Sep 10, 2008:  Thoughts on a Silvery Moon:  Where All is Not What it Seems We are now seeing physical silver trading for $3.50 to $6.00 above the price of electronic/paper silver (SLV) and this appears to be due to a lag in delivery (and production) of silver bars/coins by bullion dealers.  The simple reason the physical silver continues to trade higher than the paper is that prices are too low for sellers of physical silver to come out and sell!  It seems only higher prices would remedy availability of physical silver. We have long preferred holding physical silver over either 1) the SLV or 2) having a company hold silver in a pool of some kind.  In our May 23rd blog, in several June blogs, and in a number of HHT issues before and after that, we recommended insisting on taking delivery for any silver that investors purchased from a dealer.  We wrote that investors:   "Insist on taking physical delivery or you may get left holding a piece of paper!"   And while I expected mischief could be in the offing, we had no idea the manipulators would pull a fast one on us quite so soon.  Over 160 million PAPER ounces of silver were liquidated in the last month.  It is really frustrating to see the paper silver price at $10.60 and real silver selling in stores and on the internet for as much as $16-18 an ounce (the NWT mint is selling some for $13.90 an ounce plus shipping per ounce).  There are weeks and months of delays for delivery of physical silver and many are rightly dubious whether they will yet receive orders currently in limbo.  The US has stopped printing gold eagles and silver dollars. Is the current premium on physical silver a premium on even the slim potential for default by the backing company?  If it isn't, then it's certainly a premium due to what we know is limited available physical supply. Truly, the silver one pays for, is truly only 'yours' when it's in your hands, (and not to sound too paranoid) but also behind a safe! It would be easier to convince another trader to swap your physical silver for his paper silver these days, than would the reverse. The market seems to be sending out a message loud and clear, namely, that there are NOW two tiers of silver (and gold, too).  We'll reflect this in our next issue of HHT. It's very dispiriting to see the manipulation (outlined so well by Ted Butler - hopefully, you've read some of the article links I posted on my blog) which occurred this August, causing gold and silver to drop far more than they should have. Looking at the short-term, it is unusual for commodities to correct so steeply without a strong reaction to the upside once sellers are exhausted.  Frankly, we are likely to see greater honesty and clarity about the US financial situation once the elections are over. Long-term, bailouts of Fanny and Freddy don't make the financial system and dollar any stronger.  They have the opposite impact.  So, we believe gold and silver will be a lot higher, not lower in the next couple of years.  We believe this manipulation is temporary. One of our readers, Cindy C. passed this very empassioned letter to me: I have a significant amount of SLV shares (Barclay's) and decided to call today to see just where my silver is held. They responded by saying that the list of serial numbers are listed. I told them that was not sufficient that I need a physical address of where my silver is held! After demanding it they finally gave me the address, and wouldn't you know the custodian is the very same flagrant crook on COMEX that has been using concentrated short positions (up to 38%) to market make artificially low silver prices! The name and address: JP Morgan Chase 125 London Wall England EC2Y5AJ I asked - Isn't that a conflict of interest? Where does it say in your perspectus that by buying SLV your custodian will be the biggest illegal concentrated short seller and that in essence your money will be stolen?! Doesn't that also raise a legalality issue for physical holders of silver if this one player who holds silver on behalf of the honest public in the form of the ETF SLV has so much leverage as to smash the price down to artificial lows? I thought SLV was to reflect the "price" of siver? Well, I don't know anyplace where I can buy $11 real silver. The premiums will soon reach that! Furthermore, Barclays will not let you take delivery of your silver unless you have 50,000 shares! How many average investors hold 50,000 or more shares? This does not give us much option of taking our physical silver away from the robbers who probably are using fractional tricks beyond my comprehension. Are there any class action lawsuits in the works agaist both JP Morgan Chase and Barclays? If not, is there any list that could be initiated of interested plantiffs? I will put my name on the top of the list. Therefore, wouldn't it be great if investors could come somehow come together to combine their SLV shares into 50,000 or more share lots, to gain delivery of the physical!  Perhaps, with the power of the internet at our hands someone can come up with a viable strategy.   Understandably, for recent buyers, patience seem more of a challenge than for those purchasing gold and silver 4-5 years ago at $300 or $400 an ounce and silver at $5-$7 an ounce.  However, even bull markets correct, as we saw in 2006 when gold pulled back from $750 to under $600 and then ran to above $1000.  We may simply be witnessing a period where gold and silver take a breather before embarking on new all-time highs.  In the weeks ahead, I intend to provide more technical analysis of both gold and silver's situation (particularly, pertaining to sales and purchases of gold and silver) - as that quite helpfully removes the emotional component of decision-making.