Skip Navigation LinksHome > - News > The Tiny Silver Market, Part 2 ~ Jason Hommel
Bill Murphy Bix Weir bullion fraud CFTC deflation derivatives dollar devalued dollar value Eric Sprott free food GATA gold gold bull gold/silver ratio Hugo Salinas Price Hunt Brothers hyperinflation industrial use of silver investing IRA James Turk Jeff Lewis Jeff Nielsen Jeff Nielson JP Morgan Lew Rockwell Lindsey Williams Mineweb Peter Schiff precious metals QE Quantitative Easing rare earth metals Retirement Plans Road To Roota short positions silver silver bull silver conductivity silver purification silver test silver/gold ratio Stephen Leeb stock market

The Tiny Silver Market, Part 2 ~ Jason Hommel
The Tiny Silver Market Part 2
(Over the Counter Silver Derivatives, Exposed!)
Jason Hommel
October 1, 2009

Last week, I reviewed the tiny size of the silver market. (Tiny Silver Market, Part 1) 
I compared the following statistics:

World annual silver investment demand ($1 billion)
World annual gold demand ($80 billion)
Federal Budget ($3,000 billion)
China's foreign exchange reserves ($2130 billion)
China wants to diversify $80 billion into gold.

BIS reports "other precious metals" over the counter derivatives worth $111 billion.
Very few people understood the importance of the last item from the BIS, which will be explained in this report. The BIS is the "Bank of International Settlements".
The Bank of International Settlements reports there are $111 billion in "Other Precious Metals (IE, Silver) over the counter derivatives, as of Dec. 2008. (We await June 2009 stats.)
The BIS keeps track of statistics of most of the banks of the world. This number, the "other precious metals" over the counter derivatives is very important.
It is extremely important "breaking news" that nobody in this industry is covering. I've tried to make the importance known over the past year by repeatedly mentioning this information, but nobody is getting it.
For ten years, I've been told by all the experts in the precious metals industry that nobody knows nor can know the size of the "over the counter" derivatives, since they are not on the popular, relatively more transparent exchanges, such as the COMEX, and other futures exchanges.
Yet, here we have a report, by the BIS, the best source in the world, fully admitting, and counting, the overall size of precious metals, OVER THE COUNTER, usually non-transparent, derivatives!
THIS IS BREAKING NEWS! I don't care if the stats are nearly a year old, nobody else is paying attention, so this is NEWS! It's not in regular news, not in "alternative" news, not even showing up in our "precious metals" industry news sources. This is a crucial report for our industry, nearly hidden, and unacknowledged!
Here's what I think it means.
How can there be $110 billion of silver investments when the annual silver investment demand is $1 billion?
Think about that.
I think it shows that the $110 billion is all a scam, fraud, nothing but fractional reserve silver accounts!
This over the counter BIS-revealed fraud is the biggest silver fraud in the silver market place.

It is much bigger than the COMEX silver fraud, which is only up to 160,000 contracts of 5000 oz. each, or 800 million oz. of silver by comparison, which is only $13 billion by comparison. The $110 billion is much, much bigger and more important.
The large size alone proves that it's too big to be real silver, because the real silver market is tiny. So, what is that $110 billion, exactly?
It's mostly all silver derivatives, or silver obligations of some sort, and I think it's usually "silver bullion accounts". The other two possible categories are platinum and palladium, but investors only buy about 1% of those two markets, which are also very tiny themselves, so tiny they can be excluded from consideration.
Most of the time, investors who go to buy silver, end up buying paper silver on account with a major bank who does not go out to buy that silver in the marketplace. That's the fraud.
The major brokers first try to discourage any and all such investments into silver. But if the client persists, the client will be persuaded to buy allocated or unallocated silver on account with any of the major banks of the world, usually LBMA member banks.
Read about their common bullion accounts here:
See if your bank is a "market making member"
Or even a "full member"
Check to see if your "silver bank" is on that list!
If you have silver on account with any of those banks, you should carefully think about how all those banks can have $110 billion worth of silver "on account" for all their clients, and let their own number vary by up to $80 billion, as it was $190 billion in the previous period, and yet, the annual silver investment market is only $1 billion.
And the total annual mine supply of silver is only 600 million oz., at $16/oz., is only $9.6 billion.
I would think that banks who owe up to 10 to 20 times worth of annual silver production of silver must be fraud. What do you think?
How many people who own that kind of silver "bullion on account" would be capable of getting real silver, before the silver banking fraud collapses? I'd estimate only about 1-2%, because if even that many converted their silver, it could cause a collapse of the entire system!
How can the silver banking fraud collapse? In many ways. Silver accounts could be mandatorily converted into dollars, or ameros, or pesos. Remember, just a few years ago in Argentina, Americans in Argentina, who held American Dollars in American bank accounts had their accounts frozen, and converted into Argentinean pesos, at a 75% loss, "because of the law".
I'm continually asked if I trust this bank or that bank, or this institution or that institution to hold your silver for you. NO! I don't trust any of them. Look at the size of the fraud. Do the math!
It's really simple, Biblically speaking. If you refuse to be responsible for the security and safety of your wealth, then your wealth won't be providing you with the security and safety that you hope that it should.
One man has often said, "If you don't hold it, you don't own it."
How about this:
"If you didn't accidentally crush your fingers with it, then it doesn't exist!"

Tea Party Silver note: Stay Tuned for Part 3