Ok.. put on your tinfoil hats because I am of the opinion that the silver and gold spot prices are being manipulated at COMEX in a way I find fascinating. Over the past few months I had been buying silver via the $AGQ which is a leveraged ETF. My thesis was with inflation at records and precious metals being a hedge against inflation that it might be smart to allocate some of my portfolio there. Many would point to $BTC.X as a way to hedge but I liked the idea that there was something physically backing the asset and there is a finite supply. Additionally, silver as a commodity is critical for the production of EV batteries and especially for solar cells, both I figured would be a tailwind.

The more I dug the more I found that the basic rules of supply and demand did not appear to be as impactful as I had expected. For example, 2022 the market was undersupplied by a whopping 237 million ounces and demand had grown by 18%. So, why were spot prices staying relatively flat? I continued to dig and then came to find that I myself was unwittingly part of the problem.. I was buying paper, not the actual commodity and these institutions can simply write more contracts for the same amount of their physical stock. Here comes the COMEX (The Commodity Exchange Inc.) who currently has a 28:1 paper to physical ratio. Said another way, they sold the rights to the same ounce of silver 28 times.. isn't that sort of defeating the purpose of investing in precious metals?

Considering I was this far down the rabbit hole I kept going and kept finding more interesting information about this market like how J.P. Morgan got caught manipulating the gold market via a tactic called spoofing... well "former J.P. Morgan Traders" got caught.. obviously while they were doing it at work it was unbeknownst to the firm.. obviously lol.

So needless to say, I have backed away from investing in precious metals via derivatives but not from the commodity itself. I just took that investment and purchased investment grade physical bullion and coins. The truth of the matter is, I still believe in my original thesis, its a very useful metal especially for electronics and energy storage. If the price is being artificially held down... I will use that to my advantage and buy up the physical stuff cheaply.

The Chinese have already started opening complaints against COMEX and others as they need market forces to apply for the use of industrial silver to make economic sense. The price being held too low actually makes mining and recycling less attractive and therefore causes sourcing problems that they do not need to hit their EV and Solar goals. They did not mince words either "Explicitly citing the ridiculous outsized paper derivative leverage used by the COMEX and City of London's LBMA markets in order to keep gold and especially silver values at still suppressed price levels."

Well it will be interesting to see how this all plays out in the long run.