Most major bullion dealers are once again sold out of silver eagles, including my local dealer and some of the main online dealers that I use. The following is a screenshot from Tulving.com, which often has the lowest premiums over spot price for gold and silver coins. Notice that Tulving is completely sold out of silver eagles, 90% silver half dollars and even generic silver rounds. The only silver coins from this page that are still in stock are 90% junk silver dimes and quarters. Just a few short months ago, they used to sell at or near the spot price, but now sell for a premium of $4.49 per ounce!

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Supply shortages and rising premiums for silver coins are not isolated to just one dealer. APMEX is another large online bullion dealer that has sold out of monster boxes of 2013 silver eagles. They only list individual rolls for sale at around $630, which comes out to $31.50 per ounce.

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But wait, I thought the silver spot price was just $23? Even with a significant premium of 15%, the price should only be $26.45. But APMEX is apparently able to sell them for a 37% premium or nearly $32 due to high demand and tightening supply from mint rationing. Even then, the coins are on backorder and you will have to wait until they become available at some time towards the end of the month.

If we skip the dealers and buy silver direct from individuals on Ebay we will certainly be able to find silver eagles closer to the official spot price of $23, right?

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Nope. The three most recent listings for a roll of twenty 2013 silver eagles sold in the $630 to $640 range. That is between $31.50 and $32 per coin, or just slightly above the price offered for backordered coins at APMEX. If you want silver eagles from 2008 through 2012, those are selling for closer to $33 per coin or $10 higher than the official spot price of $23 from the COMEX.

So while we are being told that silver has dropped sharply to $23, the reality is that silver coins are selling closer to $33 per ounce. That is a 43% price difference between the rigged paper price and actual pricing for physical silver in the real world!

Of course, silver eagles always carry a premium to the spot price. But just a few months ago and throughout the majority of this current bull market, the premium has been in the 8% to 10% range. I know this because I bought a few rolls of silver eagles in February when the spot price was around $30 and I paid $32.70 per coin.

The spot prices for silver that we see on Kitco or other sites are determined by futures contracts. These contracts are traded in much the same way as stocks and other commodities. A future contract exchanges delivery of an item (gold and silver in this case) for a set price, with quantity and exact order details being specified from contract to contract.

When considering gold and silver, the most well-recognized platform is COMEX, which stands for commodities exchange. COMEX is based out of New York and is part of the NYMEX, the New York Mercantile Exchange. Gold and silver both find the bulk of their pricing determined by the trades that take place on the COMEX or on the LBMA in London. When futures contract trades take place, the prices of gold and silver adjust accordingly. Futures contracts are used to set the spot prices because the majority of the daily traded volume of gold and silver is done electronically as opposed to physically.

The contracts on these exchanges are highly leveraged, with approximately 100 oz of paper gold contracts backed by 1 oz of physical gold. For silver, the ratio is thought to be about 350:1. A very very small number of bullion banks (2 to 4) control up to 95% of these paper contracts, and hence are able to influence the price of physical bullion.

As ridiculous as it sounds, this is the current price discovery mechanism – virtual paper metals setting the price for physical metals or the classic “tail wagging the dog” mechanism. – Ned Naylor-Leyland of Cheviot Asset Management in London

With the CFTC and other regulatory agencies asleep at the wheel or complicit in the price manipulation, this electronic market for gold and silver has become increasingly divorced from reality. In fact, John Hathaway of Tocqueville Asset Management recently stated that the massive two-day paper selling in the gold market unbelievably eclipsed the entire annual production of every gold mining company in the world. I assume the situation was similar for silver, where the large banks are believed to routinely use leveraged paper contracts to manipulate the price. Mr Hathaway stated:

Selling of paper Comex contracts on Friday, April 12th, and Monday, April 15th, totaled 1 million contracts, exceeding global annual gold production by 12%. The attack succeeded when the technical support in the low $1500’s/oz. easily gave way and led to waves of forced selling. The volume is without precedent and has all the characteristics of a panic liquidation driven by naked short selling.

