Explanations of "Gold" investment-related terms A to Z

Market manipulation, also called price manipulation, can be defined broadly as a purposeful effort to control prices. This sort of manipulation exists in financial markets as traders try to influence the markets. It may be responsible for some short-term aberrations in asset prices, including the price of silver. However, there is another, more specific definition. According to the U.S. Securities and Exchange Commission (SEC), manipulation is intentional conduct designed to deceive investors by controlling or artificially affecting the market for a security. This includes rigging quotes, prices or trades to create a false or deceptive picture of the demand for an asset. A popular belief within the precious metals investing community is that gold is manipulated and the same goes for silver (generally manipulated downwards, in what is described as price suppression).

Although it is much more abundant than gold, silver is still one of the least naturally occurring elements in the world. It is estimated to make up about 0.07-0.08 parts per million of the earth's crust, about 800 times less frequently than copper. In 2017, global silver mine production was 27,000 tons. That supply was mined in many locations (that geographical dispersion is one of the reasons why silver, together with gold, was historically used as money). But what countries produce the most silver?

What did Silver say when it saw Gold walking across the street? Au!
The spot price of silver is commonly known and everyone can easily check it out on the Internet. But how much does it cost to produce it? Well, it depends. Silver production costs vary from region to region, from mine to mine, and from company to company (e.g., whether it is a junior or a senior company). For example, one company saw once all-in sustainable costs above the $15 per ounce, while other companies reported costs of $9 or $12 per ounce, depending on company's operating efficiency, regulatory environment and other factors. And it does not help that most new silver is byproduct, i.e., it comes from mines that focus on other metals.

The famous American economist, Milton Friedman, once joked that if you put the federal government in charge of the Sahara Desert, in five years there would be a shortage of sand.

It would be a very negative outcome, as shortage is a sad state in which something needed cannot be obtained in sufficient amounts. Demand exceeds supply. Think about time – there is always too little of it. Or liquor during prohibition. Shortages were very common in the communist economies, as prices were controlled by governments and couldn’t rise to clear the market.

Fortunately, in a free market economy without government interventions in the price mechanism, shortages occur rather rarely and are temporary. Many analysts underestimate the effectiveness of the price mechanism, which was called a marvel by  Friedrich Hayek, the 1974 Nobel Laureate in Economics. You see, the scarcity of any commodity, including silver, would increase its price, encouraging new discoveries and production. Simultaneously, a higher price would dishearten some potential buyers, reducing the shortage and bringing the market closer to equilibrium.

Purchasing power is the number of goods and services that can be bought by a certain good or asset. Usually, we measure the purchasing power of fiat currencies, as people are generally paid in and use them in their daily life. For example, the purchasing power of the greenback measures how many goods or services one U.S. dollar can purchase.

The price of silver, as each price, is determined by the market forces of demand and supply. The supply is the amount of a good offered for sale at each price. Therefore, the silver supply is the amount of silver offered for sale at each price. The silver supply in that sense should not be confused with the annual supply of silver, which comes from the mining production and recycling.

“Silver Thursday” is the name for March 27, 1980, when a steep decline in the price of silver occurred.

How big is the gold market? It should be easy to answer this question, right? After all, the gold market is a market for gold. And we know that gold inventory, understood as the total above-ground stock of physical gold is estimated to be around 190,000 tons. That’s about 6.1 billion ounces. At today’s dollar price (a little above $1,200 per ounce, as of November 11, 2018), that comes to about $7.3 trillion, a pretty large number.

How big is the palladium market? It should be easy to answer this question, right? After all, the palladium market is a market for palladium. But the data on above-ground stocks is scarce. In 2014, we estimated it to be between 7 and 26 million ounces. According to the LBMA, in 2012, there were about 20 million ounces of palladium in existence (now it is probably less). At today’s dollar price (around $1,100 per ounce, as of November 11, 2018) that comes to about $22 billion. Not bad – it’s actually larger than in the case of platinum ($1.9 billion) but it’s significantly smaller than in the case of gold (about $7.3 trillion) or even silver (about $3.5 trillion). They differ by a few orders of magnitude.

How big is the platinum market? It should be easy to answer this question, right? After all, the platinum market is a market for platinum. And we know that about 2.2 million ounces of platinum are in existence above ground (as of 2017). At today’s dollar price (a little above $860 per ounce, as of November 11, 2018), that comes to about $1.9 billion. Not bad, but it’s significantly smaller than in the case of gold (about $7.3 trillion) or even silver (about $3.5 trillion). They differ by a few orders of magnitude.

How big is the silver market? It should be easy to answer this question, right? After all, the silver market is a market for silver. According to the U.S. Geological Survey, 1,740,000 metric tons of silver has been discovered to date, which translates into about 56 billion ounces of silver ever mined.

Everyone has heard about the Great Depression. The stock market bust, rising unemployment, the soup lines, the Dust Bowl. The age when capitalism looked to have failed and various countries were experimenting with collectivist approaches. U.S. hasn’t been immune to these influences either, and that’s how the pillar of today’s retirement planning came about. In 1935, Social Security has been established, guaranteeing a regular income stream upon reaching a certain age. It looked elegant and has worked nicely.