The Biggest Short Squeeze In History
Silver used to be used for a lot of things, mainly currency. Your money today is a Fiat currency, but that currency still represents gold and silver. There are gold coins and silver coins, but these days, they don’t contain the physical metal.
It all changed back in 1966 in Australia, where slowly silver was removed from money. Ever since, silver’s value has been repressed.
These days, silver is worth about $32 Australian per ounce at the time of writing this.
Over the years, food has gone up in value, clothing has gone up, electronics and so on. It’s hard to find something that’s gone down in value. However, the cost of silver has gone down over the last 30 years.
If you’re wondering how that could be, think about how markets can be manipulated.
Recently you might have heard about GameStop and a Reddit group that went out to try to buy up all the shares in the market and push the prices up so the short sellers had to come back and fill their orders. That was market manipulation and there has been similar manipulation happening in the silver market to keep the price artificially low.
But why is the price being held down?
The short answer is because if the cost of it went up, the cost of everything would go up.
If you’re using your phone, your tablet, your computer, or any number of other devices, each of these probably has about 1 ounce of silver in it. Go and pick up a solar panel for your roof, it’s probably got about half an ounce of silver in it.
If the price of silver went up to $500, the cost of all your goods would go up as well and we’d see massive hyperinflation.
Shortage of supply
There is less and less silver out there in the world. It’s being used in electronic goods and devices, cars, and also in medical goods and equipment.
If you go to bullion dealers, or coin shops, it’s getting harder to find. The people who have it don’t want to let go of it, because they understand how currency works and are looking for real, solid wealth to protect themselves in the event of a hyperinflation scenario, which we may be starting to see at the moment.
Is it running out in Australia?
Ordinarily you can buy silver in a physical sense and have it stored in a vault, or you can buy it in an exchange traded fund (ETF). You can also buy it as an unallocated fund, which means you’ve got however many ounces you’ve purchased as a paper entry, but it’s then backed by the physical presence of the metal itself.
Recently people have noticed that the silver bars they have received from the Perth mint have changed in appearance. A few of the usual hallmarks are different and the quality control is not quite as good as it used to be. This has led some to believe that the bars might actually be coming from China and that the Perth mint is filling orders from there because it has no silver left.
What would that mean?
If that was the case, and there is a supply issue getting silver, there could be a bankrupt on the paper traded funds and you could see the price of silver rise astronomically.
You often hear about the property market being in a bubble, or the car market, the food market and so on. Everything is in a bubble due to the fact that currency markets are being manipulated.
So on one hand, currency is being manipulated, more currency is being printed and is therefore devalued against goods.
But on the other hand, sound money instruments like bars of silver are losing their value. How could they be cheaper? How could that be? Well it seems they are being artificially suppressed and it could be possible that there is a point where this façade cracks and the value of silver shoots up. And with that, the cost of so many things we take for granted.