Gerald Celente (not only) on MF Global:
Jim Rogers on QE 3:
For your information.
– Explosive Interview Jim Willie “JP Morgan Crashed MF Global to Avert COMEX Failure, they stole all the accounts that were going to take delivery” (Sherry Questioning All, Dec. 13, 2011):
Silver Doctor has allowed me to reproduce the transcript of what they have on the page in regards to what Jim Willie said about MF Global.
If this is true then this is completely Explosive and the Comex and JP Morgan stole everyone’s money to avoid a default! But don’t expect the government to hold them accountable, especially since the Judge assigned the trustee for MF Global that is a counsel for JP Morgan.
Portions of Jim Willie’s interview with Bull Market Thinking:
The YouTube videos of the interview are at the bottom.
We had a COMEX system failure in November. COMEX was ready to default on gold and silver in November. Rather than honor delivery demands in gold and silver- JP Morgan simply stole the money in the accounts that were going to stand for delivery. They had their pockets picked while they were standing in line at the delivery window. Notices of delivery were replaced at stolen accounts!
Tags: Banking, COMEX, Economy, Fed, Federal Reserve, Global News, Gold, Government, Jim Rogers, JPMorgan, MF Global, Obama administration, Operation Twist, Politics, QE 3, Quantitative Easing, Silver, Society, U.S.
If a rational trader found himself massively on the wrong side of a major bull market, one would expect that trader to take extreme steps to COVER his short position during a sell-off of 36% of said commodity. This is only rational.
In perhaps the best evidence of silver manipulation to date, the CFTC’s Bank Participation Report for June shows that from May 4th to June 7th, the silver short position held by 4 large US banks increased from 20,613 to 22,628 short contracts. This means that the 4 largest US banks increased their short silver position from 103,065,000 ounces when silver was trading near $50 in early May, to 113,140,000 on June 7th.
Basically, The Morgue and HSBS ADDED 10 MILLION OUNCES OF SILVER TO THEIR SHORT POSITIONS WHILE SILVER DECLINED 36% IN PRICE!
Lets look at this another way. COMEX silver inventories are down to 28.7 million ounces. This means that in 1 months time, The Morgue and HSBS have added NEW short positions equal to 1/3 of the remaining physical silver supply on the COMEX.
This means that these 4 US banks are currently short roughly 4x the amount of silver remaining on the COMEX.
‘BTFD!’ (Buy the f****ing dip!)
(… but only in the form of physical gold and silver.)
30 years ago, Bunker Hunt, while trying to demand delivery for virtually every single silver bar in existence, and getting caught in the middle of a series of margin hikes (sound familiar), accused the Comex (as well as the CFTC and the CBOT) of changing the rules in the middle of the game (and was not too happy about it). Whether or not this allegation is valid is open to debate. We do know that “testimony would reveal that nine of the 23 Comex board members held short contracts on 38,000,000 ounces of silver. With their 1.88 billion dollar collective interest in having the price go down, it is easy to see why Bunker did not view them as objective.” One wonders how many short positions current Comex board members have on now. Yet by dint of being a monopoly, the Comex had and has free reign to do as it pleases: after all, where can futures investors go? Nowhere… at least until now. In precisely 9 days, on May 18, the Hong Kong Mercantile exchange will finally offer an alternative to the Comex and its alleged attempts at perpetual precious metals manipulation.
From Commodity Online:
The Hong Kong Mercantile Exchange (HKMEx) has received authorisation from the Securities and Futures Commission and will make its trading debut on May 18, 2011 with the 1-kilo gold futures contract offered in US dollars with physical delivery in Hong Kong.
At this rate, tomorrow, for the first time, we will see a 32 handle in Comex registered silver ounces, where apparently despite the massive drubbing in paper silver, demand for physical inexplicably persists.
Speculators to be blamed for this in 5…4…3…
“The fastest way to collapse a recent run up in prices is to choke off the ability of those with leveraged long paper positions to raise cash. Another way is to rapidly hike margins; those with insufficient ready cash will be forced to liquidate. As they liquidate to meet margin calls, prices fall, and it creates a cycle which feeds on itself. I have no explanation for the recent ramp up in silver prices any more than I have an idea of where spot silver prices eventually hit bottom.”
