The Hong Kong Mercantile Exchange (HKMEx) recently started trading 1000 oz contracts for silver. The web site is here. Click on the pop-up which lists 32 troy oz gold futures, and select 1,000 troy oz silver futures, to see the silver price.
The interesting thing about this, is that it is a real physical market. There is no "paper" silver here. The COMEX and LBMA appear to be mostly "paper" markets (see here).
Currently, spot silver on the Globex is going for 38.97, and the HKMEx is 41.79 (September delivery).
The COMEX supposedly has 27.331 million oz of silver (registered inventory) available for immediate delivery. It should be possible to buy silver on the COMEX, take delivery and have it shipped to Hong Kong, and sell it on the HKMEx, netting 2.82 per oz. Since each COMEX contract is for 5000 oz. It should cost $194,850, and sell for $208,950, netting $14,100 per contract.
Similarly, the Pan Asian Gold Exchange is starting up and should be on-line by Q3 2011.
Due to the leverage of paper silver to actual physical silver, there are rumors that there is not enough actual physical silver available if everyone asked for delivery. If this is true (and it seems that Jeffery Christiansen of the CME group has confirmed it under testimony to the CFTC), it means that the price of silver has been suppressed compared to a normal supply-demand logistics in a normal market. It becomes possible that there could be a "run" on the silver market, if the buyers don't believe they can get the silver they purchased. (There are also rumors of people getting paid significant amounts over to settle their silver purchases in cash vs physical metal).
If you don't have $194,850 to buy a contract on the COMEX, you can buy 1 oz silver coin - at these suppressed prices. Max Kaiser believes that JP Morgan is short 3.3 Billion oz of silver (annual world mine production is around 700-800 million oz according to the USGS), so he has started a "crash JP Morgan - buy silver campaign". He believes that if he can get enough people to just buy a few silver coins, it could force JP Morgan to cover their position - (which would be an impossibility if they really are short 3.3 billion oz - there's not enough silver in the world).
If silver is being manipulated and suppressed, how high could it get to (when the manipulation fails)? Lorimar Wilson believes it could get this high. And he says he's got a bunch of academics, economists, analysts, and investors who agree with him.
If there is a manipulation in the markets, these two new markets opening up should help to end the manipulation, and we should see the price of silver take off.
PS: By the way, if you don't have any gold or silver, here's a cool video showing why you might want to get some.
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