Inventory Fraud Increases in Silver Market

By Jeff Nielson of Bullion Bulls Canada

When I first began examining supply/demand data on the silver market several years ago, I was somewhat hesitant to form conclusions, as silver (and gold) have traits which are very different than ordinary commodities -- which affects supply/demand analysis. The second factor which made such analysis more difficult was that supply and demand are reported much differently than for ordinary commodities.

Generally, the supply/demand equation for a commodity is very simple: supply is the total amount produced, while demand represents consumption. When supply exceeds demand, the remainder is added to inventories, while when demand exceeds supply, the deficit must be taken from inventories.

Reporting of supply and demand for the silver market is totally different. While I originally deferred to such reporting as reflecting the different nature of the silver market, it has now become obvious that the convoluted manner in which supply and demand is reported is simply another deliberate attempt at deceit in this market. In fact, when we look at the numbers closely we see a clumsy sham which should not be able to fool a reasonably perceptive 12-year-old.

Regular readers are already familiar with one facet of this fraud , since I have mentioned it frequently in previous commentaries. All of the silver (supposedly) held by bullion-ETF's has been added to silver inventories -- the major ruse used to hide the fact that silver inventories are more than 90% lower than they were 20 years ago. Since I still get questions and remarks from readers who express doubt about my characterization of this as "fraud," let me explain this scenario slightly differently.

Let me begin with a definition. An inventory is the quantity of a particular good which is warehoused and ready to be sold. When an investor decides to purchase an ounce of silver, obviously that ounce is then subtracted from inventories. It should not make any difference how or where that ounce of silver is purchased. However, suppose our hypothetical silver investor has not read my commentaries -- and thus does not know that SLV(SLV) (the largest, so-called silver bullion-ETF) is nothing but a massive JP Morgan sham .