Sprott Latest (MUST READ!) and a Turdite Video

Thu, Jun 30, 2011 - 9:59am

Two quick things this morning. First check out this email and video I received yesterday. We should all be proud of the initiative our fellow Turdite has shown!

Turd, you've been a real inspiration to me. Reading your blog posts over the last few months (and, more recently, the forums here on the new site) have encouraged me to learn more about what's really going on with the American/global economy.

To make a long story short, once I got a handle on just how big and scary the situation is, I decided to boil it down into a format that ANYBODY could understand. Since my day job is video production, I created a little animated presentation that covers as many of the bases as I could in five easy-to-follow minutes.

Like you, I've done this without seeking credit or compensation. It's purely a public service. Since you have called - from the beginning - for your readers to educate the sheeple around them, I hope that this will be a tool that Turdites everywhere can use.

Please take a look and let me know what you think! I hope you will find it worthy of sharing far and wide.


All the best,

- "Paladex"

Next, I just received the latest "Sprott Update" via email and I figured I should post it in its entirety. YOU ABSOLUTELY MUST TAKE TIME TO READ AND UNDERSTAND IT. If you'd like to receive this directly, too, click here:

June 2011

Caveat Venditor!

By: Eric Sprott & Andrew Morris

The recent bear raid on silver has left many concerned about the sustainability of its historic run. Silver, being a relatively obscure market for most mainstream commentators, attracted much attention in the ensuing days following the May 1 takedown. Indeed, though the 30% drop in silver occurred over only four days, seemingly all eyes were on silver, with commentators who could’ve cared less about the silver market only a couple of months ago, suddenly tripping all over one another to make the bubble call. Silver bubble 2.0? Hardly. Anyone who has been fortunate to have been invested in silver over the past few years would unfortunately be used to such blatant takedowns. The Chinese don’t call it the "Devil’s Metal" for no good reason. With so much talk these days about the risks of investing in silver, we think that perhaps it may be timely for us to weigh in on the matter. The silver market is riskier than ever, but for reasons the vast majority of pedestrian commentators have failed to grasp.

There is no doubt that speculative dollars have been flowing into the silver market. We note that in April record trading volumes were registered in the SLV1, Comex futures2, LBMA transfers3, and the Shanghai Gold Exchange futures4. In fact, converting the average daily trading volume in the aforementioned silver instruments to the amount of ounces of silver they are supposed to represent, there were on average, over 1.1 billion ounces worth of silver traded every day in the month of April5. Truly a staggering number when contrasted against the actual amount of silver available for investment. To wit, the world will only supply about 979 million ounces this year from mine and recycling of scrap, of which it is estimated that 657 million ounces will be used up for non-investment purposes6. So in effect, that leaves roughly only 322 million ounces available this year for investment purposes. Converting to days (recall that at least 1.1 billion ounces traded each day) it leaves only about 1.3 million ounces per trading day of available supply. So, we are essentially trading the amount of physical silver actually available for investment, 891 times over each day! It really begs the question; just what are people trading in these markets?

Consider the largest and most prominent of those markets - the Comex, which we believe has owned an effective monopoly on silver price discovery for decades. In fact, the Comex churned over 800 million ounces of silver futures and options on average each day in April7. Indeed, notwithstanding the massive but very opaque over-the-counter silver derivatives market, trading on the Comex dwarfs both the physical and the other (known) paper silver markets, combined. Despite its dynamics being relatively complex and generally not well understood by most, the world’s financial community continues to view trading on the Comex as representative of the fundamentals for the physical silver markets. A market built on a high amount of leverage, both the buyers and sellers of Comex futures and options contracts are able to establish a position in "silver" with pennies on the dollar in collateral and even more astonishingly, no physical silver backing the contracts at all. The following charts illustrate just how unreal these markets have become.

