When the worldwide Silver spot price is calculated, it is a complex equation with several factors playing into the overall equation. The entities with the most power over the Silver spot price do not generally exchange physical Precious Metals but instead use derivative commodity contracts to determine the price of physical Silver. Silver is traded virtually 24 hours a day through many exchanges such as Chicago, Hong Kong, London, New York and Zurich. The Silver spot price is then calculated using the near-term, or the nearest contract with the most volume, futures contract prices
The most important exchange in determining the spot price of Silver is the COMEX, a branch of the Chicago Mercantile Exchange. COMEX is the most influential trading market for Silver futures contracts and consequently has the greatest impact on Silver’s worldwide fiat currency spot price. Futures contracts for Silver on the COMEX represent the projected price of 5,000 ounces of Silver on a hypothetical future delivery date. However, most futures contracts are never settled in Physical Silver, just cash. Hundreds of ounces of “on-paper” Silver are traded on the COMEX for every single ounce of Physical Silver that is ultimately delivered in the real world.
https://learn.apmex.com/investing-guide/silver/how-is-the-silver-spot-price-set/
Now hold on just a minute…
The whole price of silver isn’t based on anything real or fixed, which we knew, because value is subjective, but to go from that to “yeah this one place in Chicago says what the price is based purely off hypotheticals” is neat.
Unlike the stock market, which is supposedly (but not actually) price set off the last trade, the silver market spot price is fixed based not off how easy or hard it is to get actual silver, but based off a “guess” by the Chicago Mercantile Exchange.
“Is anything these people do not founded in fraud?”
(No.)
How crazy is it that when anyone walks into a store and goes to buy silver, the price that’s asked is there not by any value judgment of the buyer or seller, but because some guy in Chicago says he thinks silver might be worth $X on MM/DD/YYYY.
The fact that they’re able to fix the price through futures contracts screams that they’re playing some game in the present to buy or sell based off the current price, literally knowing what they’re going to set the price to at some future date. RICO can’t come fast enough. They literally know what the price is going to be, because they’re actively setting it in the present with “futures” contracts. That’s nuts.
A reasonable estimate is somewhere between the inflation adjusted price of commodities in 1900 compared to now, and the price of an ounce of silver times the average number of outstanding contracts per physical ounce. (“Paper to Silver Ratio” on usdebtclock.org - currently 403x)
I trend closer to the latter, but the former should be a safe baseline. 75% of the gap seems like a safe bet. There’s no telling what it ends up being though, as market forces aren’t currently acting on it.
Hmmm.... cogent reply, but I'm still wondering about a concrete value. After years of casual stacking I've ended up with a moderate pile of physical silver. I will never sell it or see it as an 'investment'.... but it's a hedge against currency collapse.
There is no concrete reply. Value is subjective. The best we can do is guess.
Supposedly, that’s what they’re doing, except they’re actually doing market manipulation so they can know the price, because they’re setting it.
I think the range I named is a pretty reasonable assessment of where price should end up, and that’s in current FRN valuations.
Once things flip, we should end up up trading assets for assets, not dictations (“fiat”) for assets.
https://www.reference.com/history-geography/much-did-things-cost-1900-9e40559daa251473
I agree with MOST of your analysis (very Respectfully). My only divergent opinion (and it is only my opinion) is that once true price discovery functions are triggered, when the manipulation machines break down, the logical baseline you theorized (1900 to current-adjusted for aggregate asset appreciation) will absolutely be applied in the initial price discoveries, BUT I expect we will see a PREMIUM to THAT price. How big of a premium? Not sure. If history repeats itself, and the currency degradation is the impetus for the free market parole for precious metals, precious metals will take on the defacto role of physical MONEY, as well as industrial metal. When that happens, the market mechanics of supply and demand will kick-in, as well as the human penchant for behaving irrationally when markets “go rogue”. The perfect storm for gold and silver.
There was also an upper tier of “paper x oz price” listed, and I expect that during the initial correction, there may indeed be swings much higher than that.
He asked for a concrete price, though, so the demand spike wouldn’t fit.
Agree with everything you said, except the part about the divergent opinion!