Aggressive Silver Capping Continues

At some point, the question becomes "why". With gold now up 17% year-to-date, silver is up just half that amount at 9.5%. And yet, the latest CoT report shows the highest silver Commercial net short position since 2008. Again, why? Why now?

That's truly the $64MM question. Why are The Silver Banks shorting so aggressively here? What's the difference in holding price below $16 versus $18 or $20? We'll get a look at the latest CoT data tomorrow but, for now, consider this:

There was a CoT survey taken on Tuesday, December 29, 2015. The closing price of silver that day was $13.93. The data showed that the Silver Commercial NET short position was just under 30,000 contracts as they were long 52,149 contracts and short 82,027.

The most recent CoT data released last Friday was surveyed back on Tuesday, February 16. That day, silver closed at $15.33. Versus December 29, price had risen by $1.40 or almost exactly 10%. And how had the Silver Commercial NET short position changed? They were now long 44,638 contracts and short 114,700 for a NET short position of 70,062 contracts. Again, this is the largest Silver Commercial NET short position since 2008.

Additionally, look at what has transpired in the six days since that last CoT survey. Total Comex silver open interest has risen by another 7,000 contracts, which very likely increases the Silver Commercial NET short position to over 75,000 contracts...all the while, price has actually fallen by 4¢.

Therefore, it isn't very difficult  to predict what's likely to come next. A price raid. Do you recall this chart from last October?

Or how about this chart from last Friday?

It is abundantly clear that JPM and their fellow Big Shorts on the Comex are intent upon attempting to enforce lower prices. Otherwise, why would they be so adamant about selling into and capping every attempted rally? And this latest capping effort is the most egregious yet! It's perfectly fine for any entity, Commercial or Spec, to liquidate longs into an ongoing rally and, as noted above, the Silver Commercials have dumped nearly 7,500 contracts so far in 2016. However, what is definitely NOT fine is to allow the unlimited creation of paper silver in order to meet Speculator paper demand.

Again, note that the Silver Commercial gross short position back in late December was 82,027 contracts. That's a contractual obligation to deliver up to 410MM ounces of silver if called upon to do so. As of last Tuesday February 16, the Silver Commercial gross short position had grown to 114,700 contracts or 573MM ounces of silver. That's 60% of all the silver the world will mine in 2016!

So the questions must be asked again:

  1. Where would price be today if the Silver Commercials had not sold and shorted so many contracts into this 2016 rally?
  2. And if the buyer/seller equilibrium price was $18 instead of $15, what would be the difference?
  3. And why are the Commercials so intent upon capping silver? Over the same time period, gold has risen 17% but the Gold Commercial NET short position remains below levels seen at price peaks in 2014 and 2015.

Could this chart have anything to do with it?

So, we'll have to see what happens next. Logic dictates that a price raid is coming that will allow the Commercials to buy back and cover some of their short position while the Specs stream for the exits. But then what? The chart above shows an increasingly untenable position for JPM and their friends. Paper price seems to have been driven as artificially low as possible, thus the effort made to hold it back is increasing. And we haven't even mentioned the gold:silver ratio!

What's the best strategy for dealing with all of this? For me, it's the continued, gradual stacking of physical silver. Predicting the precise date of the failure of the silver manipulation scheme is a fool's errand. But, fail it will, just as all price manipulations before it have similarly failed. And, WHEN it fails, the events will be spectacular to behold.

TF

52 Comments

TheGuyFromSweden's picture

Foist

Now to read

Sanford's picture

2

YEH!

tyberious's picture

Thurd

Thurd

Edit: "And, WHEN it fails, the events will be spectacular to behold"! Global!!

Marchas45's picture

Lucky 4th

YEA??????

usk's picture

Miners are holding

In the last 27 trading sessions, only 3 down days. If this is not a major sign of a great first leg of a bull market, I don't know what it is. Kinross dilution announced today, and HUI moving up! I know, this will consolidate, but the pressure is on the shorts now. They have to break this move. They have to go nuclear to break this amazing move.

silverflower's picture

Good to see you back firing on all cylinders, Turd

Yes, maybe they put the metals into the toilet before the next FED meeting when mother Yellen may paddle back. Indicating taking back the recent rate hike.

Turd Ferguson's picture

Speaking of charts...