Chart A:

Source: Bloomberg, Sprott Asset Management

Chart B:

Source: Bloomberg, Sprott Asset Management

In chart A, we compare the total open interest in Comex futures and option contracts to the actual amount of silver held in registered inventories able to be delivered against those contracts, since 2009. In chart B, with the steeply-sloping line shows the ratio of open interest (i.e. paper silver ounces) per ounce of physical silver held in inventory. We believe the historical trend of rising open interest and falling inventories deserves considerable attention from anyone attempting to understand the silver market. And though we do note that since October 2010 the trend of rising open interest appears to have abated, the inventories have been evaporating steadily and thus the ratio of the two measures has continued to trend higher. In fact, since 2009 the ratio of paper silver to physical silver has increased fourfold from approximately 8 times to almost 33 times, where it stands today.

What is the significance of this discord between paper and physical supply on the Comex? Recall, that over 800 million ounces traded each day in April on that market. Further, consider that as at the end of April there were only 33 million ounces of registered inventories to back up all of that paper trading. Just imagine if a mere 5% of all of that buying actually stood for delivery; the entire inventories would be more than wiped out. Yet despite the steady erosion of these already scant Comex inventories - a characteristic which would surely be interpreted as most bullish in other commodity markets - the price of silver has actually declined since April. We endeavour to provide a framework for understanding this phenomenon below.

Those who were following the developments in the silver market in April and May (we note that there were many who were) will likely recall that the CME Group raised both initial and maintenance margins five times within less than a two week span effectively raising the minimum amount of capital required to participate in the silver futures market by 84%8. This is significant due to the amount of leverage in the futures market and also due to the losses resulting from the precipitous selloff which began on Sunday, May 1st, when several thousand contracts were wantonly dumped onto the very thinly traded after-hours silver futures market causing the silver price to plunge 13% within the span of less than 15 minutes9.

For example, consider a hypothetical speculative trader who went long, say 200 July 2011 SI futures contracts on April 28th. At that time this trader would have been required to post an initial margin of $2.565 million for a position of one million ounces of "silver" and thus would have been levered 18.5 times10. Below we present what the trade blotter for this trader might look like over the next few days assuming he maintained his position.

Following the initial trade, each day the trader’s positions would be marked-to-market and any losses or gains would be applied against his account’s equity balance. Should the losses on the position bring the equity balance below the maintenance margin level, the trader would be required to deposit the additional capital required to bring the equity in the account back up to at least the initial margin requirement level.

While the margin increases alone would have forced a decision for this leveraged long to either post the additional margin or close enough positions to bring margin balances in line with substantially higher requirements, the trader was actually fighting a battle on two fronts. This is because in addition to the margin increases, the trader was also experiencing massive losses to his capital due to a rapidly falling silver price. So it is also important to consider the extent of losses to the trader’s equity following the precipitous drop which began on the evening of May 1st. In our scenario, before finding a bottom around May 17th, the cumulative losses would have amounted to over $14 million, or over five times the initial margin deposit of $2.565 million that was required to take on the position on April 28th. This meant that with margin call after margin call, the capital committed to the position ballooned almost 700% by the time the silver price finally bottomed in mid May. The significance of such a dramatic erosion of capital on a leveraged position cannot be overstated, particularly in the context of rising margin requirements. The CME Group would know this very well, and so it strikes us as particularly suspect that they would continue to raise margin rates in the face of such a sharp selloff. A selloff, we might add, which emanated from highly unusual trading activity on May 1st that, in our opinion, just reeks of manipulation. How else can one explain the dumping of several thousand SI futures contracts within the course of 15 minutes, in one of the most illiquid hours of trading, without seemingly any regard for price or a fundamental catalyst to speak of11? Though we will let the reader connect the dots as to what the intent of the CME Group and the seller’s of SI futures contracts on May 1st really was, we can certainly observe what effect these actions had on the market by looking further into the weekly Commitments of Traders (COT) reports published by the CFTC.

The COT provides us with the weekly open interest held by various categories of silver futures market participants, and thus gives us clues as to how these participants reacted in response to these margin increases and ensuing volatility. We present the following table showing net open interest for the various categories, converted into silver ounces, which we obtained from the COT report for selected dates.

First, note how in the three weeks following the margin hikes, the speculative12 net long position dropped from 212.7 million ounces to 170.1 million. This very clearly indicates that the speculative longs, when faced with rising margin requirements and losses to capital, did close out a substantial amount of their long positions. The commercials who were short those 212.7 million ounces appear to have been taking every opportunity to cover their own positions. Rather than shorting further into the ensuing weakness, the commercials covered approximately 42.6 million ounces in the three week period.

