An incredible amount of fraudulent, virtual silver is being created in order to cap price and paint the chart. Will JPM and the rest of The Evil Empire be successful once again in capping price and routing the Specs. The reaction to today's FOMC minutes may help to determine the outcome.
Again, I can't stress enough the devious and fraudulent nature of this latest attempt to contain and cap price. The past four days have seen the price of Comex Digital Silver pressing up against the key resistance of $18 and the 200-day moving average near $17.93. See below:
Over this same time period, the Comex Silver Banks led by JPM have increased the total supply of Comex silver contracts by 12,809 contracts. So, while price has been flat, total supply of Comex silver contracts has been increased by 6.5%. THIS is how you cap price and paint the chart!
Imagine for a moment where price would be this morning if total open interest was held flat for the past week. How much higher would price be if sellers of existing contracts needed to be found for the 12,809 contracts of buying pressure? On a larger scale, yes the price of Comex Digital Silver is up $2 year-to-date or about 13%, but how much higher would price be if The Banks hadn't fraudulently added 44,000 new contracts since December 30?
Why do we always describe this as "fraud"? Two primary reasons:
- The Banks are selling something that they don't have. Can you enter into a contract to sell a house or a car if you don't actually own the house or car you are attempting to sell?
- The Banks create this new "silver" from whole cloth without depositing as collateral any additional silver into their Vaults.
Regarding point #2, see below. Note that at the beginning of 2017, total silver within the Comex vaulting structure was 181,903,037 ounces. Total Comex open interest that day was 163,812 contracts. With each contract representing 5,000 ounces of silver, this equates to a virtual exposure of 819,060,000 ounces.
As of last Friday, total open interest had grown to 205,602 contracts or 1,028,010,000 ounces or virtual silver yet the total amount of silver in the Comex vaults was stagnant at 184,088,021 ounces.
So, The Comex Silver Banks have increased the supply of virtual silver by 25% while only increasing the supply of physical silver in the vaults by 2%. This is fraud, this is a scam and this has absolutely ZERO connection to the supply/demand fundamentals of actual physical silver.
And what are The Banks attempting to accomplish in their aggressive efforts to cap price? Two things. First, maintaining price below the 200-day moving average is important in managing future Spec demand for additional Comex paper.
Second and perhaps more important is the chart-painting aspect of keeping price below $18. As you can see on this weekly chart, by capping price here, JPM et al are effectively attempting to paint a massive head-and-shoulder top onto the weekly chart.
So, once again, you must be alert and cautious here. The forces aligned against you in the Comex silver "market" are powerful and these criminals are doing everything in their collective power to rig price in their favor. Will they be successful (again)? That will depend upon a number of factors going forward. For today, at least, you'd be wise to not underestimate the collusive power of The Banks and the fraudulent nature of their paper derivative pricing scheme.