– Janet Tavakoli
Janet Tavakoli is the president of Tavakoli Structured Finance, a Chicago-based firm that provides consulting to financial institutions and institutional investors. Ms. Tavakoli has more than 20 years of experience in senior investment banking positions, trading, structuring and marketing structured financial products. She is a former adjunct associate professor of derivatives at the University of Chicago’s Graduate School of Business. Author of: Credit Derivatives & Synthetic Structures (1998, 2001), Collateralized Debt Obligations & Structured Finance (2003), Structured Finance & Collateralized Debt Obligations (John Wiley & Sons, September 2008). Tavakoli’s book on the causes of the global financial meltdown and how to fix it is: Dear Mr. Buffett: What an Investor Learns 1,269 Miles from Wall Street (Wiley, 2009).
– Silver Keeps Falling After Hours, Down More Than 11% On the Day (Wall Street Journal):
Silver selling continued after the official Comex market close, sending poor man’s gold down more than 11% on the day to $34.980. Silver has lost nearly 30% this week.
And the pressure may continue. At the close today, CME, which owns Comex, will enforce a 16.7% increasing in trading deposit requirements. That means speculators in the benchmark 5,000-ounce silver contract will now be asked to put up $18,900 per contract to open a position, and maintain $14,000 of that to keep the contract overnight.
Investors must exit positions if they can’t afford the higher margins requirements. The exchange raises margins during times of high volatility to ensure market participants are adequately capitalized.
Silver traded as high as $48 at the start of the week. It is still up more than 100% in the last year.
– Gold, Silver Prices Free Fall on Dollar Rally, Margin Hikes (The Street):
NEW YORK (TheStreet ) — Silver prices tanked after another margin hike from the CME and a stronger U.S. dollar, taking Gold prices along for the ride.
Gold for June delivery plummeted $33.90 to close at $1,481.40 an ounce at the Comex division of the New York Mercantile Exchange, but has fallen as much as $45 in after hours trading. The gold price has broken through $1,500, trading as high as $1,522.10 and as low as $1,471.80. The spot gold price was down almost $50, according to Kitco’s gold index.
– Gold, Silver Pummeled; End In Sight? (Barron’s)
– Commodity Crunch Hitting Miners, Energy and ETFs (Wall Street Journal)
– Gold settles under $1500, silver trades 8% lower (MarketWatch)
It has been done before (here, here and here) and it certainly will be done again. In the meantime, here is Adolf, reprising in his now traditional role as Jamie Dimon, learning that the Comex is out of silver.
Submitted by Tyler Durden on 04/22/2011 08:52 -0400
Concerns that the sovereign debt crisis may be entering a new phase and the risk of contagion has seen peripheral eurozone bonds fall sharply and the euro fall against major currencies and gold today.
Sovereign debt risk, global inflation concerns, geopolitical risk, disappointing European earnings and concerns about Japan’s coming reporting season have seen equities weaken and new record nominal highs for gold and silver (all time and 31 year).
Greek bond yields have continued their relentless march higher and have risen above 14.07% (10 year) and Portuguese debt (10 year) has risen to a euro era record over 9.27%.Spanish and Irish debt are also under pressure this morning.
Euro gold has been in a range between €900 and €1,070 for nearly a year (since last May – see chart) and this period of consolidation looks set to come to an end as gold pushes higher. Once the technical resistance at the record high of €1,072/oz (12/28/10) is breached, gold will challenge €1,100/oz .
In the current bull market, euro gold has seen many long periods of correction and consolidation prior to rapid gains and sharp moves upwards. The length of the recent correction (almost a year) suggests that the coming move could be very sharp and see gold rise to €1,200/oz in the coming weeks.
Gold is increasingly being seen as the superior currency in a world of trillion dollar and euro deficits and bailouts. Indeed, the printing and electronic creation of billion and trillions of the major paper currencies is increasingly making gold and silver the currencies of last resort.
Governments and central banks are debasing currencies through bailouts, deficit spending and quantitative easing which is leading to a massive increase in the supply of fiat currencies. Precious metals are rare and finite and this is why major currencies are falling in value versus gold and silver.
There is nothing inherently wrong and certainly nothing “illegal” about J.P. Morgan Chase gaining a vault license for storing and taking delivery of gold/silver/platinum/palladium from the futures markets known as NYMEX/COMEX. However, the speed, timing and manner in which the exchanges just granted it troubles us.
