Why Are Silver Bullion Prices Falling? Market Analysis by Gold De Royale

Many investors around the world are pretty shaken up, with silver bullion prices plummeting from $49 to $32 in 2011 and then falling again from $43 to $28. The biggest unanswered question in 2011 would be, why did silver price crash, according to George Vo, Sales Manager of Gold De Royale.

In order to answer the above question, we need to look at some basic fundamentals. Let's look at a few selected reasons that have a huge impact on silver bullion prices.

Imagine you're a financial institution that does futures trading and for some reason you made a lot of mistakes during trading. You have come to a point where you need to liquidate your assets to pay off your debt. So what do you liquidate? The simple answer is silver bullion. Why liquidate it? As you do not have sufficient cash to pay off your debts.

So as a financial institution you have three options: reduce your workforce, liquidate or file for bankruptcy. As liquidating looks more attractive than the other options, many institutions would liquidate their silver holdings to acquire cash.

When you liquidate silver, suddenly everyone is asking the question, what is happening! Why did a billion-dollar institution liquidate their silver holdings? In international trading markets, there is a general notion that when one big institution sells then it's high time other institutions follow their lead. It is almost like the blind following the blind (even though both will eventually fall into the ditch).

So then almost everyone starts selling, which causes market panic. Market panic spreads like a wild fire and there will be hundreds of rumours floating around saying, sell your silver fast as it's going to crash to $8 or $15. There will be numerous YouTube videos, blog posts and forums that will overstimulate the panic. If everyone starts following the other person in selling silver, then suddenly there will be an oversupply of silver due to liquidation and we will see silver price crash.

As human beings, one of the biggest issues we have is following the other person regardless if they are correct or wrong; it is a natural primordial instinct of survival. Since silver is money and since you do not want your money to go in drains, you get paranoid and stop buying silver.

At this stage, the whole market is gripped by a phenomenon called paranoia. No one buys silver and people want to sell their silver holdings. Presently, 50 percent of investors around the world are in a stage of silver paranoia, which started in October 2011. The other 50 percent of investors is using this paranoia as a buying opportunity and loading their vaults with silver bullion.

As the whole market is in a grip of fear (silver paranoia), who are the big players actually profiting from this? The answer is simple, your bank! Why? You just helped your bank to make more money. How? When you don't use your money and leave it in your bank account, the actual people who make profit are your bank.

The ultimate goal of every bank in this world is to make sure that your money is with them. If you withdraw your money and use that to buy silver bullion, then they lose big time. So technically speaking, with paranoia in place, you just helped your bank to make more money.

Banks are the biggest manipulators of the world financial markets and many times, directly or indirectly, we do their murky job. Regardless of how many lawsuits are filed against banks for market manipulation of silver prices, they won't change.

As long as the banking cartels rule the world financial system, rest assured they will manipulate silver markets for their own gain. As far as banks are concerned, if you do not buy bullion, then you obviously may use your money for trading shares, take mortgage to buy a house or leave it as a term deposit with your bank, which is exactly what they want.

In 2011, there was a huge hype that QE3 would be implemented, which did not eventuate. Ben Benarke came with Operation Twist. With no QE3 implemented, precious metal markets were undecided, as everyone assumed that the US economy was showing signs of recovery. This again hit hard on silver bullion prices in general.

Keep in mind that Ben Benarke has become smarter these days and the chances that he would implement QE3 in 2012 is only 10 percent. It is very unlikely we would actually hear the term QE3 in 2012. We may hear Operation Twist part two or some other operation.

Fundamentally speaking, nothing has changed in the US or in the European Union economy. In 2010, the US national debt was 14 trillion dollars. In 2011, it crossed 15 trillion dollars. In 2010, the European Union economy was deteriorating, now there are talks of countries breaking up from the European Union, which shows signs of a total collapse.

If nothing has changed fundamentally, whatever you see is a staged propaganda to ensure that people lose their confidence in buying silver bullion. At the end of the day, it comes to two choices. Do you want to hold fiat money (printed on paper or plastic) or do you want to hold real money (silver bullion)?

The biggest financial meltdown is on its way. The only difference between a person holding fiat currency and holding silver bullion is that, when the massive financial flood waters come, people who hold silver bullion have a life jacket on.

For more information about silver bullion, please visit our website at http://www.goldderoyale.com.au