Another piece of information gleaned from the COT data is that despite what many commentators were hailing as a bubble caused by excessive speculation in the futures markets, the net speculative long positions had in fact been dropping over time. Even during the April run up preceding the five margin hikes, the net speculative long position actually decreased by 23%.

That commercial short position deserves further mention. What is unique and of interest to many silver market observers is not only the size of the short position on the Comex, which is dominated by those "commercials", but also the concentration of the short interest. We provide the percentage of the total open interest held by the four largest short sellers on a net basis in the table above. Note that the net position of the four largest equates to 29% of the total open interest as of May 17th. Further we would also note that the concentrated short interest of the big four, though still quite high has actually dropped substantially over the past year coinciding with the signing of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the resultant public discourse on position limits. Comments from CFTC commissioner Bart Chilton acknowledging the "repeated attempts to influence prices in the silver markets," and that, "violations to the Commodity Exchange Act (CEA) have taken place in silver markets and that any such violation of the law in this regard should be prosecuted," perhaps have also had an impact on the behavior of silver market participants.13 And though the CFTC’s investigation into the silver futures and options market remains open after three years, we remain hopeful that its findings will further serve the interests of the investing public who rightly expect a fair and transparent silver market void of manipulative forces.

Could the drop in open interest and the reduction of the concentration in the commercial short open interest be perceived as an indication that those top four short-sellers are positioning for the inevitable imposition of position limits rules? Perhaps, and if so, it would follow that likely the short sellers seized the opportunity to further reduce their "liabilities" by buying up contracts in early May at a 30% discount.

Let there be no mistake, we view the current setup as extremely bullish. In our view, whatever froth and excess was present in the paper markets has likely been shaken out in the recent selloff. The remaining longs do not seem willing to part with their silver at these prices. These are the strong hands with longer time horizons that are likely not overly leveraged or are willing and able to withstand substantial volatility. Moreover, perhaps the "game" on the paper silver markets which has been meticulously documented over decades by Ted Butler14 and others, will soon be coming to an end.

What is perhaps most important is that despite what has recently transpired in the paper silver markets, the robust demand fundamentals for silver have not changed in our view. For confirmation of this, look no further than the physical silver market (i.e. the real silver market) which is providing us with evidence almost daily of a sustained bull market for physical silver. The US Mint recently stated that, "demand for American Silver Eagle Coins remains at unprecedented high levels."15 Likewise for the Perth Mint16, the Austrian Mint17, and the Royal Canadian Mint18 as well. The Chinese, who were net exporters of silver only four years ago, imported 300% more silver in 2010 than 2009 and such large quantities of imports are expected to continue19. Last year, Indian silver imports increased nearly six-fold, and this year consumption is expected to rise nearly 43% according to the Bombay Bullion Association20. In Utah, silver (along with gold, of course) will now be accepted in weight value as legal tender21. According to Hugo Salinas-Price, a prominent Mexican billionaire, there is now "very strong support for the monetization of silver" in the Mexican congress22. We suspect the Europeans are likely to account for an increasing amount of silver purchases going forward as well. In fact, we just can’t imagine a better outlook for silver fundamentals. This really makes us question who could be short such massive quantities of silver and why? Particularly in those leveraged paper silver markets, where as we demonstrated, only a fraction of the outstanding notional ounces are actually available in physical quantity.

We have a very tough time understanding those bearish arguments against silver. We look at the real silver market, and based on the supply and demand data coming from the real, physical markets for silver, the fundamentals are only getting stronger. And yet there exists another silver market, which as we’ve shown, is not very connected to the physical realm at all. And though silver investors have for decades suffered the tyranny of a rigged paper monopoly over silver price discovery, it appears to us that the tides are turning. In the age of QE to infinity, investors are being more scrupulous with their capital and as such they are demanding physical silver in quantity. With more and more dollars flowing into the silver markets and a finite supply of physical to meet that demand, the theoretical losses for the paper silver short-sellers are near infinite. And with such a skewed and obvious risk/reward payoff vastly favoring the longs, we pose the following question. Who is most at risk in the silver markets: the buyers of a scarce and real asset that serves a growing multitude of purposes, or the sellers, who are short a quantity of silver which may very well not even be obtainable at anywhere near current prices? Let the Seller Beware!

