Given that silver derivatives typically dictate the spot silver price and thus the majority price for silver bullion. The ongoing controversy of fractional-reserve-led silver price discovery continues.
What is evident in the following report is the Managed Money category trading on the COMEX needs to be trading bullishly in the aggregate, betting as a group for the silver price going higher for the silver spot price actually to gain upward momentum.
Reality partly is and can often feel for silver bullion bulls, that the price of silver is like the price of the 1987 movie Wall Street's Gordon Gecko described 'paper clip.' "We pick that rabbit out of the hat when everybody sits out there wondering how the hell we did it."
One look at OTC silver derivative trading turnover volumes (300 million oz silver trade turnover per day equivalent value) at around 1/3rd of the annual silver supply, and you get an idea of the outsized leverage applied to the silver spot price discovery mechanism.
Below you read a new market silver demand report, entitled “Global Silver Investment,” prepared by Metals Focus, a leading global precious metals consultancy.
The silver investment report examines current silver demand trends, as well as highlighting opportunities and identifying potential headwinds for the white metal in the coming decade (the 2020s).
The silver bullion related report also explores the main areas of silver investment demand ongoing:
Silver Futures Commodity Exchanges – a segment mostly dominated by the COMEX, which is perhaps the most sensitive to investor sentiment change, and the most volatile area in dictating spot silver prices. Silver futures contract exchanges all feature standardized contract sizes, delivery dates, and settlement locations. Most silver futures exchanges get highly leveraged, and few silver futures contracts settle in physical silver bullion getting delivered anywhere. Instead, the vast majority get paid or settled in fiat currency.
Silver Exchange-Traded Funds – silver price mimicking derivatives, traded like stocks, designed to track the spot price of silver with supposed stored silver metal backing the shares (unsecured creditor shareholders often have no claim to any silver in the ETF's silver stockpile). A silver ETF like SLV is a convenient way to gain spot silver price exposure, which has become popular amongst retail investors for short term trading or hedging tactics.
Silver Mining Stocks – offering investors look for the potential to benefit from a silver mining stock price appreciation and, in some instances, dividend streams.
Silver Over-The-Counter – an important market for silver investment with “off-exchange” transactions between investors and dealers/brokers (e.g., LBMA), which can offer greater flexibility for investors than futures exchanges in terms of quantities, qualities and form of metal, and delivery locations.
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