Understanding Silver Market Manipulation: Myths vs. Reality

In the 1970s, the Hunt brothers attempted to take control of the silver market by buying a lot of silver to drive prices up. This is just one example of silver manipulation. Today, silver manipulation refers to overinflated prices that impact the silver market. Keep reading as the experts from First National Bullion, the silver and gold dealers Carlsbad collectors trust for reliable information about precious metals markets, discuss various factors that affect prices in the market for silver.

Possible Issues with Bullion Banks

The price of silver has experienced a correction after going up more than $5 for three months in a row recently. There are now suggestions that bullion banks may be attempting to control silver and gold prices.

Production Costs

Many goods and services, including precious metals, aren’t really overvalued. Analysts often forget to consider production costs. It costs a company money to make bullion that’s appealing to the general public or smart investors. All products include added costs to allow the production company to earn a profit. Otherwise, many businesses would go out of business quickly. This applies to banks that handle bullion, including solid pieces of silver in the form of coins or bars.

The Pan American Silver Example

If we look at how this particular company has performed over the years, the fact is it has had more years of breaking even or losing money on silver. The only times when the company made significant profits was when silver prices went up substantially. Many silver enterprises have similar results, since production costs also affect how much profit a silver bullion company or banks earn. Silver is a commodity based on the cost of production.

The Truth about Silver Manipulation

Bullion banks are manipulating prices to some extent with tactics such as “spoofing” for their gains. However, even with this manipulation, the current silver price is above the cost of production. If bullion banks impacted prices significantly, many mining companies that produce silver would go out of business or go bankrupt. This hasn’t happened.

With paper silver, there are ups and downs as well and rumors or manipulation. However, this type of manipulation is easier to do and has a bigger impact. For this reason, the paper silver market isn’t an accurate reflection of the bullion market. Silver is like all commodities in that there are times when companies make profits and times when they lose profits.

It’s better to look at long-term trends in the silver market rather than just short-term periods. It’s easier to find possible signs of market manipulation if you look at shorter times. Another fact to consider is that central banks can’t really do anything about the so-called manipulation of the physical silver market. It’s not like bullion banks can automatically produce more silver like the federal bank does with paper currency.

The key to making the silver market work for you is to pay attention to market trends, both short- and long-term ones. Working with an investment advisor or financial expert familiar with the leading gold and silver markets is another way to take advantage of market trends rather than simply looking for signs of market manipulation. 

Whether they’re looking for expert advice on precious metals prices or they want to buy silver bullion, Carlsbad precious metals collectors reach out to the trustworthy professionals at First National Bullion. We can answer all your questions and help you find all the information you need on how precious metals can be a valuable part of your portfolio. Give one of our experienced dealers a call today.

The statements made in this blog are opinions, and past performance is not indicative of future returns. Precious metals, like all investments, carry risk. Precious metals and coins may appreciate, depreciate, or stay the same in cash value depending on a variety of factors. First National Bullion does not guarantee, and its website and employees make no representation, that any metals for sale will appreciate sufficiently to earn the customers a profit. The decision to buy, sell, or borrow precious metals and which precious metals to purchase, borrow, or sell are made at the customer’s sole discretion.