For more information about Sprott Asset Management’s views on silver and its silver bullion funds, please visit www.sprott.com.

1 Bloomberg
2 https://www.cmegroup.com/trading/metals/files/MoMU-April2011.pdf
3 https://www.lbma.org.uk/pages/index.cfm?page_id=51&title=clearing_-_most...
4 https://www.sge.sh/publish/sgeen/sge_price/sge_price_daily/index.htm5 Source: Bloomberg, CME Group, LBMA, Shanghai Gold Exchange. Figure also includes trading of Comex silver options which had registered a record open interest in the month of April.
6 Andrew Kaip, David Haughton and John Hayes. "A New Paradigm for Silver: Demand is Expected to Outstrip Production Growth," BMO Capital Markets. April 3, 2011, p. 35. Note: "Non-investment" demand includes industrial, silverware, and photographic demand
7 https://www.cmegroup.com/trading/metals/files/MoMU-April2011.pdf
8 https://www.cmegroup.com/clearing/risk-management/files/SI_2009_to_may_2...
9 Bloomberg
10 A trader can always post more than the required amount of margin in his account.
11 https://www.cmegroup.com/clearing/risk-management/files/SI_2009_to_may_2...
12 For explanatory notes including definitions for each category of trader listed on the COT, please visit: https://www.cftc.gov/MarketReports/
13 https://www.cftc.gov/pressroom/speechestestimony/chiltonstatement102610....
14 For further information please visit https://www.butlerresearch.com/archive-free.asp
15 https://www.usmint.gov/pressroom/?action=press_release&id=1251
16 https://www.perthmintbullion.com/blog/blog/11-02-23/Sales_Record_For_201...
17 https://www.bloomberg.com/news/2011-05-13/silver-boom-continues-at-austr...
18 https://www.ft.com/intl/cms/s/0/7f316ac4-3acc-11e0-9c1a-00144feabdc0.htm...
19 Andrew Kaip, David Haughton and John Hayes. "A New Paradigm for Silver: Demand is Expected to Outstrip Production Growth," BMO Capital Markets. April 3, 2011, p. 17
20 https://www.ft.com/intl/cms/s/0/e64ca6b2-65e5-11e0-9d40-00144feab49a.htm...
21 https://www.nytimes.com/2011/05/30/us/30gold.html
22 https://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/5/18_...
Sprott at a Glance
With a history going back to 1981, Sprott Inc. offers a collection of investment managers, united by one common goal; delivering superior long-term returns to our investors. Sprott has a team of best-in-class portfolio managers, market strategists, technical experts and analysts that is widely-recognized for its investment expertise, performance results and unique investment approach. Our Investment Team relentlessly pursues a deeper level of knowledge and understanding which allows it to develop unique macroeconomic and company insights. Our team-based approach allows us to uncover the most attractive investment opportunities for our investors. When an emerging investment opportunity is identified, we invest decisively and with conviction. We also co-invest our own capital to align our interests with our investors. Our history of outperformance speaks for itself.

Our Businesses
The company currently operates through four distinct business units: Sprott Asset Management LP, Sprott Private Wealth LP, Sprott Consulting LP and Sprott U.S. Holdings Inc.

Sprott Asset Management LP is the investment manager of the Sprott family of mutual funds, hedge funds and discretionary managed accounts. Sprott Asset Management offers a Best-in-Class Investment Team led by Eric Sprott, world renowned money manager. The firm manages diverse mandates united by the same goal: delivering superior returns to investors. Our team of investment professionals employs an opportunistic, high conviction and team-based approach, focusing on undervalued securities with the greatest return potential.
For more information, please visit www.sprott.com

Sprott Private Wealth LP provides customized wealth management to Canadian high-net worth investors, including entrepreneurs, professionals, family trusts, foundations and estates. We are dedicated to serving our clients through relationships based on integrity and mutual trust.
For more information, please visit www.sprottwealth.com