The process of being approved as a licensed vault or weigh-master/assayer for the NYMEX/COMEX futures exchange usually involves a careful security inspection of the vaults, a full report of that inspection, and a completely transparent package submitted to the U.S. Commodity Futures Exchange Commission (CFTC) for approval. This process will ordinarily consume considerably more than 45 days. Apparently, such correct and careful practices apply only to banks and independent storage facilities that are not J.P. Morgan Chase.
Some vault operators are more equal than others. JPM appears immune from processes that everyone else must suffer through. On March 15, 2011, the Commodity Exchange (COMEX) and the New York Mercantile Exchange (NYMEX) advised the CFTC that they had approved J.P. Morgan’s application to become a licensed vault facility, using a “self-certification” process. The newly licensed vault, located at 1 Chase Manhattan Plaza, NY, NY, is ready to roll as both “weighmaster” and depository, for delivery of gold, silver, platinum and palladium contracts, as of March 17, 2011, two days later.
As a smaller player, the NYSE-Liffe exchange uses COMEX licensed depositories for delivery and storage of its metals. The new JPM vault, therefore, will also qualify to accept delivery of metal coming from the maturity of NYSE-Liffe gold and silver futures contracts, including the smaller 1,000 ounce silver contract.
Additional recommended reading:
– The Silver Bullet And The Silver Shield (Must-read!)
Bob, of 321gold.com, is part of the problem. He would rather not publish well researched facts, to “save his readers” from buying into what he thinks was a near term top that might see a 10% pullback. He doesn’t want his readers to buy into a top; to protect his readers, or to protect his reputation? OK, I hope I helped to expose him for what he is. Apparently, Bob was trying to protect his readers from the risk of buying silver at $6/oz., too! HA HA!!
– Listening to Liars (Bob Moriarty – 321gold)
(I have already been accused of “showing my ass and shaking my pom poms” for silver by 321Gold.com. I figured I would spend the month of March cheering on silver from the sidelines, since I am not a player
I made the prediction that silver would hit $50 by the end of March. This prediction was based off of a possible CRIMEX default of physical silver in the delivery month of March. By all accounts we are already looking pretty good with a 4% jump on Friday to $35.67. There are rumors that silver is already $50 at the CRIMEX and that JP Morgue is paying 80% premiums not to take delivery in the crucial month of March. There are only 40 million ounces available for delivery and little under $1.5 billion would expose this greatest of frauds.
I believe that we just are in the early stages of a Mania Phase in Silver. So I put a chart together to put this silver market into perspective.
As always, I want to warn all of you “greedy, little bastards” to be very careful of this silver bull. This is a very volatile market and I know of many investors that got wiped out in 2008. There are big market makers that can turn the silver market on a dime. Remember, the market can stay irrational longer than you can remain solvent. If you need further analysis of silver fundamentals, I suggest you read the Silver Bullet and the Silver Shield. Continue reading »
* Hedge fund boss says more dollars flows favor silver
* Wary of investing in base metal due to uncertain economy
TORONTO, March 8 (Reuters) – Silver is likely to keep outperforming gold thanks to strong dollar flows, though both are still good investments compared with copper and other base metals, according to Eric Sprott, the hedge-fund manager and Canadian investment guru.
“I watch where the money goes and the money’s going into silver. There’s as much money going into silver as into gold in dollar terms,” said Sprott in an interview with Reuters.
Sprott, who heads Toronto-based hedge-fund Sprott Asset Management, said it is important to note that silver available to buy is relatively scarce in terms of value, and that bodes well for further gains.
“There is 75 times more dollars worth of gold to buy than silver, but the money’s going in one to one,” says Sprott, while speaking on the sidelines of an investor event held in conjunction with the annual PDAC mining convention in Toronto.
Silver stocks in COMEX warehouses are near their lowest since April 2006, when the metal traded at $5 an ounce. Demand for silver coins has also picked up, especially in the United States, where it was at record levels early this year.
“My biggest thing is silver — I think silver is going to go up a lot here. Gold’s right in there, but not as good as silver,” said Sprott, following a presentation to hundreds of investors in a resplendent ballroom at Toronto’s Royal York Hotel.
