Wednesday, May 4, 2011

Silver And Gold Not Even Close To A Top As CRIMEX Desperation Intensifies

Silver slumps on higher margins; Gold drops - Bloomberg

That headline says it all...and more.  If the price of Silver is falling ONLY because the margins to buy "paper silver" at the CRIMEX have risen, you should be standing in line to buy Silver at discount prices.  Seriously, what about the Silver market has changed, other than the margin rates at the CRIMEX?

Yes, myself and many others have been expecting a correction in the price of Silver.  But none of us has been basing that correction on a rise in CRIMEX margin rates.  If anything, the rise in CRIMEX margin rates lends support to the increasingly obvious supply versus demand shortfall within the structure of the Silver market.

Let's recognize and understand a new dynamic in the Silver market that has the CRIMEX criminals pulling their hair out while standing near open windows in high rise buildings.  The day trader.  The momentum players have discovered the Silver market, and it has blown to smithereens the CRIMEX banking cartel's grip on Silver prices.

Silver Rush Spreads to Stock Market
by Tom Lauricella and Carolyn Cui
Wednesday, April 27, 2011
The mania for silver has spread to the stock market as day traders pile into the buying.

Trading got so heated during the past two days that shares traded in the iShares Silver Trust, the biggest exchange-traded fund tracking the price of silver, topped that of the SPDR S&P 500 ETF, usually one of the most actively traded securities in the world.

Day traders "are going crazy," says Joseph Saluzzi, co-head of trading at brokerage firm Themis Trading. "It's typical of the bubbly speculation that's been going on in silver."

On Monday, trading in the silver ETF was especially heavy, as silver prices soared to new 31-year highs and approached $50 an ounce. Silver is up 46% this year, part of a nine-month rally. The heavy ETF trading continued on Tuesday, as silver prices retreated.

Volume in the silver ETF on Monday reached a record 189 million shares, compared with an unusually low 65 million for the SPDR. The trading in the silver ETF was five times that of the 37 million daily average of the first quarter and blew past its previous daily peak of 149 million shares set in early November. On Tuesday, the silver ETF's trading was 125 million shares, falling just 21 million short of the SPDR volume.

The volume in silver ETFs is remarkable because the ETF until recently was relatively small and was shunned by mainstream traders. Its ascent reflects a surge in appetite for silver, which itself is reflecting a rise in the price of gold.

Now it is no secret, and widely believed, that SLV does not have the Silver bullion it claims to hold to back up this ETF.  Consider then, "if" SLV purchases new lots of silver based on investor demand for SLV shares, BUT they are really only purchasing futures contracts [against JPM short sales of same], wouldn't this be a major catalyst for the rise in the price of COMEX Silver over the past month?

Could day traders entering the Silver playing field, via the SLV, be the driver of the recent "rush" higher in the price of Silver...all supply/demand fundaments aside?

The straw that breaks the camels back, so to speak...

I am merely speculating, but this scenario does seem to have some merit, on the face of it.  It does not however explain the huge withdrawals of Silver from the ETF the past 30 days.  Close to 20 million ounces of Silver have reportedly left the confines of the SLV vaults since late February.  Oddly enough, those vaults are under the custodianship of JP Morgan.  If Silver is leaving the SLV and Silver prices are rising, what exactly is going on?  Again I am just speculating...

Clearly the CRIMEX criminals are not happy about the new "players" in the Silver market, and are going to great lengths in an effort to chase them away, and regain some kind of control over Silver prices.  Three margin hikes in one weeks time?  All as Silver neared it's historic high of $50 an ounce.  Is $50 an ounce Silver the straw that will break the banking cartels back?  The global economy's back?  The US Dollar's back?

$50 an ounce Silver almost reminds me of Gold at $1000 an ounce.  And look at what Gold has done since it tore that CRIMEX wall down.  For that matter, consider what Gold has done since it took out it's "1980" high.  At it's peak of $1575 earlier this week, Gold has risen 85% since it broke through it's old 1980 high.  Folks, Silver has only just in the past week gotten back up to it's 1980 high!  Silver is still VERY cheap relative to Gold.  An 85% rise in the price of Silver from here would see Silver at over $90 an ounce!  Silver has only now just caught up with itself, it still has to catch up with Gold.

Here is a very revealing "big picture" look at Silver.  We ALL remember the 2008 smackdown Silver took as the TBTF banks along with the Fed attempted to preserve our financial system.  The price suppression that followed that 2008 smackdown is legendary.  Only in early April of this year, when price broke through $40, did Silver finally catch up to the up trend that had been established in 2007-08 prior to the economic crisis.  Only when Silver broke through the top of the uptrend channel at $45 in late April did Silver become overbought.  And most notably, as of this morning's low of $40.33, Silver has successfully retested it's predominant uptrend line that has been in place since January 2008.  In essence, Silver at $40 is very fairly priced, and still relatively cheap.

