As bad as the prognosticators can be with their predictions for the price of gold, the situation for silver is even worse. Some very recent headlines trumpeted the following proclamations:

“Silver prices to surge…”

“Silver…Why Prices Will Soar”

“Why You Must Own Silver…”

But my favorite headline expresses all of the emotion and confusion regarding silver quite aptly: “What Is Wrong With Silver?”

Maybe it would be better to ask “What Is Right With Silver?” Exactly what is it that makes silver so special in the eyes of so many investors and advisers? There are, of course, several things that others point to in their efforts to support their claims for much higher silver prices.

One is the accumulation of large amounts of physical silver by JPMorgan Chase Bank. But that should not necessarily indicate that the sky is the limit for silver prices.

It is inferred that JP Morgan’s accumulation of silver is bullish for silver prices; and favorable comparisons have been drawn between the bank’s activities regarding silver and the Hunt brothers accumulation efforts in the late 1970s.

But the Hunt brothers efforts did not turn out well. Even though silver prices soared (and definitely not just because of the Hunts’ buying, either) they came back down swiftly.  In four months, from January 18, 1980 to May 22, 1980, the price of silver fell from $49.45 per ounce to $10.89 per ounce.

The decline didn’t end there, either. Twelve years later, in December 1992, silver traded as low as $3.67 per ounce.

It is worth pointing out that there were multiple factors in play at the time silver rose from $1.33 per ounce in November 1971 to its eventual high of $49.45 in January 1980. Speculation surrounding the Hunt family’s accumulation of silver only added fuel to the fire. And likely exacerbated things to the point that silver far exceeded any realistic price level that could be justified at the time. Hence, its price decline was considerably more severe than gold’s.

And just what are JP Morgan Chase Bank’s intentions regarding the hoard of silver they have accumulated? Corner the market? Drive the silver price much higher? Then sell with huge profits?

A big problem comes after the accumulation. When and how do you sell what you own in order to take those huge profits – without dumping excess supply on the market? Ask the Hunts. They had trouble liquidating at any price; even without ‘huge profits’.