Aggressive Silver Capping Continues

52
Thu, Feb 25, 2016 - 11:09am

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

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  52 Comments

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H8Fiat
Feb 26, 2016 - 10:53am

Guess I missed the memo

That everything if f$*^@in fixed. At least soon I'll be able to pick up an ASE on the sidewalk like a bad penny.

H8

tyberious
Feb 26, 2016 - 10:22am

@gldslv

agreed! "Rickard's is staying in the system, PM bugs want a complete do reset financially and politically."

usk
Feb 26, 2016 - 7:58am

Very bad news results for GG

Down 10% PM.

Q4 results are a disaster, $5 loss / a share represent 1/4 of book value wiped out in one single quarter. That's awful.

But I am seeing big buy orders Premarket in the $14+.

This is a huge sign things have changed in the PM sector. I would be very scared if I were short miners.

gldslv
Feb 26, 2016 - 7:36am

10% allocation BS

So I watched the Rickards video and get reminded of the 10% allocation non-sense for PMs. Like many others he compares it to home insurance. Its an improperly defined analogy. He compares it to a 'normal' functioning house. Its stable, its working well and offering a sustainable future. If we take his view of 'normal' investing, we lose everything else but gold keeps us afloat. Yes that is insurance.

A proper comparison is to take a seemingly 'normal' house that is showing leaking pipes, a cracking foundation, termites festering the structure, mini electrical flash fires...etc. To save this 'normal' world you would pay *ALOT* for the home owners insurance. Much more than the 'normal' cost for normal homes simply because you can see where this 'normal' house story ends with the nightmare you currently have.

Gold is the antithesis of the financial and political structure. Not the economic structure. So its insurance against financial lunacy, not the tangible real world assets that drive economies and real markets. Of course a voluntary increase by the home owner is one thing. When the insurance company checks it out, you will really pay. Sort of like the absurdity of NIRP and cashless systems.

Rickard's is staying in the system, PM bugs want a complete do reset financially and politically.

gazzmann
Feb 25, 2016 - 10:45pm

Gregor Gregersen: Singapore Gold Dealer

Why Bullion Secured P2P Lending is Safer than Bank Credit

Gregor Gregersen: Singapore Gold Dealer - Why Bullion Secured P2P Lending is Safer than Bank Credit
jackstar
Feb 25, 2016 - 9:44pm

AGAU

Just had a second 330 gallon oil tank installed in the basement yesterday, should be enough for a full winter heating season. I view this as an important prep, not just as taking advantage of a low price situation.

AGAUinfometron
Feb 25, 2016 - 5:03pm

Foreboding .... War?

Kinda makes me wonder if this cheap oil was planned , make sure you all fill up boys get those tankers full, oil storage maxed out cos it's about to get pretty scarce for a while??? It would be nice to see that arrogant thieving asshole Erdogan and the Dirtbag Saudis get a slapping, trouble is there will be major catastrophes for us all if that shithole blows up

kenmasters675
Feb 25, 2016 - 4:58pm

Just addressed this again in

Just addressed this again in today's podcast.

Gold will likely be raided, too, but silver is in much more danger given the ugliest Commercial short position in 8 years.

Visit the FAQ page to learn how to track your last read comment, add images, embed videos, tweets, and animated gifs, and more.

kenmasters675
Feb 25, 2016 - 4:39pm

Hey turd you mention a price

Hey turd you mention a price raid in silver. Just on silver and not in gold?

I am thinking gold is going to be raided as well soon. Thanks.

MiningJunkie
Feb 25, 2016 - 4:36pm

JackAss

is a friggin lunatic. hardly understand a word that he prints and he has been saying BUY GOLD forever which offers people like me nothing of value (unless it is free via TFM Report)...

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