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When Ben Bernanke Speaks, Silver Goes Up.

In Commentary on April 27, 2011 by CQCA

The chart above shows the top ten trade volumes of SLV by which day they happened on, plus the all time average since the ETF began. Seven of the top ten volume days happened in April, 2011.

The increased trading volume in April, 2011 was based on a gamble that the Federal Reserve would continue to destroy the U.S. Dollar. That paid off. The Federal Reserve Open Market Committee announced it had decided “to continue expanding its holdings of securities as announced in November,” in order to “promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate.” It will also “maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.”

November 9th, and November 10th, 2010 also had exceptionally high trade volumes. These followed the Federal Reserve’s announcement on November 3, 2010 that it would “purchase a further $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion per month.”

December 7, 2010, the tenth highest day for volume trades, was the day the Gold Anti-Trust Action Committee filed suit against JP Morgan & Co. for “conspir[ing] to intentionally, unlawfully and artificially suppress[ing] [...] the prices of exchange-traded silver bar financial instruments.” (Kensik v. JP Morgan & Co.)

In terms of largest single day price increases, the largest price increase, 14.42%, was on September 17, 2008. This followed the Federal Reserve’s announcement on the evening of September 16, 2008 that it had “authorized the Federal Reserve Bank of New York to lend up to $85 billion to the American International Group (AIG),” and would allow the U.S. government to “receive a 79.9 percent equity interest in AIG and [have] the right to veto the payment of dividends to common and preferred shareholders.”

The second largest single-day increase in price occurred on November 24, 2008, the day before the Federal Reserve publicly announced it would create the Term Asset-Backed Securities Loan Facility. This program directed the Federal Reserve Bank of New York “to lend up to $200 billion on a non-recourse basis to holders of certain AAA-rated ABS backed by newly and recently originated consumer and small business loans.”

When Ben Bernanke speaks, silver goes up.

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