SILVER : The New Law of Supply and Demand

Theodore Butler
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July 5, 2013 - 9:10am
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This was excerpted from the Weekly Review of June 29, 2013 -
The cornerstone of the free market system is the law of supply and demand. This is the premise that governs how the prices of resources are determined in any free market economy as opposed to prices being set by government edict or monopoly control. It is the mechanism by which resources are produced and consumed in the freest and most efficient manner. Here’s a great definition of this law from the Free Dictionary – “the theory that prices are determined by the interaction of supply and demand: an increase in supply will lower prices if not accompanied by increased demand, and an increase in demand will raise prices unless accompanied by increased supply.”
http://www.thefreedictionary.com/law+of+supply+and+demand

There are three components to the law – supply, demand and price. Price serves as the fulcrum between supply and demand, balancing the two. But the important point is that the interplay between supply and demand is what determines the price. That’s elementary and spelled out in the above definition; a free market price means the price is determined by supply and demand. This is the definition we expect our children learn in school. Unfortunately, this definition is old-fashioned and no longer operative in gold and silver and other commodities. Instead a new definition of the law of supply and demand has supplanted the version still in the dictionary.
Simply put, the new law of supply and demand has the price determining supply and demand and not vice-versa as it should be. This may sound like a game of words at first blush, but it goes to the heart of the matter. When price determines how much is produced and consumed, instead of supply and demand being the determinant of price, that’s just another way of describing price manipulation. All our laws against manipulation and the restraint of free trade are aimed at preventing an artificial price from coming into existence. That’s because it is well-known that an artificial price will adversely impact production and consumption and cause overall harm to society. An artificial high price must lead to over-production and under-consumption and an eventual price crash, while an artificial low price must result in an eventual shortage and price explosion.
There is undeniable proof that the recent price action on the COMEX in gold and silver is the new and manipulative version of the law and supply and demand. There was no big increase in production or weakening of demand for gold or silver leading to sharply lower prices; instead the price decline, due to speculative selling of futures contracts, is determining what will be produced and consumed in the future. Speculative selling on the COMEX has resulted in prices low enough to threaten mine production and encourage increased demand (especially investment demand).



MAKE SURE YOU GET PHYSICAL SILVER IN YOUR OWN POSSESSION. Don't Buy SLV, or Futures or Pooled Accounts or any other BS paper silver product .Remember anything on paper is worth the paper it is written on. Go Long Stay long the bull market have even started yet