Here’s an extended excerpt from the Weekly Review sent to subscribers on March 5 –
The big surprise was in the silver COT, where the big 4 increased their net short position by 3000 contracts on the previously mentioned reduction of 1300 contracts in the total commercial net short position. This increase in the big four’s short position broke the pattern of a reduction in the concentrated short silver position that had been in force for months. The increase in the concentrated short silver position was so unexpected by me that I thought, at first, it must have been a mistake. Since the Bank Participation Report was released late yesterday, an hour or two after the COT, my first thought in the interim was that it would not be JPMorgan increasing its concentrated short position, but most likely the other three entities in the big four. After all, with all the negative attention (and losses) accruing to JPMorgan and its big silver short position, there would be no way JPM would have accounted for the 3000 contract increase in the COT for the big four.
If the silver COT was a surprise, then the Bank Participation Report was a shocker. There was a net increase in the US bank category of 6000 contracts to 25,000 held net short in silver. JPMorgan’s net silver short position, which had decreased by 11,000 contracts over the preceding three months to 19,000, had suddenly ballooned to 25,000 contracts (125 million ounces). From my reading of both these reports, it appears that the big increase in silver short selling by JPM took place during the last COT reporting week, even for the BP Report. Before I continue, let me explain that I consider JPMorgan to effectively account for all or the bulk of the entire US bank category in the Bank Participation Report for a variety of mathematical reasons. However, it matters little if there is another US bank also holding a significant net short position in COMEX silver, as all that would mean is that two US banks are colluding to manipulate the price of silver and not just one bank acting alone.
(New York Times) — As Americans know all too well by this point, commodity prices — for corn, wheat, soybeans, crude oil, gold and even farmland — have been going through the roof for what seems like forever. There are many causes, primarily supply and demand pressures driven by fears about the unrest in the Middle East, the rise of consumerism in China and India, and the Fed’s $600 billion campaign to increase the money supply.
Nonetheless, how to explain the price of silver? In the past six months, the value of the precious metal has increased nearly 80 percent, to more than $34 an ounce from around $19 an ounce. In the last month alone, its price has increased nearly 23 percent. This kind of price action in the silver market is reminiscent of the fortune-busting, roller-coaster ride enjoyed by the Hunt Brothers, Nelson Bunker and William Herbert, back in 1970s and early 1980s when they tried unsuccessfully to corner the market. When the Hunts started buying silver in 1973, the price of the metal was $1.95 an ounce. By early 1980, the brothers had driven the price up to $54 an ounce before the Federal Reserve intervened, changed the rules on speculative silver investments and the price plunged. The brothers later declared bankruptcy.
The last time we presented the silver backwardation chart, it was “only” $0.50 or so between the front month and the long end. In the week since then the difference has jumped to what we believe is a new record of $1.50 or so.
Now that the CBOE is issuing CEBOs and allowing plain Jane investors to bet on imminent corporate bankruptcies, would it be so kind to issue a contract or two on the COMEX… Pretty please?
Yesterday I said:
“Today was the option expiration on the Comex, and those options which are ‘in the money’ and have not been settled for cash are now converted to March futures positions.
Depending on the size and distribution of those conversions we may see some ‘action’ in the front month because they are sometimes notoriously weak hands and will receive at least one ‘gut check.'”
And a gut check to run the stops was very obviously delivered in the afternoon trading session at the Comex and across the monthly contracts.
This is remniscent of the ‘Dr. Evil’ strategy that got Citi warned and fined in Europe a few years ago. Memories of Citi’s Eurobond Manipulation At the time one of the defenses offered by an ex-pat trader was ‘in the US everybody does it.’ Has JPM taken up the trading strategy that Citi once made infamous? And why would banks be trading for themselves in markets with players they help to finance, and with public money?
Large players can come into a relatively small market and drive the price by selling in size, running the stops which they often can see through positional advantage, and essentially bomb the market, manipulating the price in the short term to their advantage. The profit is made through derivative and correlated bets that depend on the price of the metal, index, or bond such as shorts on mining stocks, currencies, bonds, etc.
This is why the ‘uptick rule’ in stocks served a purpose, and why regulators are in place to keep an eye on big players with deep pockets and a far reach. In a properly regulated market the CFTC would immediatly pull the trading records for today and track the big sellers, and inquire as to the reasons for their sudden selling.
