What Is Wrong With Silver: Is It Being Manipulated?

Caiman Valores profile picture
Caiman Valores


  • There is considerable evidence that silver is subject to considerable manipulation.
  • Revelations of manipulation from regulatory investigations and lawsuits in recent years have led to the introduction of stricter regulations and oversight.
  • These should help to minimize manipulation and lead to higher silver prices as supply and demand fundamentals reassume their traditional role in price making.
  • The divergence between gold and silver which now sees the gold to silver ratio well above its historical average has created an opportunity for investors to acquire the white metal at a discount.

Any of my regular readers would know that I have been bullish on silver (NYSEARCA:SLV) for some time but in all honestly, the recent performance of the lustrous white metal has been particularly disappointing. While gold (GLD) has recovered strongly in recent months roughly returning to where it was in the lead up the U.S. presidential elections, silver has failed to perform.

Source: Gold Price.

The white metal has not traded for a sustained period above the psychologically important $20 per ounce barrier since August 2014.

Source: Silver Price.

This has created considerable speculation among market pundits trying to determine why silver remains weak and has become the sick man of precious metals.

In this series of articles, I am going to take a closer look at the various claims and attempt to determine whether silver still presents as an investment opportunity.

Among some of the most popular forms of speculation have been claims of market manipulation, and that alternate digital currencies such as Bitcoin (BTC) have attracted the attention of investors that would typically be attracted to silver. While these claims may reflect some changes in the attitude of investors and the falling popularity of silver among alternate investors, the reality is somewhat different with market manipulation being among the most likely reasons for silver’s extreme volatility and prolonged slump.

Does the tremendous volume of paper silver lead to market manipulation?

One of the primary reasons for silver’s continued weakness is the tremendous volume of paper silver that exists, notably when compared to gold. Back in 2014 Bloomberg published an article speculating that the paper silver is roughly 250 times larger than the market for physical bullion.

At the time, silver was trading at around $20 per ounce so that claim was based on the assumption that with annual silver production

This article was written by

Caiman Valores profile picture
Investment specialist natural resources & precious metals. Focus on geopolitical & economic risk. Emphasis on Latin America. MBL USyd MA Pol Sci UNSW.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I/we have extensive investments in physical gold and silver bullion as well as collectible antique gold and silver coins.

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