VANCOUVER (Bullions Bull Canada) --In Part I and Part II of this series, readers were presented with two dimensions of the great Silver Paradox.

Despite having the best investment fundamentals of any commodity today, and arguably the best fundamentals for any commodity in history, silver hasn't been so under-produced since it was discovered in the New World nearly 600 years ago, and it has never been so under-owned.

As we will see in this installment, it is the relentless suppression of the price of silver that is at the root of the metal being both under-produced and under-owned.

Any discussion of price-manipulation in the silver market must begin with the relentless sleuthing of noted silver authority

Ted Butler. It was his shocking discoveries in the silver market that originally attracted the attention of small numbers of far-seeing contrarians and commentators such as myself.

Among Butler's revelations were the outrageous/absurd short positions in the silver market of a handful of bullion banks. Five of these banks hold approximately 80% of the global short position (year after year) in the world's largest silver market (the Comex) -- another smoking gun.

The magnitude of these short holdings is

grossly disproportionate to the size of short positions in any other commodity market -- yet another smoking gun.

Even more outrageous, the largest of these short positions (held by


(JPM) - Get Report

) is always roughly twice as large as the size of the Hunt brothers' long position in the silver market whenthey were convicted of silver manipulation.

This is beyond a smoking gun, it's a smoking cannon.

The banksters tell us they are "hedging" for anonymous clients with these short positions, and the blind/deaf/dumb CFTC parrots that drivel. This excuse is nonsensical on many levels. Hedging is an activity done to protect an entity from a sudden, severe price-reversal (lower) in the market.

However, as noted in Part I, relentless price suppression in the silver market has already taken the price of silver to a 600-year low (in real dollars).Precisely what sort of "sudden, severe reversal" were these banksters hedging against with the price of silver already at a 600-year low?

Silver priced below $4/oz was one of the most one-way bets in the history of commodities. Any objective analysis of that market would have indicated silver clients required much less hedging than in any other commodity market, not more. This negates the lies of the bullion banks.

Instead, building and maintaining a short position at least an order of magnitude larger than what could possibly be justified by market conditions yields only one, possible conclusion: This blatantly manipulative short position was/is a millstone aimed at dragging down the silver market and the price of silver.

We can support this obvious conclusion with irrefutable empirical evidence: the collapse of silver inventories. As I explained in theoretical terms in a

prior commentary, excessive shorting must always result in the collapse of inventories. What appears to be by dollar value the most grossly excessive/disproportionate short position in the history of commodity markets resulted in a 90% collapse in silver inventories. Case closed.

But there's more. When precious metals commentators were accused of being "conspiracy nuts" for pointing toward obvious, serial manipulation of the silver market they were frequently asked, "Where is your whistle-blower?"

In rebuttal,

GATA (the Gold Anti-Trust Action Committee) produced veteran metals trader Andrew Maguire who was ready, willing, and able to

explain in detail how and when the silver market was being manipulated.

GATA produced Maguire just as the CFTC wasabout to hold its farcical "hearing" about allegations of precious metals manipulation. The CFTC's response was to refuse to allow Maguire to testify, crossing the line between acute tunnel-vision and willful blindness.

Then we have the

"attack" on the silver market by the administrator of the Comex itself, the

CME Group

(CME) - Get Report

. In the Spring of 2011 the CME Group bombarded the silver market with five, large rapid-fire increases in margin collateral requirements, the last four increases coming after the price of silver was already plummeting lower.

Here readers need to understand that margin collateral requirements are flat rates, not percentages. Thus the plummeting price of silver itself was already rapidly increasing the effective size of margin requirements (in percentage terms). Indeed, the (only) appropriate regulatory action for a commodity that is rapidly falling in price is to reduce margin requirements. There can be no possible defense of that succession of margin increases.

It's easy to understand how/why silver is so grossly under-produced given that its price has been and is suppressed so far below its fair-market value. When commodity producers can't get a fair price for what they produce in a world of soaring costs, then that commodity will be under-produced.

Much more paradoxical is how/why silver is so ridiculously under-owned (again by a factor of at least 10) at a time when it is objectively under-priced, and with supply/demand parameters so strongly favorable. Referring back to the Golden Rule of "buy low/sell high," we would expect astute investors to be flocking to this sector followed by the inevitable stampede of retail investors.

Why have we not seen this expected evolution toward higher investment in the silver sector? Here the clueless shills of the mainstream media can claim full credit, crowing about a "silver bubble."

Again, there can be no possible defense for such idiocy. All commodity market bubbles must be characterized by two obvious conditions.

First, we must see the asset being over-represented in investor portfolios, since one half of the definition requires an excessive flow of capital into the sector.

That must always be followed by an explosion in inventories as bubble prices must result in over-supply. With silver ridiculously under-owned and ridiculously under-supplied, we have literally the precise opposite of "bubble" conditions.

Potential investors may still be asking themselves how/why they would invest in an asset that is still being

serially manipulated. The answer to that is simple:

low prices lead to high prices. It was silver being manipulated to under $4/oz that led to the inventory collapse that drove the price to nearly $50/oz in the Spring of 2011.

Inventories are still totally depleted. Thus, the suppressed/manipulated $30+/oz price of silver today can only result in an equal if not greater price explosion in the future. Smoking guns rarely lie.

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This article was written by an independent contributor, separate from TheStreet's regular news coverage.