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Does the Government Manipulate Silver Prices?

          One of the natural questions that is so commonly asked by investors is “If silver is such an incredible investment and $100 silver is a no brainer, than why have the prices stayed so low for so long?”  This is an important question to answer.  From 1980 to 2007, silver prices traded between $3.50 and $8 an ounce.  There were a few spikes that lasted a couple of months that pushed silver to $11 or so, but no consistent runs.  So why has silver stayed so low?

            In 1980, the US held the largest stockpile of silver in world history, over 3.5 Billion ounces!  At that point in time, there were numerous other governments who held large stockpiles as well.  However, from 1980 to 2007, both the US government and almost every other major nation in the world sold off their large stockpiles of silver.  The United States sold so much that in 2007 they only had 20 million ounces of silver left and in 2010 that amount was down to less than 7 million ounces!  Additionally, private investors net sold 1.7 Billion ounces during that same period.  This means during this 27-year period somewhere between 5.5 Billion to 10 Billion ounces of silver were dumped on the market!  Simply based on the law of supply and demand the only natural response was suppressed silver prices for decades.

            One natural question that arises is “If 5.5 Billion to 10 Billion ounces of silver were sold from 1980-2007 than who were the buyers?”  This question only accentuates the interesting nature of the silver market.  The buyers of the silver were industrial manufacturers.  At the same time the US and other major governments started their mass sell off of silver, the technology age began its major run.  An absolutely massive amount of silver was required every year just to meet the industrial demand required for electronics and other equipment.  Consequently, it was industrial usage that consumed the massive amount of silver that was sold between 1980 and 2007.  So in 2007, when the massive sell off ceased the demand for silver continued to increase both industrially and from an investment perspective.

            In 2007, most of the major governments around the world had exhausted their massive silver stockpiles and that stage of market manipulation came to an end.  Was there additional manipulation and are there any other ways the US government or other agencies can manipulate the price?  All of these questions are excellent and will be answered in 2^nd part of this series.

Josh Renfro

President & Founder

Lone Star Bullion LLC

First released at www.livesilverprices.net

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