Based on this "big picture" of Silver, and our criminal banking cartel pulling the CME's strings at the CRIMEX, it would not be surprising to see Silver develop a base up here between $40 and $45 before attempting to take out the $50 price level for good.  A pause to refresh and refuel here would be very constructive for Silver, but a V-bottom blast higher can not be ruled out.  A blast higher from here would require a great number of new buyers to enter the market...and in the near-term I would expect there to be more sellers than buyers as the speculative froth in Silver dissipitates.  The short squeeze in Silver from $40 was so intense because there was a lack of sellers in the market.  The stampede into Silver, as we referred to it, has subsided.  The Silver market must now rebalance itself before moving higher.

As I put this post together I note that the US Dollar is DOWN 31 pips at this moment and resting at 72.81 on the US Dollar Index.  Damn that is ugly.  And yet Silver and Gold are up weakly, and Platinum and palladium are getting whacked...ONLY ON THE CRIMEX.

Is Gold About to Go Vertical?
by Brett Arends
Gold is in a bubble. Anyone will tell you that. They've been saying it since gold was about, oh, $500 an ounce.

But it's a funny kind of a bubble. It's the only one I've encountered where so few people seem to own the asset in question.

During the dot-com bubble, you met lots of people with tech stocks. Taxi drivers told you what dot-coms they owned.

During the housing bubble you met normal, ordinary people who were trading up to expensive homes using adjustable-rate mortgages, buying new condos off plan to flip, and cashing out their fictional "equity" through a refinance mortgage.

But who actually owns gold? I keep hearing about the gold bubble, but every time I ask people if they own any themselves, they say, "no, no, of course not, it's a bubble."

Some bubble.

Less than 1% of ALL global financial assets are invested in Gold.

Debunking the Gold Bubble Myth
By Eric Sprott & Andrew Morris
The 0.7% ownership data point also has interesting implications for global gold ownership going forward. Consider that to return to a meaningful level of gold investment, say to the 5% level of 1968, it would require over $9 trillion of gold investment today, or about 6.5 billion ounces of gold at the current gold price. This would represent well over 1.3 times the amount of gold ever produced throughout history and four times the amount of known gold reserves.4,5 So not only is the public relatively underinvested in gold, but at current prices it isn’t even possible to increase our gold holdings back to a meaningful level.

$1,500 Gold Is Just the Beginning

By Christopher Barker
If gold has reached $1,500 per ounce before the big-money institutional investors have even managed to incorporate the metal into their allocation strategies to any significant degree, and silver has exploded to $45 per ounce before the mainstream has even begun to take it seriously, what sort of additional upside potential must you therefore ascribe to the sector as massive capital flows finally begin to find their way into gold and silver?

No Sign of the Top in Silver
By Chris Mack 
Silver may have seen a near term local top, however it has not seen the top in its ongoing bull market. It's in severe backwardization, speculators are selling, commercial shorts are unable to cover their positions, and major bullion dealers are struggling to meet increased investor demand. All the while, sentiment has already shifted to be bearish as almost everyone is expecting a huge correction in price. In fact, the structure of the silver market could not be more bullish.

Take That You Silver Bulls
By Patrick A. Heller
In my judgment, the extreme measures taken by the U.S. government to suppress gold and silver prices in the past week are signs that the COMEX and London Bullion Market Exchange are at heightened risk of default. If they were not at a greater risk of default, the U.S. government would have pursued less blatant tactics that they have used in the past such as sneaking physical gold and silver on to these exchanges. That such a tactic was not used can be interpreted as meaning that supplies of physical gold and silver are becoming more difficult to locate.

If There's No Shortage of Silver, Why Are Forward Rates Negative Again?
By Atlantic Capital Management
Until those calling for a top in silver prices can explain why silver forward rates (SIFO) are once again negative, their argument will be far from convincing. Essentially, negative SIFO rates mean that some investor (or investors) who's short actual metal is paying physical holders a premium to obtain the metal.

In the opaque world of precious metals, forward rates are the foundation for “leasing.” Silver shorts that participate in leasing are actually lending cash to the owners of the physical metal. The silver owners then hand over that metal to the cash owners (the shorts) as collateral for the loan.

When the forward market shows negative rates, it means that the cash owners are, instead of earning an interest rate on their loan, paying someone else to borrow it. This is like going to your local bank and having them pay you interest to borrow the bank’s money. The only reason this would occur is if cash owners are being forced to repay or return physical metal that they do not have and are having a lot of difficulty finding the actual metal through other means.

Another Decline In Registered Silver Brings Total Comex Physical To Multi-Year Lows
By ZeroHedge may wonder just how "justified" the fall in silver price has been over the past 2 days.

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