Silver: When the Paper Market Outgrows the Physical Market

There is one thing about the silver market that I still find absolutely absurd.

In a single day, the futures market can trade an amount of silver equivalent to a huge share of annual global mine production.

One COMEX contract represents 5,000 ounces of silver, and the same contracts can change hands multiple times during the day.

So yes — high trading volume by itself is not automatic proof of manipulation.

But when the price of a physical metal is largely discovered in a market where paper claims worth enormous multiples of actual mine supply can trade within hours, I think it is completely fair to ask how much influence the futures market really has over the price of the metal itself.

And that is what I find truly crazy about the silver market.

The price of physical silver is, to a large extent, determined in a market where paper is traded far more than actual physical ounces.