Sprott Consulting LP provides active management services to independent public and private companies and partnerships to capitalize on unique business opportunities. The firm offers deep bench strength with a highly-talented and knowledgeable team of professionals who have extensive experience and a proven ability to design creative solutions that lead to market-beating value improvement.
For more information, please visit www.sprottconsulting.com

Sprott U.S. Holdings Inc. offers specialized brokerage services and asset management in the natural resource sector. Global Resource Investments Ltd., our full-service U.S. brokerage firm, specializes in natural resource investments in the United States, Canada and Australia. Founded in 1993, the firm is led by Rick Rule, a leading authority on investing in global natural resource companies. More than just brokers, the team is comprised of geologists, mining engineers, scientists and investment professionals.
For more information, please visit www.gril.net

"Performance has always been the core objective of our firm and in 2010, Sprott Asset Management delivered significant out-performance for our investors."

Royal Bank Plaza, South Tower
200 Bay Street, Suite 2700, Toronto, ON M5J 2J1

Subscribe | Unsubscribe | Send to a colleague

Disclaimer: The opinions, estimates and projections ("information") contained within this report are solely those of Sprott Asset Management LP ("SAM LP") and are subject to change without notice. SAM LP makes every effort to ensure that the information has been derived from sources believed to be reliable and accurate. However, SAM LP assumes no responsibility for any losses or damages, whether direct or indirect, which arise out of the use of this information. SAM LP is not under any obligation to update or keep current the information contained herein. The information should not be regarded by recipients as a substitute for the exercise of their own judgment. Please contact your own personal advisor on your particular circumstances.

Views expressed regarding a particular company, security, industry or market sector should not be considered an indication of trading intent of any investment funds managed by Sprott Asset Management LP. These views are not to be considered as investment advice nor should they be considered a recommendation to buy or sell.

The information contained herein does not constitute an offer or solicitation by anyone in the United States or in any other jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation. Prospective investors who are not resident in Canada should contact their financial advisor to determine whether securities of the Funds may be lawfully sold in their jurisdiction. SAM LP and/or its affiliates may collectively and/or beneficially own and control 1% or more of any class of the equity securities of the issuers mentioned in this report. SAM LP and/or its affiliates may hold short position in any class of the equity securities of the issuers mentioned in this report. During the preceding 12 months, SAM LP and/or its affiliates may have received remuneration other than normal course investment advisory or trade execution services from the issuers mentioned in this report.

Have a great day!! More later. TF

About the Author

turd [at] tfmetalsreport [dot] com ()


GM Jenkins
Jun 30, 2011 - 11:42am

thanks for the video

Thanks Paladex for making the video. I think it will serve its purpose very well

Re: corporate tax: my view is that any tax on income is retarded. When you tax corporations, some (not all) of the tax is passed on to consumers. When you tax individual income, people are incentivized to work less. Less work = less growth. If you want to encourage hard work and prevent too much inequality in income distribution, tax consumption progressively, especially luxury items. A rich dude who earns a lot of income but lends it (i.e. saves it at a bank) or invests in capital helps everybody, and that shouldn't be disincentivized. Of course, all taxes should be minimized by cutting all the government bloat to its bare minimum - such as responding to national emergencies and defense of borders (which certainly does not include maintaining a vast global empire: check out how much air-conditioning troops in Afganistan costs: https://globaleconomicanalysis.blogspot.com/2011/06/air-conditioning-afg...)

Jun 30, 2011 - 11:46am

Further OI reduction




2000 further contracts covered in silver. OI down to 112k. More than 10k less than at the already very bullish setup at Turd's Bottom at 26,5$. And we're still around 35$!

Do you guys realize how bullish that is? Fuck doldrums, this is gonna launch soon and in a big way.

Oh, and I still stick by my triple digit silver forecast sometime this year (meaning it might not close the year over a 100$, but will at least stick its nose above it within the year). A little late already, but at least my earlier forecast of 50-100$ silver by the end of the year will will be reached, 100%.

- Markus

Eric Original
Jun 30, 2011 - 11:51am

Privatize the profits, Socialize the losses

It's the same old same old "Privatize the profits, Socialize the losses" scenario. It's the oldest story in the world, sad to say. Friggin' bankers...