With silver trading at a new multi-decade high trading above $34 and gold up almost $20 breaking above $1,400, King World News today interviewed John Hathaway, Senior Managing Director of the Tocqueville Gold Fund. Hathaway stated, “What I strongly believe is that the amount of paper we are seeing traded in both gold and silver on the Comex and in the derivatives market is nonsense. It has to be something in the order of 100 to 1. The fact that the market is moving today when the Comex is closed tells me it is not New York that is doing this, it is physical demand.”
“I think it is just a tight market. There have been reports of some difficulty regarding physical availability of silver. Retail interest is being driven even further by the price action in silver.
Silver has broken out to the upside and because of that you have technical buying and short covering. This could in fact be a short squeeze.
Full article here: King World News
More on gold and silver:
With gold up over $10 and silver attacking multi-decade highs, the London Source has given King World News major news on the activities of the Asian buyers, “Not only have the the Asian buyers been purchasing large numbers of shares of the ETF GLD in order to take delivery of gold, but they have now in fact decided to buy SLV with the intention to take physical delivery of silver directly from that ETF.”
The London Source continues:
Another complicating factor is that there are currently 16.12 million shares short on SLV. This is an increase of almost 2 million ounces over the prior reading. In other words BlackRock will also have to make sure that this silver which has been borrowed will be returned.
We have serious backwardation, a supply shortage, short interest growing on SLV and now we have the Chinese waking up to the fact that there is metal in SLV and saying, ‘let’s go get it.’ Let’s not forget the paltry inventories on the Comex. Any short would have to be frightened by that data.
It will be very interesting to see which option the shorts take here, but for now the wind is in their face and we will look to see if silver can clear $31 on good volume. The London Source closed with this question, “If you were a for-profit trader yourself and you were short here, what would you do?”
Full article here: King World News
Maybe the elitists have no problem sacrificing their JP Morgan Illuminati bank pawn (or any other pawn), maybe they want to do exactly that, to create chaos.
After all the elitists own almost all gold and silver and chaos would financially benefit them a lot and also their NWO agenda.
They want to bankrupt America, destroy the US dollar and turn the US into a Third-World country, making Americans so poor that they have no will left to stop their New World Order.
The elitists have just elongated the crisis, because the people didn’t stood up to them.
They got away with every bailout and every imaginable looting of the people.
So of course they have prolonged the crisis, making the coming collapse a whole lot worse.
“The best time to buy is when blood is running in the street.”
– Nathan M. Rothschild
More on gold and silver:
And don’t forget to do this (!!!)…
… or …
Silver Bullion COMEX Stocks at 4-Year Low as Backwardation Deepens
Gold and silver are higher after last week’s 1% and 3.5% gains in dollars. Silver is particularly strong again this morning and the euro has come under pressure as bonds in Ireland, Spain, Portugal and Greece continue to rise. While Asian equity markets were higher, European indices have given up early gains.
Silver’s backwardation has deepened with spot silver at $30.16/oz, March 2011 contract at $30.13/oz and April’s at $30.00/oz. While spot silver has risen nearly 1% so far today, the July 2012 futures contract was down 0.187% to $29.81/oz.
The gradual drain of COMEX silver inventories seen in recent months continues and COMEX silver inventories are at 4 year lows. Total dealer inventory is now 42.16 million ounces and total customer inventory is now at 60.68 million ounces, giving a combined total of 102.847 million ounces.
The small size of the physical silver market is seen in the fact that at $30 per ounce, the COMEX silver inventories are only worth some $3 billion. The US government is now paying some $4 billion a day merely on the interest charges for the national debt. It is also the same value as Twitter’s new venture round of financing or Ford’s debt pay down in the first quarter.
Talk of a default on the COMEX is premature but the scale of current investment demand and industrial demand, especially from China, is such that it is important to monitor COMEX warehouse stocks.
Backwardation rarely happens in the gold and silver bullion markets. Since gold futures first started to be traded in 1972 (on the Winnipeg Commodity Exchange), there have only been momentary backwardations of a few short hours.
* COMEX silver stocks falls to four-year low
* First silver futures backwardation since ’97-98
* Strong industrial, coins demand, producer hedging cited
NEW YORK, Feb 11 (Reuters) – The tightest physical silver supplies in four years have tipped the U.S. silver futures market into backwardation this week, making near-term prices more expensive than more distant months.
