Monday, March 7, 2011

Silver & Gold: GAME ON!

Silver and Gold powered higher in Asian trading last night along with the price of Oil.  Silver peaked at $36.73, and Gold peaked at $1444.60. 

Silver's Bearish RSI Divergence grew more pronounced with the overnight rise in price, and a bearish "shooting star" candle is forming on it's daily chart as I type this with Silver near $36.  I remain wary of Silver and will not chase price here.  Silver is going much higher from these levels, but we are now looking for a reaction in price to open or add new positions.

Gold today rose and coincidentally peaked at one of Jim Sinclair's oft noted "golden angels" at $1444.  The significance of this in the battle royale in Gold playing out on the CRIMEX remains to be seen.  Gold has reacted lower in the week(s) following it's last three previous "All-time" weekly closing highs like we just had this past week...noteably Gold's fourth new weekly closing high over the past 18 weeks.  Even more noteworthy is that each of these four new weekly high closes came during the week of First Notice Day in the the futures market.  Interesting then that price would fall as the CRIMEX goons scamble to find metal to meet delivery demands.

And scambling for metal is what the CRIMEX goons are doing on the Silver side of their playground.  Delivery demands are not being met in a timely manner, and would appear that the cash settlements FOAM were seeking may actually be taking place in order to keep this CRIMEX charade in the Silver market going a couple more months.

A little math applied to the number of open March Silver contracts versus notices of delivery is quite revealing:

At the close of trading on Friday, February 25, there were 4250 open contracts heading into First Notice Day on Monday February 28.  Thru the close of trading on Friday, March 4, ONLY 308 contracts had been posted for Delivery by the CRIMEX goons, yet the number of open contracts had fallen by 2,374 to 1876.  If we subtract the 308 contracts that received delivery out of the 2,374 contracts that "disappeared", we get a net 2066 contracts that were potentially settled in cash [for a premium price].  2066 contracts, at 5000 ounces each, equals 10.33 MILLION ounces of Silver the CRIMEX goons were able to wiggle out of delivering.  If this in fact has occurred, the CRIMEX fraudsters have dodged a massive bullet that is equal to one quarter of the supposed 43 MILLION ounces of Silver in their vaults available to meet delivery demands.  As it were, meeting the demands of 308 contracts has forced the CRIMEX goons to cough up 1.54 MILLION ounces of the real thing.  The remaining 1876 open contracts that the CRIMEX faced as this week began represents 9.38 MILLION ounces of Silver...again almost one quarter of their supply.

Silver Shocker
By: Theodore Butler
We know that concentration in any market is to be avoided. The whole thrust of commodity law goes towards preventing concentration. We know that the ideal profile of a free market is where a wide diversity of market participants competes on both the buy and sell sides of the market. We also know that the most extreme state of concentration possible is where there is, effectively, only one buyer or one seller. Therefore, what the latest COT and Bank Participation Reports just confirmed was that the most extreme form of concentration possible just occurred during the latest reporting week.

This is the key point – what would have happened if JPMorgan hadn’t sold short the additional 6,000 silver contracts (30 million oz) when they did? Asked differently, in the current market conditions, what price would have been required to induce other market participants to sell the 6,000 contracts if JPMorgan hadn’t sold? My guess is that would have taken a price over $40 or $50 to attract that much legitimate selling. The fact that JPMorgan was the sole seller is the clearest proof possible that silver has been manipulated.

So egregious was this latest increase in JPMorgan’s short position that I am inclined to think that it may have been done on an unauthorized or rogue trader basis. Perhaps JPM management and the CFTC are not yet aware of it, seeing how recently it occurred. After all, the COT and Bank Participation Reports were only published less than 24 hours ago. (As is my custom, I will be sending this article to the Commission and JPMorgan and the CME Group).

I realize that I am making serious allegations of violations of commodity law, as there is no market crime more serious than manipulation. At the very least, this new government data release is so disturbing that it should be addressed immediately. Silence on the part of JPMorgan, the exchange and the CFTC is no longer constructive. If my accusations are off-base, then I should be set straight. I’m not out to cause trouble; I am trying to help correct what I see as a very serious market problem.

White House considers tapping oil reserves
By Jackie Frank
(Reuters) - White House Chief of Staff William Daley said on Sunday the Obama administration was considering tapping into the U.S. strategic oil reserve as a way to help ease soaring oil prices.

Speaking on NBC television's "Meet the Press," Daley said: "We are looking at the options. The issue of the reserves is one we are considering. It is something that only is done -- and has been done -- in very rare occasions. There's a bunch of factors that have to be looked at. And it is just not the price."

