying to strengthen their currency. That however, isn't as likely, considering gold didn't go into the negatives, and it's used more against the dollar.
2) The person/entity holding such a large position, knows or anticipates something drastic concerning silver. Maybe they think it's going to crash or go down considerably. REMEMBER: We are talking about PAPER METALS. Unfortunately, this is WHERE the price is set. Even for buying/selling the physical metals. The price is set in the paper world. And just like my example with the jewelry makers, the physical price doesn't need to be the same in the real world. But maybe, the entity selling such a large amount of PAPER SILVER is expecting paper silver to become weaker. Maybe the paper holders are catching on. Either way, this "Insider Trading" scenario is something to be considered.
3) The third reason someone/entity would sell so much paper silver at a MARKET ORDER and get ANYTHING FOR IT; is because the individual/entity is mentally unstable. There is no other reason a person would unload such a large position, and not care what they got for it.
So, either the seller was manipulating the price so they can hope it crashed lower than what they sold it at and they were buying it back; or other manipulative reasons; OR someone knows SOMETHING about the paper metals world and is trying to get out of it; OR the person is a "Couple of French Fries Short of a Happy Meal".
So, how does this affect you? Well, if you are still accumulating silver, you could save some money purchasing. Other than that, it doesn't really do anything. And it definitely DOESN'T HURT YOU. Remember; in 2010-2011, when silver was at $30-$35, I sold 100 ounces of silver to a native american jewelry maker for $75 an ounce. (SHE SET THE PRICE). In the REAL WORLD, when silver is needed, wanted, desired, etc. it won't matter what the PAPER PRICES ARE. Currently, it matters. And for you BUYING SILVER, it's keeping the price down. Go Get More!!! But when the time comes, and it will, that the INDUSTRY NEEDS PHYSICAL SILVER; and the supply simply isn't there, the paper price will disappear. And you'll know when it's coming. First, the government mints will decide, (For their own reasons), to stop minting silver such as the american eagle, canadian maple leaf, philharmonic, australian, etc. Then you'll start noticing that comex and other large depositories, that's SUPPOSE TO HAVE the physical amount of silver to back their paper, will no longer be able to lie any longer.
Either way, I just wanted to explain WHY the price dumped on Friday. Not a reason to panic. Matter of fact, if you're a buyer, celebrate. The ONLY PEOPLE who would be worried, are the INVESTORS. And you all know what I think about INVESTING in precious metals. (I don't think much of it). I don't BUY silver. I don't INVEST in silver. I simply EXCHANGE for silver. I'm exchanging 1 currency for ANOTHER currency. Just so happens, physical silver and gold is MORE TRUSTWORTHY as a currency than PAPER Dollars/Yen/Euros/etc.
CYA: SE:
People know my knowledge and position on Silver and Gold. First thing that I need to make clear to you, my readers, is: The silver drop on Friday was 100% a PAPER DUMP! This has nothing to do with the physical metal. And as my readers know; the only thing we care about is the PHYSICAL SILVER. So; how could silver take such a big dump Friday?
The first thing to know, if you don't know already, is that when it comes to these PAPER METALS, the price is based on what a person is willing to pay to buy and what someone is willing to accept to sell. That's pretty obvious; but in the paper world is more important. Let me explain with an example:
Back in the 2010-2011 time frame, not only was the price of silver going up, but more importantly, the PHYSICAL SILVER was almost impossible to buy. NO ONE WAS SELLING IT!!! Yes, paper was being sold and bought daily. But the REAL SILVER wasn't being sold. I was in Albuquerque visiting family, and I took a trip downtown to "Old Town". Beautiful place, with many native americans selling home made silver, turquoise, etc. jewelry in the market square. I noticed that there wasn't a lot of silver jewelry for sale. Much less than normal. I asked one of the ladies selling why there wasn't much silver jewelry. "Was the price of silver TOO HIGH" to buy and make jewelry? She said: "Of course not. Jewelry markup is great enough that it doesn't really matter what the price of silver is. We can still make a profit." So I asked; "Then why isn't there a lot of silver jewelry being sold like normal"? Her answer simple was: "We can't find any silver to buy, to make the jewelry". At the time, silver was around $30-$35 an ounce and on the upswing. People simply weren't SELLING. Remember; YOU CAN'T MAKE JEWELRY, SOLAR PANELS, ELECTRONICS, etc. with PAPER SILVER!!! So I asked this lovely lady. "I know you prefer the silver beads/pellets because they're easier to melt, but if I had silver bullion (Bars), would she be interested in buying it"? She said "MOST DEFINITELY". I asked how much she'd be willing to pay. She said that because she simply can't get ANY, she'd pay ALMOST ANYTHING. I sold her a 100oz Academy Bar of silver. She paid me $75 an ounce for it. (SHE SET THE ORIGINAL PRICE). I didn't get greedy. I simply said: "OK". I went home, got her the silver bar, and everyone was happy. She said 100 ounces would keep her in business making jewelry for a a month or two.
