Is the silver market open to manipulation? Many believe that the answer is yes, and last year a lawsuit was filed against JP Morgan alleging that the company worked to suppress the value of this precious metal. The lawsuit was eventually dismissed by the judge but that does not mean that manipulation did not occur, only that it could not be proven according to the legal standard. This is not the first case that has alleged this type of activity and it will probably not be the last.
Markets can be manipulated in many ways. If central banks and government entities make large trades then this can cause an increase or reduction in the spot price. In the past there were attempts to corner the silver market, and the Hunt Brothers and their conglomerate of wealthy investors almost succeeded. After this attempt and a spot value that almost reached $50 an ounce new regulations were passed to prevent this from happening again. Whether or not these were successful is still being debated today.
With an economy that's on a verge of collapse, there's a widespread thought that the value of all the precious metals should indeed be far higher than it currently is. Manipulation has been blamed to be the culprit of this anomaly. Some acts are pretty obvious like the resetting value of certain investment options right after the central banks have a meeting. Naturally, what worries people the most would be those that are done surreptitiously.
In the JP Morgan case, the organization was alleged to have been shorting huge quantities of silver in its attempt to force the sale of the silver at a low price in order to control it. On the other hand, there are those who believe that most of these positions that they were holding had been taken over by them when Bear Stearns collapsed and that JP Morgan didn't really have a choice but to sell off some of their positions as they were too large.
Whether or not you believe that the silver market is open to manipulation can determine whether you decide to use this vehicle. For many owning the bullion provides a safety net and helps them hedge against inflation, and they are more concerned with the intrinsic value and capital protection offered than the market movements that are seen on a short term basis. Before you decide whether or not this mineral is right for you make sure that you understand how the market works and all of the possible results that you may see.
Markets can be manipulated in many ways. If central banks and government entities make large trades then this can cause an increase or reduction in the spot price. In the past there were attempts to corner the silver market, and the Hunt Brothers and their conglomerate of wealthy investors almost succeeded. After this attempt and a spot value that almost reached $50 an ounce new regulations were passed to prevent this from happening again. Whether or not these were successful is still being debated today.
With an economy that's on a verge of collapse, there's a widespread thought that the value of all the precious metals should indeed be far higher than it currently is. Manipulation has been blamed to be the culprit of this anomaly. Some acts are pretty obvious like the resetting value of certain investment options right after the central banks have a meeting. Naturally, what worries people the most would be those that are done surreptitiously.
In the JP Morgan case, the organization was alleged to have been shorting huge quantities of silver in its attempt to force the sale of the silver at a low price in order to control it. On the other hand, there are those who believe that most of these positions that they were holding had been taken over by them when Bear Stearns collapsed and that JP Morgan didn't really have a choice but to sell off some of their positions as they were too large.
Whether or not you believe that the silver market is open to manipulation can determine whether you decide to use this vehicle. For many owning the bullion provides a safety net and helps them hedge against inflation, and they are more concerned with the intrinsic value and capital protection offered than the market movements that are seen on a short term basis. Before you decide whether or not this mineral is right for you make sure that you understand how the market works and all of the possible results that you may see.
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