What I find particularly interesting is that on April 1st of this year, when silver was trading at $28/ounce on the COMEX, silver eagle rolls were selling for just above $650 on Ebay or $32.50 per ounce. Fast forward to today when the silver price has supposedly crashed by over $5 in two days time and a roll of silver eagles is selling for around $640 on Ebay or $32. So the true free market pricing for silver has only dropped about $0.50 per ounce in the past few weeks, not $5.

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The COMEX paper market pricing has become distorted, divorced from reality and no longer serves as honest price discovery. The recent waterfall price drop has convinced many investors that the silver price is crashing and the bull market is over. These weak hands have reacted by panic selling their positions into the hands of the big banks that have pulled off another con job on an unsuspecting investing public.

This really begs the question, why should anyone pay attention to the COMEX futures spot price?

If you are holding physical metals, they are still worth roughly the same as they were before the fake crash and continue to appreciate in true purchasing power each year. So don’t fall for this game of short-term manipulation.

If you hold mining stocks, you should also resist the emotional urge to panic sell and exit your positions. This disconnect between true free market pricing and COMEX manipulation will come to an end soon. The value of the gold or silver that the miners own hasn’t really dropped, so any waterfall decline in share price is nothing more than a buying opportunity.

It should be glaringly obvious by now that gold and silver prices are heavily manipulated. GATA has been correct all of these years, even when their message was met with ridicule or fell on deaf ears. This manipulation is taking place because gold and silver are money and in competition with the flood of fiat notes being printed.

The current political and economic power resides with those that have the ability to print money, particularly the world reserve currency. Those in power will fight any challenge to the fiat fractional reserve banking system and the U.S. will fight to keep the dollar as world reserve. But this is a battle that will be lost, which is being shown via increasingly blatant and desperate attempts at maintaining the status quo. With the rise in popularity of precious metals and alternative currencies such as bitcoin, it appears the days of the dollar are numbered.

If the elite can keep the price of gold and silver from rising too rapidly, it gives the illusion that inflation is in check and makes their fiat money appear valuable and stable. The FED has nearly unlimited resources and has been using this power to slow the rise of precious metals, while their member banks reap the rewards of siphoning wealth from the less sophisticated investment public.

I believe that the proper course of action is to resist the urge to sell, keep your emotions in check and use their manufactured dips as a buying opportunity. You may not be able to find physical silver for $23, but you can pick up oversold silver funds such as PSLV, royalty companies and mining stocks on the cheap right now. The manipulators have convinced investors to dump their shares under the false guise of rapidly falling prices and this has resulted in some significant distortions in value.

Imbalances and distortions such as this don’t tend to last very long. The big banks need only run the manipulation long enough to force funds to liquidate positions on technical stops and weak-handed investors to panic out of their positions. They can then swoop in, cover their short positions, pick up bargains and profit again on the way up, just as they did on the way down. It is a zero sum game and the investing public is the proverbial sucker at the poker table.

Avoid this trap, ignore their price fixing, buy quality mining stocks during sell offs and keep stacking. Don’t be the sucker at the table.

Despite the well-timed propaganda from Goldman Sachs and media blitz of bearish sentiment on gold, the bull market in precious metals is nowhere close to being over. The official inflation adjusted high for gold is $2,400 and the real inflation-adjusted high is nearly $9,000 according to economist John Williams of Shadowstats.com. For silver it is $150 per ounce of $517 using honest inflation figures. I believe we will see these numbers before this bull market is over.

If you want to know which bullion funds, mining stocks and royalty companies I believe will outperform during the next wave higher, you can click here to sign up for my monthly newsletter and premium membership.

Ignore COMEX Pricing – Silver Eagles Sold Out at Dealers, $33 on Ebay

After making a high of as near damn of $50 back in April 2011 silver slumped all the way down to $26.05 by September 2011, a fall of nearly 50%. Silver then rebounded but failed to hold above $35 for any length of time.

By December 2011 silver was back trading around the $26.14 level. Silver then rallied once again to $35 over the next couple of months but yet again couldn’t manage a monthly close above $35.

So silver drifted lower once again and got back below £27 by summer 2012. This was followed by a rally to, you guessed it, $35, and you guessed it again, it just couldn’t hold above this level.