That example is to point out that in the PAPER WORLD, people would NEVER be that desperate to pay 2X Spot Price for silver. However, in the REAL WORLD of Physical Silver, where it has industrial uses, the price can definitely be more flexible. So, why did the price of silver take a nose dive 2 days ago?
Well, there are only 2 ways to sell paper derivatives.
1. You can sell with a "LIMIT ORDER"
2. You can also sell with a "MARKET ORDER"
This is important to know. A LIMIT ORDER is the normal method. It means that you, the seller, are trying to get the best price you can. You set a limit, so that if the price reaches a certain point or higher, you are willing to sell. Thus, making the profit or higher that you want.
The other way; the "MARKET ORDER", no one in their right mind would do. (UNLESS THEY HAD ULTERIOR MOTIVES. A Market Order simply says: "I have this for sale, and I will take ANY PRICE YOU'RE WILLING TO PAY!!!". Now, for an individual selling a hundred ounces of silver, because they ran into hard times, this is understandable. But for someone selling a large enough volume, that as it's being sold, the price continues to drop, and more of it is getting sold, this is ridiculous. We're talking a SHIT LOAD of silver being sold. And again; no one in their right mind would be willing to sell such a LARGE POSITION of their silver derivatives with a MARKET ORDER; meaning, AT ANY PRICE. But that's exactly what happened.
So, the question is WHY??? Well, there's only 3 possibilities when dealing with sells of this magnitude. Either:
1) The holder is wanting to manipulate the price; hoping it will drop even further after their sells are done; and thus be able to buy back the silver at a lower price than they sold it. Or for some other manipulative purposes, such as the government trying to strengthen their currency. That however, isn't as likely, considering gold didn't go into the negatives, and it's used more against the dollar.
2) The person/entity holding such a large position, knows or anticipates something drastic concerning silver. Maybe they think it's going to crash or go down considerably. REMEMBER: We are talking about PAPER METALS. Unfortunately, this is WHERE the price is set. Even for buying/selling the physical metals. The price is set in the paper world. And just like my example with the jewelry makers, the physical price doesn't need to be the same in the real world. But maybe, the entity selling such a large amount of PAPER SILVER is expecting paper silver to become weaker. Maybe the paper holders are catching on. Either way, this "Insider Trading" scenario is something to be considered.
3) The third reason someone/entity would sell so much paper silver at a MARKET ORDER and get ANYTHING FOR IT; is because the individual/entity is mentally unstable. There is no other reason a person would unload such a large position, and not care what they got for it.
So, either the seller was manipulating the price so they can hope it crashed lower than what they sold it at and they were buying it back; or other manipulative reasons; OR someone knows SOMETHING about the paper metals world and is trying to get out of it; OR the person is a "Couple of French Fries Short of a Happy Meal".
So, how does this affect you? Well, if you are still accumulating silver, you could save some money purchasing. Other than that, it doesn't really do anything. And it definitely DOESN'T HURT YOU. Remember; in 2010-2011, when silver was at $30-$35, I sold 100 ounces of silver to a native american jewelry maker for $75 an ounce. (SHE SET THE PRICE). In the REAL WORLD, when silver is needed, wanted, desired, etc. it won't matter what the PAPER PRICES ARE. Currently, it matters. And for you BUYING SILVER, it's keeping the price down. Go Get More!!! But when the time comes, and it will, that the INDUSTRY NEEDS PHYSICAL SILVER; and the supply simply isn't there, the paper price will disappear. And you'll know when it's coming. First, the government mints will decide, (For their own reasons), to stop minting silver such as the american eagle, canadian maple leaf, philharmonic, australian, etc. Then you'll start noticing that comex and other large depositories, that's SUPPOSE TO HAVE the physical amount of silver to back their paper, will no longer be able to lie any longer.
Either way, I just wanted to explain WHY the price dumped on Friday. Not a reason to panic. Matter of fact, if you're a buyer, celebrate. The ONLY PEOPLE who would be worried, are the INVESTORS. And you all know what I think about INVESTING in precious metals. (I don't think much of it). I don't BUY silver. I don't INVEST in silver. I simply EXCHANGE for silver. I'm exchanging 1 currency for ANOTHER currency. Just so happens, physical silver and gold is MORE TRUSTWORTHY as a currency than PAPER Dollars/Yen/Euros/etc.
CYA: SE:
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