Ed Steer, publisher of the Gold and Silver Digest and board member of the Gold Anti-Trust Action Committee, has wise words for silver investors: be patient.
Steer gave a presentation entitled “Silver — and Its Concentrated Short Position on the COMEX” during this year’s Vancouver Resource Investment Conference, and in the interview above we asked him for further details. Notably, Steer explained why investors should invest in silver despite the fact that it is manipulated. He also gave his prediction for the silver price in 2017.
According to Steer, there are only two major players in the silver market: Scotiabank and JPMorgan Chase (NYSE:JPM). They have the largest short positions on the COMEX, and “they can step into the market whenever they want to and take a positive trend and either cap it, or cap it and drive it down lower again.”
Despite that shorting, Steer said of investing in silver, “there has never been a better time, but you have to be prepared to be patient and sit and wait this thing out.”
He believes that silver is not the only commodity that is being manipulated — gold, platinum and palladium are as well. He said, “in order to keep the hard assets under control, the banks just control the key ones: precious metals, crude oil and copper. If they can control those ones — and they do control those ones — they can control the price of all commodities and all hard assets, and keep everybody in stocks, bonds and stuff like that.”
Steer ended by touching on the silver price. “At some point in time, whether it be this year or next year, whatever, we’re going to see a silver price that, quite frankly, most people can’t possibly imagine,” he said.
Watch the video above for the full interview.
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Securities Disclosure: I, Pia Rivera, hold no direct investment interest in any company mentioned in this article.
INN: Yesterday your presentation was on silver’s concentrated short position on COMEX. From what I understand, only a few traders are responsible for that position. Which traders are they?
ES: Well the concentrated short position — I focused on silver because that’s where everybody’s main interest is, but it also is in gold, platinum, palladium, copper, the crude oil market, any of the major markets. There’s basically the commercial traders who are, and especially in the precious metals, are the bullion banks themselves. JPMorgan Chase, Scotiabank, HSBC (NYSE:HSBC) … Citigroup (NYSE:C), Goldman Sachs (NYSE:GS) — those are the principal players in the precious metals. And in copper and crude oil it’s others, but it’s basically one group of traders — the commercial traders, the banks — against what are called the managed money traders or the non-technical funds.
But in your question, specifically regarding silver, is the fact that there’s only two real major players in the silver market. There’s Scotiabank, which we consider to be the largest short holder in the COMEX futures market. But the kingpin, even though they don’t have the biggest short position, is JPMorgan Chase. They are the leader of this, and the moment they decide that they’re going to back out of this and let free markets reign will be the day that we see silver prices not at what they are today, but some other number. Are they going to let it go? I don’t know.
INN: So that’s a problem because they’re exerting so much control over the market?
ES: Absolutely, there’s just no question about it. They have a huge futures position and they’re actively going short. Anybody who wants to go long to drive the price up — just pick a world event, Trump’s election is a perfect case in point. The moment everybody realized he was going to win, gold prices took off to the moon. And then at 12:00 at night, down it came — that was the boys in the market, that’s why it turned around so quickly. So they can step into the market any time they want to and take a positive trend and either cap it or cap it and drive it down lower again. That’s JPMorgan Chase and a handful of other traders.
INN: Would it still be a problem if many more traders had concentrated short positions?
ES: The thing is that there are thousands of traders in the silver market and there are thousands of traders in the gold market. When I talk about concentration I’m talking about four or less traders, really … that are short. I think I said yesterday that eight traders are short 50 percent of the entire COMEX futures market in silver, which is grotesque. Especially when they’re all working together and colluding, they all trade as one. So it’s not really a market at all.
In order to have a free market, the thousands of other traders on the other side of the trade that are long, the short position has to disappear, and that only takes two players to get out of the market: JP Morgan Chase or Scotiabank. But mostly JPMorgan because they’re the ones that keep this thing going. If they decided to step back from the stage by just putting their hands in their pockets and not doing anything when the next price rally starts, we would see … the gold and silver prices, and a lot of other commodity prices, take off to the moon and the stars almost right away.
INN: So why invest in silver if it’s manipulated? Should people just learn to operate within those parameters, or do you see [manipulation] ending anytime soon?
ES: Well, all price management schemes end at some point. When is this one going to end? I don’t know, but silver analyst Ted Butler says it will end when JPMorgan either decides it’s had enough physical silver or it’s instructed to stand back.
But as far as investing, I’ve been investing in it for 15 years now, and I remember buying silver once, about a 5-ounce bar, for $35. You don’t do that anymore. The price is slowly sneaking up there, and the stocks are doing well if you invest early enough. And I can tell you right now, even a $3 or $4 or $5 move in silver would get investment demand back up again and would drive precious metals shares to the moon as well. There’s never been a better time, but you have to be prepared to be patient and sit and wait this thing out.
INN: You touched on this briefly before, but what other commodities also face manipulation?
ES: Like I mentioned at the top of the interview, if they control one they have to control all the precious metals. Jim Rickards is a friend of mine, and he says, well, if you’re going to control gold and silver, you have to control platinum and palladium as well. Because you can’t have platinum at $2,000 an ounce and gold going down $20 an ounce in one day, something doesn’t fit here. So in order to control commodity prices and keep the hard assets under control, the banks just control the key ones. The four precious metals, crude oil and copper. If they can control those ones or they do control those ones, they can control the prices of all commodities and all hard assets, and keep everybody in stocks and bonds, mutual funds and stuff like that.
But the moment they let the paper market go down the toilet, then you’re going to see precious metals, hard assets, I don’t care if it’s rubber cocoa, tin, sugar, wheat — take your pick. Once the paper assets start to slide, then you’re going to see the hard assets take off. So they have to control the key ones.
INN: So very, very overarching.
ES: Very, very. It’s a world picture of keeping hard assets depressed and paper assets elevated. That’s the bubble that we’re living in right now for the last 20 odd years since we went off the gold standard in 1971.
INN: Last question. What’s your prediction where the silver price this year?
ES: If I wanted to know the answer to that question I would pick up the phone and call Jamie Dimon at JPMorgan Chase and say, “okay Jamie, is this the year or isn’t it?” But nobody knows what the free market price is — are we going to have a free market price this year? I don’t know. Are they just going to retreat to a new level, higher level in price like $50 or $100 an ounce? Who really knows? All I can say is at some point in time, whether it be this year or next year, whatever, we’re going to see a silver price that, quite frankly, most people can’t possibly imagine.
INN: Thank you for joining me today, that was great.