“A simple definition of concentration is a large market share held by only one or a few participants operating in concert. The question of concentration is of utmost importance to the functioning of free markets and a more familiar term for market concentration is monopoly – which lies at the heart of antitrust law. Sometimes monopolies can’t be avoided – in the case of public utilities for instance – but in those cases, strong oversight and regulation are the order of the day.
Whenever I use the term concentration, substitute the word monopoly or cartel. Think of the four or less traders on the short side of COMEX silver as a monopoly or cartel whose existence is solely dependent on keeping the price of silver contained – much like OPEC or the DeBeers diamond cartel seeks to elevate the price of oil or diamonds.
It appears to me that the big silver short monopolists on the COMEX are fighting the inevitable coming rise in silver prices, not for profit, but from the fear of what a failure to contain prices would entail. An explosion in the price of silver, even with the recently reduced concentrated short position would involve the potential financial ruin for some of the big shorts – to say nothing of resultant legal fallout. And please don’t think I am minimizing in any way the power of the motivation of the fear of ruin. The big silver shorts were originally and for most of the past 40 years motivated by greed, but now the motivation is fear.”
Ted Butler, The What and Why of Concentration