"All matters have to be on the table when you see the difficulty coming out of this economic crisis we're in and the fragility," Daley added.

Congress has pressured the Obama administration to look to the emergency oil supply to ease consumers' fears over rising gasoline prices, which are threatening again to top $4 per gallon at U.S. gas stations

The Strategic Petroleum Reserve [SPR] is in place to protect the country in the event of actual Oil shortage, or disruption in supply of crude. Crude inventory at Cushing, Oklahoma just rose 1.1 million barrels to hit a new all-time high of 38.6 million barrels. The country right now is literally awash in Oil. There is NOT a real physical shortage of Oil. Prices have been moving recently because of news and rumor coming out of the Middle-east and North Africa.

The Obama administration has stooped to the lowest level to try and manipulate the economy by threatening to tap the SPR. Oil prices are rising as much becasue of the falling US Dollar as they are the unrest in the Middle-east. Flooding an already flooded Oil market will not save the economy from the grips of Inflation. By suggesting the tapping of the SPR, the Obama Administration is trying to "talk" the price of Oil down. Good luck with that...

Impending crude correction by mass rollover
by Dian Chu
Now with crude prices bid up so much, traders are left with a dilemma – to be in the crude oil trade, players basically either have to take delivery, or rollover contracts and options comes expiration time. However, with storage at Cushing, Oklahoma pretty much at capacity, and price curve front month (April) loaded, it is doubtful that anybody would be in a position to take physical delivery.

It’s The Rollover That’ll Get Crude
And don’t forget that the humongous United States Oil Fund (USO) is a futures-based ETF that has to rollover as scheduled (from Mar. 8 to Mar. 11). The USO effect, plus the record open interest almost exclusively long and heavy in April, suggest there will likely be a massive rollover starting with USO around March 8, then to all the other market players, when April contracts and options expire (See Chart). That will push down the April price for both Brent and WTI, regardless what’s going on in Libya.

From the current price and technical signals, WTI could easily correct down to $94 to $95, Brent could drop to $110 to $106 range.

This is noteworthy as Silver has traded in Oil's shadow during it's recent "speculative" run-up in price. Should the price of oil correct for any reason, we should expect the price of Silver to do likewise. In fact, we may be seeing the beginning of just such pricing activity in these two markets today:

Should Silver react lower with Oil prices, look to take advantage of these sale prices.

Trading the Big Dips in Silver
By Avery Goodman
During periods of severe shortage, bank buying heavily pressures prices upward in spite of the best efforts of the most skilled market manipulators. A skilled manipulator can induce a big one or two day price drop by coordinating his actions with other market dominant players. A prerequisite key to success is cessation of purchases in preparation for downward manipulation days. With that caveat, the same old tactics that have been successfully used to control prices in the past, are more than sufficient to recreate a transient price crash.

We saw transient price crashes-- which I believe were intentionally induced-- on February 24, 2011, and again, to a lesser degree on March 3, 2011. Prices recovered and soared further in both cases, within the very next day or two. This can be explained by the issuance of reams of paper, for hours at a time, or as long as a day or two, and / or use influence on exchange committees willing to alter performance bond levels at request. Such manuevers trigger speculative long stop loss orders and / or margin calls and / or both. They can be especially effective during periods of light trading.

The dirty work can be watched quietly, as it plays havoc during the subsequent heavier trading period. As margin calls are sent out and not immediately met, massive involuntary liquidation orders are filled at lower and lower price points, more and more stops are triggered, and the price is sent into a temporary downward spiral. Even if the primary aim is to manipulate silver prices, it is beneficial to apply the same techniques to all the precious metals, to preserve plausible deniability. So, we often see the metals moving at the same time, though at vastly different rates.

Only the manipulators know exactly what is going on at all times. As prices drop dramatically, even market participants who know better become fearful. A percentage bail out. This drops the price further. The market becomes temporarily shell-shocked. Manipulators use this market condition to unload over-the-counter and exchange regulated derivative short positions at relatively favorable prices. They can even start buying physical metal, at cheaper prices than they should be able to get. The smartest non-connected investors, however, will buy along with the manipulators, at discounted prices, at such times.



  1. PIMCO sold all their T-Bills in esence buying dollars. Pushing the dollar up and comodities and equities down. I suspect they will wait until the dollar is close to or at a peay and commodities are at a bottom and then they will start dumpint fiat into tangibles and all this will reverse again and just as fast