Banging.............from Rico

Spot precious metals (bullion) prices USED to be considered a price discovery system of the market. No longer, now it is widely seen as something that can be "gamed."

Take a look at the second consecutive day of "banging the close" in the silver spot markets. When the market is essentially 'asleep' about 6-7 pm Eastern Time, there is almost NO trading volume and trading is very thin.
- A motivated seller with no volume or other traders to deal with can 'take down' the price in very short order.
This used to be 'illegal' and people used to go to jail for it. Not any more. Not with the gangsters running Wall Street and Washington.

Now it is seen as a good way to make quick money (or "doing God's work" as lloyd Blankfein once famously put it...I'd actually phrase it as carrying water for Blythe masters and Jamie Dimon, myself).

So what?

This what.

I see a huge bifurcation coming between the notional (paper) spot bullion prices and the prices of physical bullion.
- Paper spot could be, say $25 for silver while the cost to hold the physical stuff could be $75.

Far fetched?
- As I write this, COMEX (a.k.a. CRIMEX) spot silver is around $40.98/oz, and the retail cost to buy a 1oz Silver Eagle is well over 'spot' at $$48.40. This is why the premium to NAV (net asset value), that is to say the extra you pay to own a unit of Eric Sprott's PSLV (Physical Silver Trust, backed by physical bullion) is running around 14% versus the i-Shares SLV (paper-backed, there is NO physical inventory) that JP Morgue and Blythe are peddling.

Supply-demand.
- Silver, physical silver, is in a classic supply-demand situation right now. There is more demand for it (think industrial, think your flat screen TV or I-phone) than there is supply of it.
- There is an infinite supply of paper.

Pick one. The red pill, or the blue pill.