As GATA has reported in the past, such tactics have quietly been taking place with the London gold market for roughly a year. But this is no "solution" for JP Morgan and the rest of the silver-shorts. Obviously, the first thing that most of these Comex customers will do after accepting their paper bribes in lieu of real metal is to buy even more silver for delivery in the next month's contract.
Markets rarely simply shoot higher in a straight line, no matter how out-of-balance that market had previously become. Thus silver investors (and especially those new to the sector) should not be recklessly buying silver, and by "recklessly" what I am referring to is the use of "margin." While the recent hikes in margin-requirements by the
(owner of the Comex) were clearly intended to be manipulative, as we come closer and closer to an absolute default in this market, we should expect margin requirements to legitimately be raised still higher in the future. Those greedy traders who get hurt by such moves have no one to blame but themselves.
What we know about the silver market today doesn't give us the luxury of "mortgaging the farm" in order to place massive bets on silver. However, what current fundamentals do allow is for ordinary people to invest a significant portion of their wealth in this monetary "insurance" -- and know that they have no fears over the longer term of this investment losing value.
Such "one-way" trades are very rare in markets, and those sitting on the fence have no time to dither. Prices could explode still further, inventories could completely collapse -- or both -- in the near future. While investors will not enjoy quite as much "upside" on their investment as those who started their buying with silver closer to $10/oz, there can be no doubt that over the long-term that silver is heading to a three-digit price.
Knowledgeable investors in this sector already know that the average, long-term price ratio between gold and silver (over
roughly 5,000 years
) has been approximately 15:1 -- and that was when silver was truly abundant in the world. With silver stockpiles exhausted, it would be silly not to expect silver to breach that ratio on the upside.