The right time to invest in silver

In the first quarter of 2013, the Silver price Reduced by $2. On January 2, 2013, the price for 1 troy ounce of silver stood at $30.50. On March 29, 2013, the silver price was only $28.30 per troy ounce. The demand for physical silver during this period was historic. The reason for the low silver price and strong demand lies in the paper silver market.

To give an idea of the silver market, we use the physical holdings of all the silver ETFs combined with US Mint sales of the silver Eagle. These two play an important role when it comes to the demand for physical silver.

The U.S. mint sold a record amount of silver Eagle coins in the first quarter of 2013 compared to the first quarter of previous years.

The silver ETFs increased their physical holdings by almost 4%.

To put these numbers into perspective, remember that the total mining supply in 2011 was 761.6 million ounces (equivalent to 24,485 tons). 

What is most striking in the silver market in the first quarter of this year is that despite the strong demand, there is still a decline in the silver price. This strong demand is rare in the silver market. But despite this strong demand, the price of silver has still gone down, but why? The following texts explain this question.

Silver expert Ted Butler has been studying the field of silver for 3 decades and reported weekly evolutions in great detail that took place in the silver market. The conclusion he drew from his latest analysis is as follows: 

The standout price-function of silver in the first quarter was the reduction of the total short-term commercial net position on the COMEX. This culminated on 5 February. From this peak through last Tuesday, 29,000 net contracts were bought by the commercials. This is equivalent to 145 million ounces of silver and is clearly an extremely high amount compared to the other amounts of silver produced or consumed within this quarter. Despite the fact that these are paper transactions, they are so extraordinarily large that they overwhelm the free market forces that emanate from the real world of supply and demand. Simply put, the commercials on the COMEX use a lower silver price during this quarter to entice the funds to sell. 

One of those commercials is JP Morgan. Based on this analysis, Ted Butler calculates their short position

JP Morgan holds 23,000 contracts as of last Tuesday. This is a total of 96% of the commercial short position of 24,000 contracts measured in the latest COT report. I doubt that such an extreme degree of concentration has ever occurred before in the silver market. On this measure alone, it is safe to conclude that JP Morgan has manipulated the silver price in the last month(s). Since there are virtually no commercial short positions in COMEX silver without this bank. To put things in perspective, JP Morgan's current short position is equivalent to about 12.5% of the total annual silver mining production. This short position is so concentrated that JP Morgan has the authority to control the total silver price.

Ted Butler points out that controlling the price of silver in the paper market is illegal, it is against commodity law. 

Ted Butler wrote the following in his final conclusion: 

In retrospect, it was the growing demand for physical silver that prompted JP Morgan to abandon the sale of silver in the fall of 2010, causing the price to rise to almost $50 per troy ounce. The crooks at JP Morgan will see that physical silver can become unbalanced for anyone by this method.

The market situation in silver is not sustainable in the long term. It can certainly stay on for a while, but not indefinitely. From a long-term perspective it is a risk perspective, which is the fundamental reason for physical silver investors, silver is an excellent asset for owning. 

I still believe that we are closer to the silver price bottom of some major significance. The investment in silver has rarely been more attractive than it is right now. It is important to recognize that any conceivable price that is lower and vastly surpassed by the potential amount of silver will go higher in the price. The essence of successful investing is that the chances of losing money are low and the chances of making big profits are high. In this case, it's silver. 

Source: www.bullionstreet.com