MODERATOR

This is certainly encouraging!

LostMind's picture

Top 10

Oh, what a nose dive and recovery!!!  Looks like a dog fight with some serious G's being pulled on recovery!

Markedtofuture's picture

Wrong Gatekeepers to Clean Up the Culture of Wall Street

These Are the Wrong Gatekeepers to Clean Up the Culture of Wall Street

By Pam Martens and Russ Martens: February 25, 2016

In a feeble public relations move, Bill Dudley, the President of the Federal Reserve Bank of New York and FINRA, the self-regulatory body on Wall Street, are making noises about cleaning up the culture on Wall Street. It’s always dangerous to make any predictions when it comes to Wall Street but in this case we can confidently predict that when it comes to the New York Fed and FINRA, the only possible impact they could have on the culture is to make it worse.

The New York Fed didn’t see a problem for Bill Dudley’s spouse to collect $190,000 a year in deferred compensation from JPMorgan Chase while the New York Fed served as the bank’s main regulator. The New York Fed didn’t see a problem for Citigroup’s CEO, Sandy Weill, or JPMorgan CEO, Jamie Dimon, to sit on its Board of Directors as their banks embarked on a serial reign of abuses against the investing public. In 2013, Carmen Segarra, a lawyer and former Bank Examiner at the New York Fed, filed a lawsuit alleging that Relationship Managers at the New York Fed obstructed her investigation of Goldman Sachs and attempted to bully her into changing her negative findings. When Segarra refused, she was fired by the New York Fed according to the lawsuit. Segarra later produced internal tape recordings backing up the toothless regulation of Goldman by the New York Fed.

continued....http://wallstreetonparade.com/2016/02/these-are-the-wrong-gatekeepers-to-clean-up-the-culture-of-wall-street/

SealRock's picture

Re: Denver Dave's Junior Miner Pick

In reply to mike97 from yesterday's thread.  Dave recommended Silvercrest Metals (SIL.V) in his January 10th Short Seller's Report.  With PDAC coming up early March (6th-9th) expect a flurry of news releases from the juniors.  SIL started a drill campaign in last October, so they should be releasing drill results.

goldcom's picture

Turd

Have you found any more info on the Gold Silver lease rates or was the report on SD just an anomaly?

jwmkratz's picture

Just a Thought

If gold continues to run, at some point won't it overwhelm the price of silver? Things have changed imho. Anyone who has been involved with metals over the last 4 years or so can sense this. While silver is the lynchpin... the power of gold's move,  the uncertainties on the world's stage,  both from a war footing and financial distress, should make the risk/reward of owning metals light on the risk and heavy on the reward. I'm not doing anything but BTFD. If I'm wrong so be it. There's just too uncontrollable events/unintended consequences that could and most likely will strike the world before the end of 2016.

Turd Ferguson's picture

The implied gold rate has already reversed

MODERATOR

The silver rate is still down. I still don't think it means much and the silver rate that Nick has will probably come back up, too. But we'll keep watching, just in case.
http://www.sharelynx.com/chartstemp/PM4XChartslt.php

Response to: Turd
Turd Ferguson's picture

2015 results and statement

MODERATOR
Turd Ferguson's picture

Add this to the pile

MODERATOR
Turd Ferguson's picture

A guy sent me this

MODERATOR

Interview with Brent Cook and Mickey Fulp, two guys we've had as A2A guests.

Turd Ferguson's picture

Thanks for finding that

MODERATOR

Excellent info.

Wingy's picture

To answer your post, Turd

The answer to your question: Why cap silver?, is really quite simple. First, the gods of profit are against me. Whether the stock market, crap tables, flipping coins, or the PM market. The gods conspire to make me lose. If I owned gold, your question would have been reversed, but I own silver and those same gods are simply toying with me. That's my story and I'm sticking to it. 

SquibLoad's picture

Re: April 19, 2016 china opens gold fix

Thanks Fatso,
I just marked this on my calendar with a red sharpie marker!
Regards,
SquibLoad

brokerk22's picture

Just an

observation. I search "silver coin lot" on Ebay. The number of listings has been cut in half over the last month. Usually you will get 16000. Now I only get 8000.

s1lverbullet's picture

Waiting patiently

For a pullback in the HUI to 140.  If we get it, I will go all in on about 15 different miners.  The bear market is over.  Just look at the volume coming in in the past few weeks.  Things are definitely changing.

