Silver Bullion
Another aspect that is brought out about silver leasing is that when something is leased you can usually use something for a fee, such as is done with homes, cars, airplanes, computers etc. However, a bar of silver or gold cannot exactly be used. The only way these could possibly be used would be by selling it or melting it and normally only things that can be legitimately used can be leased since there is a utility value on each. The question comes in because something that cannot be used cannot be considered a basic material. This is why it considered as being a straight sell in the eyes of some.
In other words, the only use a person could possibly get out of bar of silver or gold is to melt it or sell it. The Central Banks that loan these out is then sold by the bullion bankers which in turn converts it into straight money. Most people would not just borrow something to keep it stashed away for nothing, which then again in the opinion of some analysts turns this into a fishy business.
According to the analyst Theodore Butler the Central Banks are actually selling enormous amounts of silver and gold through supposed loans however these “sells” are not reported. And that since the metal from the Central Banks vaults are not being reported, they actually have less in them then what they say to the public. He also states that the Central Banks claim they do not have the need of reporting the metal they do not actually have in their vaults since these are technically classified as loans. According to this very controversial analyst this is what is considered to be fraudulent reporting and a lie.
The opinions on these aspects obviously vary and there is a lot to be said these days about it, however, it is said that the thing that mostly affects the economy is the results these loans have had on the prices of silver and gold which has annihilated the prices of silver and gold. Due to the fact that the loans in the opinion of some are actual sales, actual metal is placed in the market when the loan starts off. It has been said that there is at least 150 million ounces of gold and around one billion ounces of silver loaned out from the Central Banks. Looking at it in perspective this would mean that over the last decade or so around fifteen million ounces of gold and one hundred million ounces of silver have been loaned or sold (whichever you choose to believe) each year and that due to the fact that the loans are not returned or paid back, it is simply all extra supply. This is obviously besides recycling, mine production, and the straight sales of Central Banks. There is around an annual world mine production of about seventy five million ounces of gold and around five hundred million ounces of silver, it would mean that the silver and gold loans have dropped two whole years of mine production into the market. This would obviously make the prices go down and stay down since there is so much extra supply. Looking at it in this perspective it is surprising that silver and gold are not offered at less.
According to Butler he has established documented track records that establish fraud and manipulation in silver and gold. However, he has also said that the positive aspect to what he considers silver and gold frauds and manipulation is that the silver and gold loans of the prices offered are a once in a lifetime opportunity. As a matter a fact if it were not for the silver and gold loans throwing huge amounts of metal onto the market the costs and prices would not be the same as they are now. This was of course not a premeditated end result of all the silver and gold loans. Not intentional since the idea was not to give the public with a good buy, however it did turn out to be this way
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