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About.Ag - Is the Price of Silver Manipulated?

Many people claim that the price of silver and gold are manipulated.

On the one hand, it would be hard to manipulate a multi-trillion-dollar market (gold). It would likely take a large government or large group of traders to do this, and would be hard to pull off without the help of COMEX and the CFTC.

On the other hand, about 100 times as much silver and gold trade on COMEX and other paper exchanges each day than there is demand for. And silver (and gold) aren't as easy to price as, say, stock in a company. The problem with manipulating most markets is that you have to convince people to either buy at an inflated price, or sell at an artificially low price. But with silver (and gold), if you can control the 'spot price', you can get people to sell at a price that is lower than it otherwise should be. The 'spot price' is often the current price of futures on COMEX, the very ones that have a trading volume about 100 times as much real silver.

Another interesting fact is that the price of silver directly tracks the price of gold. Throughout the day, if the price of gold starts going up, within a couple of minutes the price of silver rises too. And if the price of gold falls, silver will follow. This either means that the people trading silver futures are also trading gold futures (and enter the prices in the same way), or the people trading silver believe that its value is based on the exact same fundamentals as gold (mostly ignoring the large differences between the two metals).

Some people feel that silver and gold are manipulated by short sellers of silver and gold futures. The idea is that if there is a huge amount of silver or gold being sold short (where someone promises to deliver it in the future, even though they may not have it), they will have to eventually buy that silver or gold, at which point the prices would rise. On the other hand, some people believe that the short sellers are able to rig prices downwards, where they can then buy back the silver at prices near what they were when they originally entered the market.

So is the price manipulated? Do some research, and you can decide.

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