What are silver swaps (silver swapping)?
What are silver swaps? Silver swaps in the context of the Silver Bullion website refer to the different types of silver swapping between central banks: The first type refers to the literal swapping of hordes of silver between two central banks. The second type refers to the practice where the silver reserves of one central bank is loaned or lent to another central bank in exchange for currency.
The sole objective or purpose of both types of silver swaps or silver swapping is to distort markets and balance sheets. E.g. the second type of silver swaps or silver swapping is considered by central banks to be “collateralized loans” which they don’t have to show on their balance sheets. This makes it difficult at best to determine exactly how much silver central banks have loaned or lent to each other. The truth be told, gold swaps or gold swapping is much more common than silver swaps or silver swapping. Does this mean that gold swaps or gold swapping are not really used to manipulate the silver market? No, it is no secret after all that gold and silver prices tend to move in the same direction. Thus, even if you’re sitting with a bunch of central banks that are hell-bent on gold swapping with little appetite for silver swapping, it will not only negatively affect the gold market and gold prices, especially the spot price of gold, but also the silver market and silver prices, including the spot price of silver.
Needless to say, silver swapping (silver swaps) is among the most hideous forms of silver market manipulation, not only because of sheer scale, but because physical silver is used in a frown-upon way to manipulate the silver market by distorting balance sheets, creating a form of paper silver in the process.