Could Gold & Silver prices go negative? Stupid as this may sound “Yes” they could, but it is highly unlikely given that most Fiat Currencies worldwide are so unstable. Yet nearly four months ago on June 2nd, something very unusual happened in Edmonton, Alberta, Canada. The price of Propane Gas actually became negative, hitting an unbelievable -0.625 cents per Gallon.
It’s hard to believe that the price of a productive commodity could become so beaten down by the market, that producers would practically have to pay you to take it off their hands. Now that’s cheap and completely nuts of cause, but this actually happens from time to time with certain commodities, and there are a number of reasons that it does occur.
A negative price might imply a dramatic oversupply where the cost of storing the commodity exceeds the benefit from owning it. Sometimes even something like real estate can have a negative value—perhaps when a building is in such decrepit condition that the cost of tearing down the structure exceeds the land value on which it sits. But sometimes a negative price simply means that markets are just completely broken.
The primary function of a marketplace is what’s called ‘price discovery’. This is an incredibly important role where buyers and sellers collectively determine the true value of a product, service, or asset. Think of it like an auction: if you really want to know what that old baseball card is worth, put it on eBay and let the market tell you its value. But they dare not do this with Gold & Silver.
The problem is that, these days, markets are so Heavily Manipulated that the price discovery mechanism has been totally broken. Consider that the most important ‘price’ in the world is the price of Currency, i.e. interest rates. The price of currency dictates, or at least heavily influences, the price of so many other major assets and commodities. Stocks. Bonds. Oil. Home prices, and Precious Metals in Gold & Silver.
Rather than leave this all-important price to be set by the Market-place, the price of currency is established by an unelected committee of Central Bankers, and by setting the price of currency, they are effectively influencing the price of just about EVERYTHING. Including propane gas in Alberta, Canada. Then of course there’s the more nefarious Price Manipulation, much of which is just coming to light now.
There was an appalling LIBOR scandal back in 2012, when multiple Banks confessed to criminal charges of conspiring to fix interest rates, and they barely got a slap on the wrist for these criminal actions. Investors in the United States have also filed a number of lawsuits, alleging that Banks and Brokers have rigged the market for U.S Treasury bonds.
The U.S Federal Energy Regulatory Commission has recently accused French oil company “Total” and British firm BP of Manipulating natural gas prices, and both the U.S Department of Justice and the Swiss Competition Commission are investigating several Banks for colluding to Manipulate Gold & Silver prices. Yeh sure that will go a long way, and as we all know, No Bankster will ever see the insides of a jail cell.
So in addition to markets being broken, there is also an extraordinary amount of Market Manipulation going on in recent years… which means that, quite often, prices mean absolutely nothing, when it comes to determining true value. Consider Gold & Silver, these two Precious Metals have had obvious long-term stores of value throughout history, and yet their prices have literally been in limbo over the past few years.
Bear in mind that these are Paper Metal prices we are talking about, i.e. prices set in broken commodities markets, which are heavily influenced by Central Banks, and Criminally Manipulated by Investment Banks. So are Gold & Silver prices as they stand today, really a valid indicator of their true worth in today’s markets? Not by a long shot. These Precious Metals are truly a bargain to be taken, in today’s grossly over-manipulated markets.
Author: Simon Black. Founder, SovereignMan.com