It’s the Difference Between $70 and $140 Million [Podcast]

A few years ago, I was at a private conference listening to a CEO of a silver mining company explain—quite matter-of-factly—how silver prices were being manipulated. He laid out the whole playbook: how major Wall Street traders would flood the market with short positions in paper silver, drive the price down, and simultaneously accumulate physical silver at rock-bottom prices. Then, once they’d cornered enough physical supply, they’d let prices rise, selling into the momentum they themselves created. It was a textbook case of market manipulation—illegal, unethical, but enormously profitable. But what stuck with me wasn’t the CEO’s explanation. It was the reaction of some of the "finance elite" in the room. A few of them scoffed. You could practically see them rolling their eyes. Manipulate silver? Why would anyone bother? They arrogantly dismissed the notion outright. Fast forward a couple of years, and guess what happened? JP Morgan paid a nearly $1 billion fine for precisely this kind of manipulation. Several traders went to prison. Turns out, the “conspiracy theory” was, in fact, reality. The reason why it happened is because it could happen. Silver is a small enough market where a few large players can force those kind of price fluctuations. And to me, that is the primary reason why we likely won’t see a sustained run up in silver prices. Gold has now hit $3,000 per ounce. So could speculation drive silver to ridiculous heights? Absolutely. The Wall Street traders might even pull the reverse of what they did last time and intentionally drive prices up. But there is a key difference between silver and gold-- gold has an obvious catalyst for higher prices: central banks are buying up gold literally by the metric ton in their efforts to diversify away from the US dollar. The silver market, on the other hand, is simply too small to absorb that amount of capital. Gold also provides central banks with the best wealth density to easily store vast fortunes of value. Think about it like this— a barrel of oil is worth about $70. If you fill up that same barrel with silver, you’d have about $1.5 million of value. But fill it up with gold and suddenly it’s worth about $140 million! In other words, gold is the one of the most ‘dense’ forms of wealth in existence... and that’s the primary reason why central banks are loading up on it, instead of silver. We discuss all this in today’s podcast, as well as another precious metal that central bankers might consider accumulating— and it’s not silver. We also talk about what gold’s latest milestone means, if investors are too late to the party, and some alternative ways to gain exposure to what will likely be a continuing run up in gold prices. One of those alternatives is investments in profitable, well-managed precious metals companies which are at the moment incredibly undervalued. That’s because central banks are buying gold, not gold companies. The last three precious metals companies that we showcased in our 4th Pillar investment research newsletter fit this exact criteria, and are up 27%, 21%, and 40% respectively. We still think this is a very sensible approach worth considering. You can listen here. https://youtu.be/-KNn7mYehr8 Also, you can access the transcript of this video, here.