Everyone who collects or invests in silver or gold wants a deeper understanding of the bullion market. Understanding the market better makes you more knowledgeable and increases your chances of executing a profitable deal. In investing, sometimes it’s luck that wins you money, which reminds me of a guy on the television show Pawn Stars who acquired a few thousand troy ounces of silver for roughly $3/oz and sold it for $30/oz, making hundreds of thousands of dollars on tv.
[https://www.history.com/shows/pawn-stars/season-6/episode-11]
But that’s a story for another day; the point is that understanding the market and keep DCAing when bullion prices are low is the key to future profitability; when the bull market eventually comes back, you will make a buck. Anyway, what is a bullion market?
The definition of a bullion market is an exchange where silver and gold are traded, along with derivatives based on those commodities. The London Bullion Market is the one that typically comes to mind first when one mentions a bullion market; however, there are other other bullion markets as well.
A bullion market’s goal is to provide a centralized exchange where buyers and sellers (big bankers) can meet on an open, “transparent” system where prices are based mostly on supply and demand. Bullion markets are designed to display synchronized real-time prices currently being traded. It’s entirely up to the investors to decide whether and how much to invest, buy, or sell based on their own individual circumstances. The rules of one market may not apply to another. The London Bullion Market, for example, is always open and predicated on regulations set by the London Bullion Market Association.
There is always speculation that LBMA has been manipulating the price of gold and silver for a long time. The bullion banks like JP Morgan have manufactured the perception that there is no scarcity of silver despite the high industrial demand for silver. They want the general public to believe that the amount of silver is inexhaustible and that there is an ample supply of silver buried underground. Because of this narrative, both the market and the public think that storage facilities for precious metals, such as the COMEX, can be restocked with silver without any issues, and paper silver can take delivery at any moment. In point of fact, over the past few decades, there has been significant growth in demand for silver as an industrial metal. As a result, miners are having an increasingly difficult time discovering fresh depots of the metal. If the vaults at the COMEX and LBMA were to be emptied, it would mark the end for the bullion banks. However, this is all speculation.
