Why Gold and Silver are Collapsing

Recent history proves the point that the precious metals markets, especially Silver, is very volatile. In a Kitco Commentary titled “Deflationary Collapse Crushing Gold and Silver“, Jason Hamlin writes:

“Gold is down more than $300 or roughly 16% in the past few weeks. Silver has lost nearly 40% in the same time period and the mining companies have also been hit hard. This decline in precious metals has been driven by funds scrambling for liquidity, the CME hiking margin rates and a stronger U.S. dollar. Many also suspect that the banks helped to manipulate the price lower in order to cover as many of their underwater short positions as possible. JPMorgan and their cohorts control the paper markets and can use their leverage to manipulate the spot price to whatever level they want in the short term. This is done via “stuffing” trades and using a variety of other methods to make the markets believe that there is considerably more selling pressure than actually exists. This is particularly profitable as options expiration is this week and the current smack down will leave most options expiring worthless, in addition to providing an opportunity to exit short positions.

But despite the apparent manipulation, JPMorgan has been woefully unsuccessful at suppressing the price in the long term. After all, gold is still up 25% and silver 40% in the past 12 months!”

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