Since then silver has drifted all the way back below $27 once again this week.

Silver (monthly):

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Clearly the support level around the $26.95/40 area is key to stopping a run lower to around $23.

It should be pointed out that although a near 50% drop in the past couple of years is certainly painful for the silver investors it certainly isn’t unique in its size.

In fact we only have to go as far back as 2008 to see a bigger drop of around 60%

Silver (monthly):

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And from that low of $8.41 (yes, silver really did trade this low only 5 short years ago) in October 2008, it went onto rally some 500% over the following 3 years.

Silver at the bottom of 19 month trading range

Here’s what we found…

Silver $ (weekly):

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We can see for the first few years of the bull market the silver price bounced nicely along that parabola. Then in mid-2005 silver really started to take-off rallying from $7 all the way to $20.7 by the start of 2008 – a move of around 200%.

We then saw silver sell-off heading into 2009 which took the silver price through that parabola line. There were then two failed attempts at breaking back above this parabola line.

Then in Autumn 2010 silver touches the parabola line of support around $17.75 and rocket launches to nearly $50 – another move close to 200%.

After nearly hitting that $50 high in the first half of 2011 silver has been down trending ever since. But look where it has pulled back to – right smack-bang onto that parabola line of support.

Whilst the parabola line of support isn’t quite as good a fit as the one in gold (it has broken below it whereas in gold it hasn’t) it certainly seems to following that trend line pretty well.

We’ll have to wait and see to find out if silver is using this line to launch into another 200% move higher just like before – a move that would take silver to near-on $90 an ounce.

Silver price copying gold in following a long-term parabola line of support higher

There have been three failed attempts at breaking above the $35 level and three failed attempts to break below the $27 level.

Silver $ (weekly):

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With silver trading just shy of $29 it is a couple of bucks (7%) above that 16 month support, which means it is actually holding up better than gold which yesterday touched its 14 months support long-term support before bouncing higher.

We’ve also been keeping a keen eye on the gold:silver ratio which has been hovering between 55 and 53 so far in 2013.

There is a 16 month head and shoulders pattern that has been forming on this ratio (something we noted here). As long as the ratio doesn’t get back above 57 this pattern remains intact. Which means should it break lower it will quickly take the ratio back towards 43.

Gold:silver ratio (5 year):

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Silver price remains above its 16 month long-term support

This morning silver has bounced once again off that level by nearly 1%.

Silver $ (10 mins): 

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A quick look on the longer-term chat and we can see that for the past month the $30.75 level is providing some decent short-term support.

Silver $ (1 hour):

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In terms of overhead levels to look out for for the rest of the week the $31.25 will be the first target that the bulls will reach for.

On any pull-back look for the $30.75 to again offer up support.

It should be noted that silver is managing to post gains today despite a rise in the dollar of more than 0.5%.

$DXY (10 min):

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Silver price up 1% after bouncing off short-term support levels despite a 0.5% rise in the dollar

Silver $ (daily) 

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We can see there has been a rising support level since July 2012 and today silver has sold-off to meet that line perfectly. This will be a ‘must hold’ level for the bulls otherwise $30 silver will quickly come into play.

We’ve recently pointed out that China have been a massive buyer of gold helping to provide a floor underneath the price:

As we’ve said many times before this massive gold buying out of China is a huge floor underneath the price that should mean that any pull-backs are well bid.

And yet that ‘floor’ seems not to be there this morning, which is hardly because this week all of China is on holiday celebrating the Chinese new year (the year of the snake). So what a perfect week for the bears to try and drive the precious metal prices lower – a week when the biggest buyer in the market is off.

Silver price now at eight month rising support level as China takes a new-year holiday

CME, the biggest operator of U.S. futures exchanges, said late Thursday it lowered initial margins on the benchmark COMEX 100-ounce gold futures contract by 10 percent to $5,940 per contract from $6,600.

It also cut maintenance margins by 10 percent to $5,400 from $6,000.

This follows a reduction in the margin back in December:

On Dec. 28, CME trimmed initial margins on gold futures by 11 percent.

And it’s not just gold, silver margins have been cut as well.