Market watchers said that it has been more than 10 years since silver futures were last in backwardation, an unusual term structure, associated with shortage of physical supply. Warehouse stocks of the white metal have dropped to a four-year low on surging demand, while miners have hedged their future production.
Booming industrial demand for silver and record U.S. coin sales, combined with a surge in demand from mining companies to borrow the metal for their hedge programs have led to a squeeze in the physical silver market.
“The problem is that there is great industrial demand for a specific grade of silver, and there is not enough coming fresh from the mines,” said Miguel Perez-Santalla, vice president of Heraeus Precious Metals Management.
“The stocks are being pulled for all the high grade and better materials, and that essentially put a squeeze on the physical market,” he said.
Perez-Santalla said that silver futures have not been in backwardation since billionaire Warren Buffett bought 130 million ounces of silver between 1997 and 1998.
Backwardation is a condition where cash or nearby delivery prices are higher than the price for delivery dates further in the future. Usually, forward prices are higher than cash prices to reflect the costs of storage and insurance for stocks deliverable at a later date.
“The extent of the backwardation in silver is unprecedented. It suggests that retail investment and industrial demand internationally is very robust and the small silver bullion market cannot cater to the level of demand for refined coin and bar product,” bullion dealer GoldCore said in a note on Friday.
“The Biggest Scam in The History of Monetary Civilization”
Added: 2. December 2010
Added: 24. December 2010
Added: 9. January 2011
Added: 11. February 2011
More on gold and silver:
The contact out of London has updated King World News on the massive Asian buyers which have been accumulating both gold and silver. The London source stated, “What we’ve been talking about for the past few months, the Asians, particularly the Chinese buying staggering amounts of physical gold has just gone into the mainstream media. The Financial Times was months behind King World News in reporting this information.”
The London source continues:
“The Asians, particularly the Chinese, want physical gold and they want it tomorrow. So the Chinese have a new method. They are now planning to buy tremendous amounts of the ETF GLD. They will then tender the GLD shares for immediate delivery of the gold. This bypasses all of the rules of places such as the Comex limiting delivery. There is no limit as to how much you can buy from the ETF GLD.
Mainstream media and some pundits have been pointing to drawdowns in GLD and saying there is liquidation of tonnage and that it is bearish for gold. They are ignorant and don’t understand what is happening is large buyers are tendering shares for delivery, and this is extremely bullish for the gold market.
This gets around the delays, delivery problems and any form of limitation.
The Asian entities are essentially looking for ways to get hold of physical gold because they are having trouble procuring gold in large quantities.
Full article here: KingWorldNews
Gold is down 6% and silver 12% since the start of 2011. This is the sharpest decline in precious metals since June of last year and with technical support broken at the 50-day moving averages, many are concerned of a deeper correction ahead.
While there are a myriad of factors driving the prices, two of the major opposing forces are Chinese demand for physical gold on the long side and JPMorgan paper schemes on the short side. Which force prevails in the short term remains to be seen, but in the long run the paper shorts will eventually be squeezed, pushing the price for both gold and silver much higher.
Corrections are a healthy and normal part of any secular bull market, allowing the bull to rest its legs, shake out weak hands and prepare for the next phase up. Every correction in precious metals over the past decade has brought so-called “experts” out of the woodwork to proclaim an end to the gold bull market. They were wrong when gold hit $500, $800, $1,000 and will be wrong many times again before gold finally does peak somewhere above $5,000 per ounce.
But the recent slide in gold and silver prices seems like more than the usual correction and profit taking. Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act during July of 2010 and many metals analysts believed it would lead to the CFTC implementing sensible position limits. In addition, the passing of the Volker rule and closing of prop trading desks seemed to jump start precious metals into an impressive and steady advance.
Many gold bugs believed they were witnessing the end of the fraudulent gold and silver manipulation that has been occurring so blatantly over the past several years. This manipulation has been painstakingly exposed by GATA over the years, was detailed in an earlier article that I published and has led to a series of lawsuits against JPMorgan and others.
