Wednesday, March 9, 2011

JP Morgan Looking To Napalm Silver Market

As of 7AM est the US Dollar has given back one half of it's little rally that began early Monday morning.  Notably, this little rally died right at it's previous key support of 77 on the US Dollar Index [USDX].  Old support, once broken, becomes new resistance.  Fundamentally, NOTHING has changed for the Dollar.  It's little rally appears, so far, to have been driven by a "technical" bounce off critical last support down near 76.20.  That or the Fed has stepped up to defend a possible free fall in the Dollar should it break below 76.20.

The December/January Double Top in the US Dollar at 81.31 on the USDX broke down in mid-january with a breach of 78.77.  This breakdown projected the next move down in the Dollar to 76.23 on the USDX.  The Dollar low on Monday was 76.12.  Technically, the Dollar should have been expected to bounce near 76.23, and it did.  How high the bounce remains to be seen.

Silver and Gold have, for the most part, been consolidating recent gains here as the Dollar attempts to firm up and gather it's legs for a rally.  Any further rally in the Dollar looks as though it would be cut short around 77.50 on the USDX.  A rally here in the Dollar back to the Double Top breakdown near 79 can not yet be ruled out, but it does not appear likely.

Silver and Gold peaked in their overnight rallies Tuesday morning at 7AM est.  As I type this, they both look to have again done the same this morning with Silver touching $36.29 and Gold $1435.  Once again, today's trade will be driven by action in the Oil market.  Oil [basis Brent Sea Crude]came off it's low of 112.14 very early this morning, but has since run into resistance here at 114.  Oil is looking very tired up here, and a move to 110 is possible, particularly if the Dollar should get it some wind back in it's tattered sails.  If Oil moves lower, Silver and Gold will likely follow it.

Gold's overnight trade was actually stronger than Silver's.  Gold broke from it's recent downtrend as Silver remained coiling up in a Consolidation Triangle.  Gold's breakout will only be confirmed if it moves strongly back through $1436.  Silver could run fast and hard should it break from it's coil on the up side.  It could easily drop as quickly should the coil break to the downside.  Silver still has me a bit wary up here.  I would like to see it retest it's break from 34.80 at a minimum, before moving higher from up here.

Ted Butler's revelation that JP Morgan and friends added 6000 new  Silver shorts to the CRIMEX in February as the price of Silver soared has taken the internet by storm.  Have these CRIMEX goons reached a new level of desperation, or are they about to through in the towel and leave the mess to the Fed and the Treasury to clean up?  Bix Weir tries to answer that question in an excellent post below:

Silver "Scorched Earth" and The END of Market Manipulation
Bix Weir
Are The Silver Manipulators Playing The "Too Big To Fail" Card?

Last Friday the CFTC released their monthly Bank Participation Report (BPR) which revealed a startling statistic. After 3 months of desperately trying to cover their gigantic short position the US Banks that control the price of silver decided to go back to their reckless shorting routine...BY A HUGE AMOUNT! Here's the numbers and the link to the CFTC BPR postings:

11/2/10 = 30,760

12/7/10 = 26,332

1/4/11 = 22,658

2/1/11 = 19,706

Over the last 3 months it really looked like they were trying to close out their gigantic short position before the Position Limit Rule goes into effect on March 28, 2011. That was until the latest BPR was posted. Just look at the increase in the US Bank silver short position...

3/1/11 = 25,586


That is a STUNNING amount of new shorts added during the month of February when the price of silver actually managed to RISE 25%. It is important to understand that IF these new shorts were not placed on COMEX silver then THE PRICE WOULD HAVE EXPLODED TO OVER $50 OR EVEN $100 PER OUNCE!

This was clearly a short designed to keep a lid on the price of silver.

Here's why I think this happened:

- The CFTC is FINALLY getting serious about enforcing the commodity laws and the US Banks know it.

- Although the US Banks tried to close out their 150M ounce short position THEY COULD NOT DO IT IN TIME.

- Once they saw that they couldn't sucker any more sellers they had to crank up their shorts to stop the price of silver from going parabolic.

- Now they are TRAPPED with NO WAY to cover their short position before the 28th DEADLINE so...


It is a way to protect themselves from the inevitable default in the COMEX silver market. Clearly a skyrocketing silver price would destroy the US Bank short position. "Too Big To Fail" will have to come into play in both the implementation of position limits as well as potentially deflecting the BLAME onto the CFTC and Dodd-Frank Law for TOO MUCH REGULATION.

They could even try to BLAME the destruction of the global monetary system on those "greedy silver bugs" who only care about themselves!

These US Banks know the silver manipulation game is over as the rest of the investment world has finally come to the understanding that there IS manipulation in the silver markets. On Wall Street when there is blood in the water you can bet the sharks will circle and a feeding frenzy will soon begin.

Fleckenstein: Fed is printing money to cover bank theft, leading to global food Inflation

The Fed printing money to cover bank theft is causing food riots worldwide, says Bill Fleckenstein on MSNBC’s Dylan Ratigan Show. Fleckenstein is a hedge fund manager and president of Seattle-based Fleckenstein Capital.

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