CME also cut the margins on the COMEX 5,000-ounce silver contract by around 14 percent, and those of the NYMEX 50-ounce platinum futures contract by about 13 percent.

In theory this should make it cheaper players in the paper gold market to take on position and just might entice the sleeping speculators to arise from their slumber the past couple of money and add new positions in gold.

Gold and silver margins reduced

Silver $ (daily): 

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We can see back at the end of November the silver price got above the 55DMA – but within a couple of weeks silver was pushed back below its 55DMA.

It remained below the 55DMA until the 18th January where it makes a brief excursion above the 55DMA for a few days. Then in the last couple of days trading it looks like the resistance of the 55DMA is becoming support.

And just like in gold there is a rising line of support that started at the beginning of January.

Silver $ (hourly):

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We can see the silver is now at a point where it will have to break above resistance higher or break lower through its support line because there is less than .50c separating the two lines.  The next few trading days should confirm which way it will break – the fact that it’s holding above its 55DMA hints that it is like that it will break higher.

Another thing we’ve been keeping a close eye on is the gold:silver ratio (see this). And just like in both the metals themselves there is a falling line of resistance meeting a rising line of support  coming up to meet it – again hinting that we should expect a break one way or the other very soon.

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To get a steer on which way it might break a look at the two year chart of the gold:silver ratio is very useful:

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So there we go it would appear that the rather dull action in the metals over the last couple of months just might be coming to an end. Keep a close eye on all these levels over the next few trading days.

Silver price holding above it 55 daily moving average as a directional break comes into play

This is now the forth time that silver has spiked into the $32 area only to be beaten back fairly promptly. On January 23rd silver got as high as $32.48 only to find itself trading under $31 just three days later.

Today has been no exception, after getting $32.3 silver has been taken back towards $31.7.

It is very clear on a chart to see why this level is being defended. If/when it does fail to hold there really isn’t much stopping it quickly move up to the $34.5 area.

Silver $ (daily): 

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And much like the action in gold, all the action that is taking place is occurring within the confines of a much longer trading range.

Silver $ (weekly):

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We can see that there is a 15 month trading range that silver is operating in, with $26.7 marking support and $35.5 marking the top. The key to breaking this range-bound action will be silver bulls taking out that $32.4 level with conviction.

The gold:silver ratio is offering some interesting clues as to where the precious metal are heading. After spiking back above 53.5 the gold:silver ratio has rolled over once again and is back approaching a 52 handle.

Gold:silver ratio (60 day): 

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On a longer-term chart we can see that since silver has been in its 15 month trading range the 50 level has proved to be very tough to break through.

Gold:silver ratio (5 year):

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However this might be all about to change. There appears to be a pretty strong head and shoulders chart pattern forming over the past 15 months in the gold:silver ratio.

Gold:silver ratio (2 year): 

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The key to confirming this pattern will be a break below that neckline which is now sitting almost bang on that 50 level. A break below the neckline should see the gold:silver ratio fall to 43 in pretty short order. So keep a close eye on the 50 level as we move into February.

The last time the ratio traded around the 43 level was back in August 2011, silver was around $44 and gold touched $1920.

Silver price spikes over $32 again as 15 month head & shoulders pattern forms on the gold:silver ratio

Silver $ (2 hourly):

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We’ve also been keeping a close eye on the gold:silver ratio the past few weeks. Back in January 10th we noted the following:

When the ratio fell from 60 to 51 at the end of August it was accompanied by a 12% rally in gold. Then when then the ratio went form 50 to 55.5 gold fell 4%. It now looks as if the ratio is rolling over again which should be positive for gold – but we’ll have to wait for a few more trading days to confirm this.

It now looks like we have confirmation of this with the gold:silver ratio dipping below 52:

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On a longer-term chart we can see that 50 is the key level of support over the past 16 months. Three times over that time period the ratio has tried to break that 50 level but each time the level has snapped back higher.

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We can also see that when Silver was knocking on the door of $50 the ratio collapsed to 33 which was the lowest the ratio had been since 1983.

Silver price falls to $31.8 after a 10% run since January 4th