GoldenWizard's picture

Silver

Logic dictates a short squeeze for Silver is inevitable, timing is tuff to predict.   

The short squeeze on silver will likely arise when SM dumps and Gold Rallies.  Once Gold crosses the Rubicon of $1308, in my opinion it will have to drag Silver with it.  There is no way, Gold crosses $1308 and Silver stalls or drops.  Once the Rubicon $1308 level is crossed, Silver will gap-up in price, likely crossing $16 violently around $17.50. 

Then if gold continues to rally ($1400 level), silver will start to out-perform Gold and begin the assault on $20 bucks. 

One step at a time, we need Gold to cross $1308 and then Silver will get its Shine back, big time.

Just my two cents.

SquibLoad's picture

Silver suppression as an act of law enforcement

Excerpted remarks at the Signing of the Coinage Act," July 23, 1965 by Lyndon B. Johnson
http://www.presidency.ucsb.edu/ws/?pid=27108

“Some have asked whether our silver coins will disappear. The answer is very definitely-no.

Our present silver coins won't disappear and they won't even become rarities. We estimate that there are now 12 billion--I repeat, more than 12 billion silver dimes and quarters and half dollars that are now outstanding. We will make another billion before we halt production. And they will be used side-by-side with our new coins.

Since the life of a silver coin is about 25 years, we expect our traditional silver coins to be with us in large numbers for a long, long time.

If anybody has any idea of hoarding our silver coins, let me say this. Treasury has a lot of silver on hand, and it can be, and it will be used to keep the price of silver in line with its value in our present silver coin. There will be no profit in holding them out of circulation for the value of their silver content.

The new coins are not going to have a scarcity value either. The mint is geared to get into production quickly and to do it on a massive scale. We expect to produce not less than 3 1/2 billions of the new coins in the next year, and, if necessary, twice that amount in the following 12 months.

So, we have come here this morning to this, the first house of the land and this beautiful Rose Garden, to congratulate all of those men and women that make up our fine Congress, who made this legislation possible--the committees of both Houses, the leadership in both Houses, both parties, and Secretary Fowler and all of his associates in the Treasury.

I commend the new coinage to the Nation's banks and businesses and to the public. I think it will serve us well.

Now, I will sign this bill to make the first change in our coinage system since the 18th century. And to those Members of Congress, who are here on this very historic occasion, I want to assure you that in making this change from the 18th century we have no idea of returning to it.”

So, friends ....with silver being the everyday man’s gold and the most practical medium of payment in full in the form or asset exchange. My question is this … Is the Herculean amount of suppression acting upon silver not PRIMARILY to crush silver but simply to support of the Coinage Act of 1965 in the most direct manner? Is it not just policy but essentially enforcement of the law to crush silver so it does not raise back to an everyday settlement of debt and store of wealth?

"It seems to me that an unjust law is no law at all." 
Saint Augustine

Angry Chef's picture

China Opens The Gold "FIX"...

the one word that scares me the most about the opening of the China Gold FIX ! FIX ! Damn it...FIX !

" It is likely that the 10 banks that are official market makers in the system set up by the SGE in January to facilitate interbank gold trading will participate in the yuan-denominated fixing, one source said ".

brolgaboy's picture

Turd

are you gonna buy some calls if the s n p crosses 1950?

Verus nemo's picture

Does anyone have a guess on the half-life length of

this apparent new Fed/Treasury strategy of delaying POMO and Treasury auctions? Is this a tactic that could have an extended period of effectiveness in juicing markets or is it more likely that it will be viewed as one more desperate attempt to levitate the system? Who will ultimately call them out on this: the investor class, the TBTF banks, sovereigns...who?

I honestly don't know but it strikes me as having a very short duration of effectiveness. One must give them points for style and creativity though. <sarc>

It also leaves one with the impression of "trying to run out the clock" in a sporting event, doesn't it?

Compwiz4u's picture

Kitco Not Reporting Lease Rates

Never saw this before. Kitco is not reporting lease rates. Something strange is definitely going on.  http://www.kitco.com/market/lfrate.html

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