Guest Post: "Smelly Smoke Signals" by NN-L
Our pal, Ned, has cranked out a very interesting piece regarding the recent suspension, by the LBMA, of the publication of silver forward rates (SIFO). In an effort to give this article as wide of distribution as possible, it is reprinted below.
The most interesting and compelling part of all this is the timing. The LBMA decided to suspend SIFO reporting at the close of business on Friday, November 2. At that exact same moment, some newly-created measures of backwardation such as Sandeep Jaitly's "Basis/Co-Basis" were literally screaming of extreme backwardation and physical tightness. (More details here: http://www.feketeresearch.com/index2.php) The question is: Is there a direct connection here or is this all just a strange coincidence?...and I think you know how I feel about coincidences in the metals markets.
So, what do we know? Well...
- Massive, recent physical purchases by Sprott, the Royal Canadian Mint et al.
- Huge drawdowns of silver from SLV and ZKB.
- Startling day-to-day turnover at bullion bank vaults
- Highest total silver open interest on the Comex since October 2010.
- I'll even add this: Tremendous recent price strength in face of blatant capping and manipulation.
What does it all mean? Maybe nothing. Maybe price will continue to languish while we patiently wait for the price to catch up with the fundamentals. Maybe, though, this is the beginning. Maybe we are finally about to see the incredible short squeeze and signal failure which we've all been expecting and was narrowly averted in May of 2011. Maybe we are about to witness something explosive and historic.
Maybe. We'll see. Just BTFD.
(Will edit and load as a scribd in a few minutes.)