Silver "Shocker"

Discussion in 'Money, Investing & Precious Metals' started by IrritatedWithUS, Mar 22, 2011.

  1. IrritatedWithUS

    IrritatedWithUS Well-Known Member

    Silver is at $36.44 an ounce today!

    Got this today. Not a big surprise but now there is proof that silver has been manipulated:

    The big surprise was in the silver COT (Commitment of Traders), where the Big 4 Banks increased their net short position by 3,000 contracts on the previously mentioned reduction of 1,300 contracts in the total commercial net short position. So, this increase in the Big Four's short position broke the pattern of a reduction in the concentrated short silver position that had been in force for months.
    Since the Bank Participation Report was released late yesterday, an hour or two after the COT, my first thought in the interim was that it would not be JPMorgan admitting and increasing its concentrated short position, but most likely the other three entities in the Big Four. After all, with all the negative attention (and losses) accruing to JPMorgan and its big silver short position, there would be no way JPM would have accounted for the 3,000 contract increase in the COT for the big four.
    There was a net increase in the US bank category of 6,000 contracts to 25,000 held net short in silver. JPMorgan’s net silver short position, which had decreased by 11,000 contracts over the preceding three months to 19,000, had suddenly ballooned to 25,000 contracts (125 million ounces)
    From my reading of both these reports, it appears that the big increase in silver short selling by JPM took place during the last COT reporting week, even for the BP Report. Before I continue, let me explain that I consider JPMorgan to effectively account for all or the bulk of the entire US bank category in the Bank Participation Report for a variety of mathematical reasons. However, it matters little if there is another US bank also holding a significant net short position in COMEX silver, as all that would mean is that two US banks are colluding to manipulate the price of silver and not just one bank acting alone.
    Let me walk you through the mechanics of what just took place and then I’ll speculate on the motivation of JPMorgan increasing its silver short position so dramatically. Over the past two COT reporting weeks, it has been primarily a commercial versus commercial type affair. The big technical funds have largely refrained from adding to their net long silver position, even though prices have climbed very sharply. Two weeks ago the raptors (the smaller commercials away from the big 8 ) increased their net short position to 4000 contracts, the highest level in four years. The raptors were selling to the smaller unreported category traders who were buying. This week, the raptors bolted from their entire short position, buying it back completely and leaving them flat (not net long or short). JPMorgan was the sole seller to the raptors’ buying, resulting in the big increase in JPM’s short position.

    As far as the motivations behind this trading, the most plausible explanation for the raptors running from their newly initiated big short position is the stark reality that shorting silver has been a very bad deal. My guess is that the raptors did their homework on silver only after they put on the big short and started to lose money on rising prices. That homework persuaded them to get off the short side of silver pronto, which they did. JPMorgan’s motivation for suddenly and greatly increasing its silver short position is less clear and more troubling. My own guess is that the JPMorgan silver trader thought he had no choice but to sell many more contracts short in order to control the price and protect their existing short position. That’s because there was no one else left to sell. If JPMorgan didn’t sell, no one else would have (at prevailing prices). That’s the problem and it goes to the heart of the crime. The raptors didn’t want to sell, nor did the 5 thru 8 large traders. Ditto for basically all the other silver traders. That left JPMorgan as the sole silver seller, as the COT and Bank Participation Reports clearly document. Please think about this.
    This is the key point – what would have happened if JPMorgan hadn’t sold short the additional 6,000 silver contracts (30 million oz) when they did? Asked differently, in the current market conditions, what price would have been required to induce other market participants to sell the 6,000 contracts if JPMorgan hadn’t sold? My guess is that would have taken a price over $40 or $50 to attract that much legitimate selling. The fact that JPMorgan was the sole seller is the clearest proof possible that silver has been manipulated.
    Please don’t assume that the sharp increase in short selling by JPMorgan is automatically bearish for the price of silver. Yes, such manipulative short selling in the past has led to sharp sell-offs and could again. But things do change and current conditions in silver are vastly different than they have been in the past. While we must be prepared for a sell-off (by not holding on margin), this situation could (and should) blow up in JPM’s face. They are increasingly isolated which makes them both dangerous and vulnerable. Most of you are holding silver from prices much below the current levels. This bestows on you a power that few newcomers to silver possess, namely, the power of a long term perspective and the ability to withstand short term price gyrations. You have a price cushion and the power of knowledge that should enable you to persevere against any short term manipulation. The proper approach is to hold silver to go much higher and not to lose your position, just as it has been all along.

    -Ted Butler
  2. BasecampUSA

    BasecampUSA Sr. Homesteader

    WOW! that is a shocker

  3. Clarice

    Clarice Well-Known Member

    IMHO I believe all the markets are a sham. Look around you, the world is going to hell in a hand basket (that is on fire) and the market continues as if everything is great. Just how long this can go on is anybody's guess, but I think not much longer. This tightrope they are balancing on is getting freyed. I thank God everyday that we had the good sense to get out of the market a while back. My sister didn't and they have lost over half of their retirement. No more big dividen checks for them.
  4. Immolatus

    Immolatus Just getting started. Always.

    When I got up this morning, it was ~36.xx I went to my local coin store at around 1PM EST, and it was already $37.40, when I bought some.
    It closed at $37.42.
  5. IrritatedWithUS

    IrritatedWithUS Well-Known Member

    This makes me so happy ;)
  6. 778008

    778008 Active Member

    Yes, I have some silver coins from back in the day plus I did get some from a local dealer in the fall. I have decided to get some nickels since there is no risk in them. They cost 5 cents each, they will never be less than 5 cents plus the actual metal content is more than a nickel. Just a thought for a sure thing although a pain for storage for any large number but a hedge against inflation in the metal market (they can become the dimes, quarters and halves of 1964 and before once the govt changes the metal content) If they don't, always a nickel and no premium.
  7. zookeeper

    zookeeper Junior Member

    The gap from gold to silver is not a reflection of their economic value.
    Gold is a monetary investment. Silver is an industrial metal. Gold can drop, yet silver will still be in demand.
    I'm not saying they will exist neck and neck. But silver should be within 50% of gold.
  8. BillM

    BillM BillM


    Historicly silver has always chased gold at a 15 to 1 ratio.

    Because of manipulation and increased industerial uses for silver, that has not proven to be the case as of the last few years.

    If silver corrects to it's historic level , it should be about $ 87.00 per ounce.