Ah yes, the silver manipulation crowd is ecstatic this AM as they gleefully point to news that Deutsche Bank has agreed to settle in a class action lawsuit which claimed that it, along with several other large banks, had been rigging the silver price at the London Silver Fix.

The claim by the silver cultists is that the bank would not have agreed to settle if they had done nothing wrong. Hello? Ever heard of companies settling nuisance lawsuits to make them go away? Nowadays it is called the “cost of doing business”.

Many unscrupulous attorneys make their living targeting corporations and other juicy targets in the full knowledge that such companies will almost inevitably settle to avoid the costs of litigation, not to mention the time, resources, and aggravation that would be involved in taking such a case to trial. Then there is always the risk of a fickle jury.

The funny thing about the way this story has been reported is the ASSUMPTION that because Deutsche Bank agreed to settle the case, it therefore PROVES that they were manipulating silver prices. On the contrary, it proves nothing. What it proves is that Deutsche Bank simply wanted to avoid the aforementioned burden of dealing with a nuisance lawsuit.

Here is the main point however. The entire premise of the silver is always manipulated crowd is that on account of these “nefarious banks”, the silver price has been held down and would be considerably higher than it would otherwise have been were it not for their activity.

I have long ago debunked that nonsense by simply displaying one chart.

I will do so again for the benefit of those who might have missed those days.

Chart_16-04-14_09-03-58

The dark line is the Dow Jones/UBS Commodity Index. This is just one of several commodity indices which are comprised of a basket of select commodity futures markets weighted according to a predetermined formula. While the individual weightings of each commodity can and will vary from one index to another, they all do a very good job of providing a picture of how the overall complex is faring.

Notice how the silver price rises and falls with the rise and falls of the actual index. In other words, the two move in unison, rising together and falling together.

I should note that the commodity index contains such things as crude oil, gasoline, corn, wheat, soybeans, cattle, hogs, sugar, copper, etc. In other words, it is very inclusive which is what one would expect from such an index.

Here is the point. Based on the theory of the silver manipulation crowd, the silver price was being illegally held from rising by the actions of the various banks, included among them, Deutsche Bank.

I would ask these poor souls the following simple question: “on what basis do you claim that silver prices would have been strongly higher were it not for these banks conspiring to force down the price and keep it from otherwise rising?”

Are those of us poor, ignorant, and unenlightened souls such as you silver manipulation cultists, supposed to believe that while the rest of the commodity complex was sinking, silver was to somehow soar in price? While deflation/slow growth fears, oversupply issues, etc., were sinking commodities as an asset class, your gray metal god was somehow to have been immune to all such events? Did Deutsche Bank and its supposed allies among the other banks, work to suppress the price of oil, gasoline, copper, corn, beans, wheat, cattle, sugar, hogs, platinum, cotton, and every other commodity market on the planet? Did they force the entire commodity sector lower? Why then were those latter markets falling in price?

Oh I see, it was all a giant conspiracy foisted upon the poor, defenseless commodity sector by evil, nasty banks.

You may choose to believe whatever nonsense you wish to believe but I will stick with the simpler and more reasonable view that silver prices rise and fall with the fortunes of the rest of the commodity sector. It is no more complicated than that.

Comments (5)

If the price of silver goes down over the next year or two, this would confirm that the “cartel theory” was wrong. Afterall, if the “manipulation” is now over, shouldn’t we expect to see “drastically” higher silver prices very soon?

On the other hand, if the price of silver does goes up – even on fundamental reason – it will only fuel the conspiracy fire more and even give more credit to the silver manipulation crowd. Let’s see what happens.

James – to me it is pretty simple – if commodities rise as an asset class, silver will go higher. As a matter of fact, it will actually outperform gold in such instances.

If commodities as an asset class move lower, so will silver and it will underperform gold.

thanks for the comments

Instead of trying to debate “manipulation” with a couple guys at work, I just went and found a brick wall to bang my head against.

Deep down im sure they just want someone to blame but themselves for being wrong.

Eastmon – Did you see the dents in that wall? Those belong to me as I beat you to the wall buddy. Trying to dispel this stuff over the many years that I have been trying definitely can drive a man nuts. There is simply no reasoning with these deluded souls. As you say, they simply refuse to read a simple price chart and have no one to blame but themselves and thus find it easier to scapegoat than to adapt and change to the new market conditions.

I do however fault the hucksters who keep peddling that manipulation swill. Those people have shamelessly profited off the misery of their victims who believed their crap.

The hucksters have been around for thousands of years,
They just take different forms. You’d laugh at your mate who tells you a story of sending 10k to Nigeria to help some random guy in need. I don’t see these guys, or the people they are scamming any different.
It seems to me that’s just nature, and probably necessary in the the grand scheme of things.

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