Eric Original
Jun 30, 2011 - 11:54am

An oldie, but a goodie

Every time I get disgusted with the bankers (which is pretty much every day anymore), I like to dig this one out. It's an oldie, but a goodie. I never get tired of it.

Irish Wanking Bankers - An Irishman Abroad.
Rusty Gates
Jun 30, 2011 - 12:04pm

@ Eric Original

Great video... excuse me great fuckin video!

rock collector
Jun 30, 2011 - 12:05pm


As of 11:50AM, GG is currently closer to the designated July $50 strike, needs 3.8% up move, GDXJ needs 4.6% to get to $36 and NGD needs 6.7% to get to $11.
If there is a non company specific PM (gold) shock to the upside, my thinking is that the big money flows to GG first.
There has been some steady nibbling at the juniors lately, so GDXJ is my 2nd choice and I think $11 is a little difficult for NGD to successfully attack with just over 2 weeks to go.
Then again, you may only need the perception that any of these will exceed their strike price. i.e. they get close to strike and continue to look strong and you sell before expiration.

Disclaimer: I am an amateur option trader with a roughly 45% batting average suffering from a hesitancy to sell at the best moment.

Warren Peace
Jun 30, 2011 - 12:10pm

Historical perspective of 'Real Price"

A shocking look at the 'constant current dollar' value of silver. Consider this has happened as the known world inventories have dwindled substantially since the '50s. Is there any doubt that there has been extreme manipulation? We also get a sense of where price is going now that supply and demand is re-asserting itself. Only goes to 2004. Is it a stretch to say silver is going into the 100's, when historically, it's already been there. The price high was in 1477 at $806 current dollar value (I think it's even higher since all the money printing since '04). There is less silver now than there was then with infinitely more uses, and wealth to demand it. Talk about an easy investment!

Richard Booze
Jun 30, 2011 - 12:11pm

TF Economics 101

Kudos to Paledex,

Here's everything we need to know about today's economics presented in a convenient, concise and understandable format. Many thanks for your time and talent.

Outta here, Fed, treasury, Obamanomics, EE and Keynesians!!

Hire that guy, TF!!

Eric Original
Jun 30, 2011 - 12:15pm


I guess I missed the part where you said you were looking at July ​calls. I had December calls on the brain for some reason. Maybe from Turds comment about Dec gold calls just above yours. Or maybe where you said "long shot calls" I was thinking "long term calls". I dunno.

July calls? Hoo boy, you are not leaving yourself much time for things to work there buddy. Time decay should be pretty steep too. I see what you mean about it being a long shot. Good Luck.

Jun 30, 2011 - 12:19pm

Amazing graph Warren Peace.

Amazing graph Warren Peace.

Richard Booze averagejoe
Jun 30, 2011 - 12:19pm


What does GL mean? You must be a pro.

Jun 30, 2011 - 12:22pm
rock collector
Jun 30, 2011 - 12:30pm


Another related idea that occurs to me is to try to buy 1 GG 07/16/2011 46.00 C but put in a limit order of say $2.20 (it's currently about $2.50 with a low today of $2.09) and hope it dips one more time this week to catch your bid.
If GG gets close to $50 by July expiration and even if it falls a little short, you still walk away with up approximately $4.00 instead of the call expiring worthless (clanging off the rim).

Disclaimer: same amateur option status as previously stated.
Good luck.

Jun 30, 2011 - 12:32pm

Re: Why Silver Could Drop Below $30/ozt.

That's all fine and dandy... but the "mania" paradigm is for time periods measured in YEARS, not months. The Bull market for silver isn't over. Yes, it's due to fall < $30 soon... but it's not the end of the bull market.

Jun 30, 2011 - 12:39pm

f(x)=b^x monetary

f(x)=b^x monetary implosion..

The frequency in which crises will emerge will be halved with each crises until this mother blows up. Anyone care to do the math on that? 1 year maybe?

Jun 30, 2011 - 12:40pm

Sprott's commentary

would have more credibility if it came from someone who did not have a vested interested higher prices. I am long term bullish but I am not a perma bull like sprott and the rest of the godfathers of precious metals.

