Price volatility has always been, and continues to be a fundamental characteristic of the silver market. Factors contributing to silver’s volatility have kept many from investing, although recent silver price momentum has been towards the up-side.
Today’s paper silver market is constructed of over-the-counter commodities derivatives, futures contracts, and exchange-traded stock and equity funds. The prevalence of these types of financial instruments has changed the face of silver commodity trading, in additon to creating a fresh dynamic in bullion silver delivery practices.
Paper silver financial instruments have fallen victim to the possibility of price manipulation. Silver trading by institutions, holding large amounts of precious metal, have given small investors a disadvantage. Paper silver, like other physical commodities represented by paper, are more abundant than the bullion they represent.
Ownership of paper silver cannot bestow peace of mind upon investors who believe that hyperinflation or systemic fiscal collapse are emminent. Traditional silver ETFs, futures and options are no less risky, as shown by the recent propensity of companies to use customer funds to make speculative economic bets.