Gold and silver posted impressive gains in 2010, with gold up 30%, while silver rocketed more than 80% higher! But these advances came to an abrupt halt at the start of 2011 and the decline worsened a few weeks later when the CFTC announced the details of it proposed position limits. First off, the proposed limits were way too high to curb manipulation and more importantly, JPMorgan, HSBC and other large investment banks were granted an exemption to the new position limit rules by being “grandfathered.” The CFTC absolutely caved to the interests of JPMorgan and the price of gold and silver both proceeded to tank and drop through key levels of support.
To what degree the CFTC decision is driving the decline in precious metals is unclear. Gene Arensberg recently pointed out that the large commercial banks have actually been covering their short positions lately and that the swap dealers are the ones that have been uncharacteristically piling on the paper shorts. Regardless, big money has certainly been helping to push prices lower, even as the dollar has weakened significantly in the past few weeks.
While the paper market has been driving the spot price lower, the physical market appears to be as robust as ever. Sales of silver eagle coins for the month of January have already set a new all-time record, with ten days still left in the month. Furthermore, silver demand in China has quadrupled versus last year, as the emerging Chinese middle class looks for a hedge against inflation and the Chinese government encourages its citizens to buy gold and silver.
This is a relatively new phenomenon in Chinese culture, as ownership of precious metals was illegal just a few short years back. But this has all changed as China has become the largest producer of gold in the world and is expected to surpass India as the largest consumer of gold as well.
Demand from China is not only coming from the citizens though, as the Chinese government has been accumulating massive amounts of gold and silver for their reserves. After not reporting gold reserves for six years, the Chinese government in 2009 made a surprise announcement that they had nearly doubled their gold reserves to over 1,000 tons. They have been doing this quietly via buying up the production from Chinese mining companies, as well as making purchases in the open market via intermediaries.
China announced annual gold production of 314 tons in 2010 and this number is expected to be around 320 tons in 2011. If the suspicion that China is buying up most of the country’s gold production is true, there could well be another 600 tons or more moved into ‘unofficial’ reserves before the next announcement. Add in purchases in the international market, and it is conceivable that China’s reserves could effectively be doubled again by the end of 2011 to some 2,000 tons.
The recent theory put forward by Ted Butler has the Silver conspiracy world all abuzz. Ted concludes that it is CHINA and not JP Morgan behind the huge silver short position on the COMEX. Here’s the article:
“JP Morgan must have some reason to justify the big concentrated COMEX silver short position. If they claim that they are long silver OTC swap positions as an offset to their COMEX short position, it becomes critical that the CFTC inquire who is holding the short side of the OTC silver swaps. My belief is that it will be Chinese interests on the short side of the swap.”
Butler goes on to discuss reasons why he comes to this conclusion which are very understandable and, in my opinion, likely. Due to a strategy the Chinese developed over the past 10 years almost ALL PHYSICAL SILVER mined in the world passes through China to be refined. Very little silver is processed anywhere else in the world because most other refineries have gone out of business. In hindsight, it is easy to see why other refiners closed their doors…because China forced them to! The way they achieved the cornering of the global silver refining business was by offering silver miners BETTER PRICES and UP FRONT PAYMENTS for their silver ore. Naturally, silver miners around the world started accepting the Chinese bids for the ore shifting almost all silver refining to China.
But that brings us to a much bigger issue when it comes to the ultimate moonshot for silver and the vulnerability of JP Morgan’s concentrated silver short position. By definition, all COMEX contracts in both futures and options are merely paper derivatives of silver. Regardless of the Chinese involvement in selling paper silver derivatives, JP Morgan is ultimately on the hook for filling these commitments for physical silver if delivery is requested. If they have a contractual agreement with certain Chinese interests who have placed those derivative bets through the JPM trading arm, those “agreements” are only as good as the counter parties ability to perform.
It’s coming. More here.
Added: 2. Dezember 2010
Too big too fail banks like JPM and HSBC have been artificially manipulating the price of silver and gold, scamming the tax payer, and ultimately will lead to the biggest financial disaster in the history of human financial civilization. The run on the comex has begun. The COMEX offered dollars instead of physical metal on December 1st silver deliveries. GAME OVER.
I would not sell one ounce of physical gold and silver.
