/biz/ - Business & Finance

I have some questions for those with a solid grasp of the underlying economics of the silver market and the manipulation by the moneylenders. I have a decent understanding of the concept of shorts and a fractional reserve in general, but I want to make sure I can understand this very well when I go to tell my family and friends in the next few weeks.

So what we have is JP Morgan managing Comex and the SLV ticker, and we understand that they have way, way more (orders of magnitude more) SLV stock than actual physical ounces of silver. My question boils down to this; how do they get away with it?

You and I going to the LCS or ordering online run into premiums, which are essentially a recognition that the real demand and supply isn't reflected in the spot price. So then I guess the retail suppliers (for people like us) pay the smelters more, in order to mint more coins for retail purposes, who then pay the miners more, and I guess industrial buyers see this reflected in needing to up their prices since the common man has taken up more interest.

Here's where we really get to my question. How exactly is the SLV price even affected buy the drying up in physical supply? Can't they just buy a bit less and issue a few million more in stock? Let's just say that the current short squeeze campaign is a massive success, and the real price to buy an ounce of physical silver is $50 in two months... will the "spot" price and the real price just divorce? Why does SLV need to respond to actual price pressure at all? What is the relation?