With the recent announcement by the Obama administration of 30 million barrels of oil to be released from the strategic oil reserve, and another 30 million barrels to be released by others, I couldn't help but wonder why? There has been no reports of shortages in this country of oil or gas. It has in fact been the opposite. Haven't there been endless analysts on CNBC confounded by the rise in oil price at a time when we are awash in oil???
When I saw how that announcement caused a heart attack drop on the silver chart, my conspiracy cogs started a turning. The comex registered inventory of silver has been hitting new all time lows recently, and currently stands at just over 27 million oz. As we approach the first day notice for the July silver contract next week, the open interest remains stubbornly, and unusually high. In the days before the raid there were around 35,000 contracts open interest, and about 1000 a day were selling or rolling out where there is usually about 4000 a day this close to first day notice. Since each contract is for 5000 oz, if all these contracts were to stand for delivery, comex would have to come up with 175 million oz. As they only have about 27 million oz and falling, you can see that unless they can get a whole lot of contracts to cash out, and fast, they are about to see their destruction.
First day after the raid on oil (and silver), the open interest dropped from about 33,500 down to 31,500 for a loss of 2000 contracts. Typically as first day notice approaches, the open interest numbers drop more quickly. But if after a massive raid that has to be triggered by using the strategic oil reserve can only shake out 2000 contracts per day, and with first day notice just next week??? IMHO, the comex may be in a fix. If they fail to scare enough long contracts out by next week, just where are they going to get all that silver? Since we know them so well, we can expect all kinds of shenanigans, and outright cheating, and fraud (think rule changes, etc.) Watch the OI numbers, and be ready for next week. See how they come up with the oz standing through July.... I don't think the only fireworks will be on the 4th!