Since there is a high volatility in the market:
“Options can exploit the kind of crisis that might come next..” (Source: Paul Wilmott on CNBC: The Link Between Prices And Value Has Been Completely Lost Because Of High Frequency Trading)
London’s leading gold forecaster has advised clients to liquidate holdings of gold and silver until the latest speculative fever abates, warning that futures contracts on New York’s Comex exchange are flashing warning signals.
John Reade, an analyst at UBS, said the number of “net long” positions held by speculators reached 29.02m an ounce last week, a record high.
Investors watch Comex contracts as an indicator of froth in the market. Last week saw a jump of 6.4m ounces in net long contracts, a rare occurrence. When such sudden moves have occurred in the past, gold has fallen 5pc over the subsequent month on average.
The buying frenzy last week followed Chinese comments on the need for reserve diversification from dollars into euros, yen, and gold, as well as a proposal by the United Nations for a world currency. The dollar fell sharply, propelling gold to $1011 an ounce – tantalizingly close to its all-time high of $1030.
Mr Reade, a repeat winner of the London Bullion Market Association’s forecasting prize, said speculation in silver futures is even more extreme by some measures.
Demand for physical gold – as opposed to paper contracts – has been flagging, with Indian jewellery demand well down on the levels a year ago and poor volumes reported in Turkey and Switzerland. The metal is trading at a discount on Istanbul’s exchange.
“We recommend that nimble investors take profits on any long gold and silver positions, looking to re-enter after a correction,” said Mr Reade. His price target is $950 over the next month, with fresh rallies in 2010.
Secretary Paulson Remarks on the Economy Before the U.S. Chamber of Commerce
“The structure of our economy is sound and our long-term economic fundamentals are healthy.” – Henry Paulson
January 22, 2008
Paulson: U.S. Banking System Fundamentally Sound
“Our banking system is a safe and a sound one,” Paulson insisted on CNN’s “Late Edition.”
Mon Jul 21, 2008
Bush: US Economy is Sound Despite Problems
“We can have confidence in the long term foundation of our economy. And I believe we will come through this challenge stronger than ever before,” he said.
15 July 2008
Source: VOA News
The next bubble to burst will be US Treasuries and when this bubble bursts the dollar will be destroyed.
There will be a financial collapse in the US.
This mess will – most probably – be even worse than the Great Depression.
I urge you again to prepare yourself.
There is not much time left to get yourself ready.
Part II: “The Next Bubble to Pop! (2/4)“
Part III: “On Gold and Market Manipulation (3/5)“
Supplement to explain futures market basics and backwardation: “The Money Matrix – What the Heck Are Derivatives? (PART 10/15)“
Tags: Bubble, COMEX, Constitution, Derivatives, Derivatives market, Dollar, Economy, Fed, Federal Reserve, Gold, Government, Hyperinflation, IMF, Inflation, Politics, Silver, Stock Market, Wall Street
If COMEX would not be totally manipulated and gold will continue to rise beyond $ 860/oz. then I would say Merry Christmas and Happy Gold New Year.
Gold has a very bright future not because of some charts showing only the past but because of its fundamentals.
A future out of control, bankrupt financial institutions trying to hold on, limitation on credit severely limits ability of the economy to start up again, debt totally embraces our lives, handouts a state secret, soon cash infusions wont work for banks anymore, banks hold too much toxic garbage to even know if they are solvent. We are now 17 months into a credit crisis that continues to expose the corruption and incompetence of government, banking, Wall Street and transnational corporations. The situation has not stabilized and it won’t anytime soon. All we see are sweetheart deals for elitist corporations for which American taxpayers will pay for years to come. The future of our nation is totally out of control. For the last eight years our economy has been running on something for nothing, lies and deceit. The result will be hyperinflation and then the Second Great Depression. Continue reading »
Tags: AIG, Banking, Bear Stearns, Ben Bernanke, Bonds, Bubble, Chrysler, Citigroup, COMEX, Corruption, Credit Crisis, Credit Crunch, Debt, Depression, Derivatives, Derivatives market, Dollar, Economy, Fannie Mae, Fed, Federal Reserve, Ford, Fraud, Freddie Mac, GM, Gold, Goldman Sachs, Government, Great Depression, Henry Paulson, Hyperinflation, Inflation, JPMorgan, Mortgage crisis, Mortgages, Politics, Recession, Stock Market, Taxpayers, Treasury, U.S., Unemployment, Wall Street