Sunday, June 27, 2010

Silver: "Looking Good Billy Ray - Feeling Good Lewis!"

The bullish set up in silver (and gold) has turned insanely bullish. An astonishing amount of silver has been removed from the Comex warehouses over the past two weeks. Most of it from Scotia - who has unrefutedly been accused by many, including me, of operating a "fractional" bullion custodian operation - and from HSBC - who has by far the 2nd largest paper short position in silver, on the Comex and via OTC derivatives as per the latest Comptroller of the Currency's Q1/2010 Report on Bank Trading and Derivatives Activities.

Every day last week silver (and gold) traded up in the physical buying markets of Asia and India, only to undergo massive paper selling in London and on the Comex. What was incredibly bullish was the way silver recovered from repeated paper price attacks during the paper-only Comex trading sessions every day last week. I can't recall seeing price "snap-back" action like this in nearly nine years of trading silver. Silver closed the week slightly lower than a week ago, but closed nearly a dollar above it's intra-day trading low last week. This is an even more remarkable feat considering that the Dow and the SPX were demolished for the week.

The trading action I observed and participated in, combined with the amount of silver leaving the Comex, tells me that the paper shorts are having a hard time triggering any meaningful stop-loss selling, which is how the big Comex shorts (JPM, HSBC) have historically covered their short positions.  Here is Ted Butler's comments from his weekly King News World radio interview: 
There's not a lot of people out there looking to dump physical metal right now...and I can see situation developing where a lot people wake up and say they want to acquire big physical positions and that mismatch of no big physical supply and potential physical demand is what the doctor ordered for a big price explosion.
Here's the link to the entire interview - it's about 10 minutes and worth hearing:  Ted Butler on silver

I can't really add much to my commentary above, but they say (whoever the hell "they" is - who is John Galt?) a picture says a 1000 words:

About all that's left to be said about the situation in silver is this:


  1. Silver will explode, as it is ignored by all while gold occupies the center stage. If you listen to the James Turk interview from the same site as the Ted Butler interview:

    at about the 12:21 minute mark, James Turk identifies silver is still in phase 1 of a bull market, while gold is in the later phase 2 stage. As a person of meager means, I still have a large appetite for physical silver, although it is far more bulkier than gold (54 oz gold vs. 5000 oz silver): my one safe is chock full; I need to buy another!

    And as the Hunt Brothers proved in the Carter years, it's easy to corner the silver market. How long before some rich pig tosses a paltry $2B or so into the COMEX and does the same? He/they would at the very least double their initial investment in no time.

  2. I'm not buying it. Sorry, I'm conditioned to believe that silver will always implode, LOL. It's kinda like when Lucy pulls the ball away just as CB gets ready to kick it.

  3. Thomas, that's hilarious. It flows better if you ask "who's Jesse L?" LOL


    I love Silver. :)

  5. I heard Viper is now in a Prechter-sponsored tent city. Any truth to that rumor?

  6. LOL JK - I think there's truth to that rumor. Denninger puts on nightly deflation seminars dressed in ballerina outfit.

  7. Take down on comex gold right now

    F*cking b*stards

  8. it's okay. use it to add to positions. the harder they try to push this beach ball underwater, the bigger the move will be when it shoots up.

  9. Dave, can you please explain what you mean by 'buying up the physical markets'?

    Are you referring to trade of physical gold in various street/internet shops or is there some other form of physical market?

    I am following, as much as I can, the discrepancy between the paper and physical price of gold due to the price suppression mechanisms, but am not sure I follow you here.

    Thanks for explaining.

  10. B*stards in for another hit.

    Something strange here, last week was options something happening in the near future that we don't know about?

    Gensler and his staff should be crucified...slowly, leastways some legal action...same with JPM, HSBC, etc

    Or is this a set up to drag out all the naked shorts, and then stand for delivery? - break the b*stards - maybe?

  11. I would say the Fed is scared Shit-less to be honest.

    The obvious manipulation as come to the fore front. No I am not a Gold bug claiming manipulation it is BLATANTLY OBVIOUS.

    But as Dave notes use it to your advantage.

  12. Just saw Gartman on CNBC saying Gold is on the verge of a parabolic move up. It appears CNBC is starting to leak some truth.

    Bill H. noted the same in Midas last week.

    Joe M.

  13. Prepare for Cliff-Edge, 'Monster' Money Printing: RBS

  14. Good question JR. When I refer to the "physical markets," I am referring to the markets in which physical gold is actively traded. This would be London (LBMA), India, Viet Nam, Middle East (Dubai), Shanghai and some others. In these markets, physical buyers take delivery of 400 oz. LBMA bars. These would be the "wholesale" markets in which all users/big investors in bullion transact. Contrast this with the Comex, which is primarily a paper market, with very little physical gold that actually gets delivered in contrast to the paper dollar amount of the contracts that trade.

    There are ALL kinds of evidence, anectdotes and market data points the point to the growing tightness in the physical market.

    What's most striking about the physical market right now is that historically, when gold broke thru to new price levels, the "scrap" market for gold would become flooded with supply. This last happened in January 2009 and preceded a big price pullback. Ever since we broke thru $1030 for good, however, there has been - on a relative basis - very little scrap coming into the market as per bullion bank reports out of London. This is REALLY price-bullish and indicative of a tight physical market. Another good indicator is when the U.S. suspends productition of most or all of its gold/silver eagle products. I don't know where it stands right now, but a few weeks ago they put dealers on order allocation.

    Hope that helps

  15. Thanks for clarifying this to me Dave.

    I have now new bits of information to investigate and to start following.

    Keep your luster shining!