Jun 30, 2011 - 12:40pm

Standing for Delivery Number

Today is put up or shut up day for people who want physical delivery.

Any idea when that number comes out? Can someone post it here?

Will be interesting to see going into the long weekend.


Jun 30, 2011 - 12:44pm

Thank you for the input

Eric and Rock Collector. Rock, I see what you mean about GG. If things do heat up quickly, a lot of $$$ will migrate to them pretty fast. Right now it looks like my choice is between GDXJ and GG.

Eric, I'm definitely into some December calls too, to this rank amateur it seems like the most advantageous expiration after a post-August run up in PM prices. Ditto November 19 expirations, for the same reason. I remember that the EE got very ugly last January, took the miners way down. So I'm a little more leery of the Jan. 21 2012's.

I may or may not bet July 16, but will definitely do at least one of these for 8/20. Again, it's a stink bid on the high side, allowing me to profit in the near term in the event Turk has read it right. I've also bought a couple of Puts to cover things in case he's wrong.

Turd has a lot of company in the opinion that the typical doldrums hold. I think it's the more likely outcome too, but I can squeeze out a few bucks for a small bet on James.

UGrev atlee
Jun 30, 2011 - 12:51pm

Does it take away from the

@Atlee: Does it take away from the fact that this has been supported not by just sprott himself, but by TF as well? You know, when a well rounded group of people come together and pretty much say the same thing, and you do your due diligence in trying to sift through any possible BS.. one must wonder if they're on to something with this paper silver scam.. hmm?

Jun 30, 2011 - 12:57pm

Even after taking the standard "Talking His Book" discount

this Sprott piece shines brightly.

All should consider subscribing via the link Turd provided. Poke around for John Embry's and Rick Rule's pieces while you're there.

jem Paladex
Jun 30, 2011 - 1:09pm

great work paladex

Thanks so much for this video. We already know all of this but it is a simplified way to explain it to others. There is much confusion among those who only watch the MSM. I have sent the link to several friends. I especially liked your ending, "very extraordinary circumstances".

Economical Disaster
Jun 30, 2011 - 1:16pm
Dr G Zoltan
Jun 30, 2011 - 1:28pm

Delivery #s

From Ed Steer's Daily Gold and Silver:

"...the CME released its Daily Delivery Report for the first day notice in the July delivery month. It was another stunner of a number in silver, as only 110 contracts were posted for delivery on Friday, July 1st. I was expecting many thousands...and it just didn't happen...and that's not the first time this year that silver has started off a delivery month with almost no activity worthy of the name. It's going to be another interesting month."

Source: https://www.caseyresearch.com/gsd/home

Jun 30, 2011 - 1:32pm

@Atlee - Exactly

Atlee correctly views Sprott's opinion with some degree of caution, BECAUSE of Sprott's upside should silver prices rise. In short, Atlee has excellent critical analysis skills.

When listening to anyone say anything of a persuasive nature (in my mind, there are only two kinds of speech, objective or persuasive), the very first question I ask is "What is the speaker's incentive?" Then, I critically analyze what is said based on the speaker's incentive to form a belief in the veracity of what in fact was said.

Simple example: Salesman of a used car says "this car is low mileage, only driven by a little ol' lady." I think: "What is the salesman's incentive?" Answer: to sell the car, hence, salesman is apt to tell me favorable facts but not tell me unfavorable facts. So, I think: "If it has such low mileage, perhaps it was wrecked, which would account for the low mileage." So, I ask: "Has it been wrecked and repaired?" If salesman tells me that the car has not been wrecked, then I can choose to believe that which he says, or I can do my own due diligence and ask to see the Carfax printout to test his veracity. If the Carfax printout confirms the salesman's story, then he has gained credibility, and probably makes the sale. If the Carfax printout shows the salesman is lying, then I go somewhere else.

Similarly, here, in this forum, we must all act like Atlee, and question the incentives of those who posit persuasive speech.

So, Sprott stands to gain if silver increases in price. Then, is Sprott likely to tell us things which reinforce the upside view, or will he also tell us everything that may in fact tend to discredit the upside view? I tend to agree with Sprott, because he as adequately sourced his facts, and has cited to readily, objectively verifiable sources so I can do my own due diligence. Hence, like Atlee, even though I do see Sprott as a crusader for silver's upside, Sprott does seem to have sufficient, objectively verifiable data to support his premise and conclusions. But, I still do initially look with caution at what he or any other cheerleader says. As we all should do anyway.

Same analysis applied to mainstream media, reveals that they are not credible, nor can they be trusted to convey any truth at all in whatever is broadcast or printed. This simple truth is because the mainstream media remain beholden to advertisers to pay for the means of delivery. Hence, if advertisers pull their ad revenue, the media source finds itself extinct. Hence, there is NO chance, ever, of getting accurate information from the current mass media paradigm. Which therefore makes the internet, with no controls, the last bastion of truth, but as such, it is mandatory that every single viewpoint expressed be first challenged by critical thinking.

Just my $0.02.

Jun 30, 2011 - 1:40pm

Standing for Delivery Number


July O.I. in silver is 2,381 contracts. This amount will be reduced in the days ahead. While expecting a thousand or more contracts posted for delivery - only 110 contracts were thus posted? Looks like another long, drawn out, delivery month. Why? Could there be... Don't tell me!!! Possibly... A physical silver shortage? Yikes!

Jun 30, 2011 - 1:44pm

MOPE is not restricted to the markets...

Nat. Inflation Association uses Lindsey Lohan to Tweet on Fed QE. Double "deadly embrace" that completely marginalizes the (otherwise sound) underlying message. Well done, EE, well done. https://www.huffingtonpost.com/2011/06/29/lindsay-lohan-will-let-yo_n_88...

Jun 30, 2011 - 1:49pm

standing for delivery

seems to me that it should be obvious that they will press silver price down to discourage taking delivery. How hard they press will be determined by how successful they are in discouraging standing for delivery. I expect lower prices near term.

Jun 30, 2011 - 1:59pm

Silverquest makes a nice move up...

Up .14 / 12.6% to 1.25 so far today.

Yes tons of Ag, but SQIFF has lots of gold too. Accumulate on dips, but with the Yukon now thawed out, don't wait too long. These guys could be closing in on 2 beans by the time the freeze ends things this Fall. Here's their latest news release:


Jun 30, 2011 - 2:05pm

Placed a small short bet on

Placed a small short bet on Silver @ around 34.90... hoping there's a big raid this weekend so I can buy more silver / miners on the dip. Though the miners look quite strong even with the weakness in silver.

GS_PHYS atlee
Jun 30, 2011 - 2:07pm

@atlee I don't write much


I don't write much cause I do not have too much to offer.

But Hat Tip to you and keep posting in general thread often besides only in Pailin's Trading. Your views are appreciated here too.

I agree with @Cali_laweyer, he correctly pointed about your skils.

Keep it up


Donate Shop

Get Your Subscriber Benefits

Exclusive discount for silver purchases, and a private iTunes feed for TF Metals Report podcasts!

Key Economic Events Week of 5/20

5/20 7:00 pm ET CGP speech
5/21 10:00 ET Existing Home Sales
5/22 2:00 ET FOMC minutes
5/23 9:45 ET Markit PMIs
5/24 8:30 ET Durable Goods

Key Economic Events Week of 5/13

TWELVE Goon speeches through the week
5/14 8:30 ET Import Price Index
5/15 8:30 ET Retail Sales and Empire State Manu. Idx.
5/15 9:15 ET Cap. Ute. and Ind. Prod.
5/15 10:00 ET Business Inventories
5/16 10:00 ET Housing Starts and Philly Fed
5/17 10:00 ET Consumer Sentiment

Key Economic Events Week of 5/6

5/9 8:30 ET US Trade Deficit
5/9 8:30 ET Producer Price Index (PPI)
5/9 10:00 ET Wholesale Inventories
5/10 8:30 ET Consumer Price Index (CPI)

Recent Comments

by argentus maximus, 3 hours 39 min ago
by Craigo, 6 hours 24 min ago
by scoremore, 7 hours 48 min ago
by scoremore, 8 hours 8 min ago
by Wizdum, 8 hours 17 min ago
by scoremore, 9 hours 35 min ago