Tuesday, November 22, 2011

"Holy Crap", Is Silver On The Cusp Of The Mother Of All Short Squeezes?

Efforts by the pestilence we know as The CRIMEX, to smash the price of Silver and force December futures contract holders to cough up their claims on physical Silver, appear to have failed miserably.  Robust discount prices Monday brought bargain hunters into the Silver playground, instead of shaking down the longs, and turned up the heat on the Rat Bastid Banking Cartel.

But be wary, a dead bee can sting you twice.

2.8 Million Ounces of Silver PHYZZ Withdrawn from COMEX Vaults Monday!
From SilverDoctors
We have 3 major withdrawals to report from Monday's COMEX silver inventory movements, including an almost unprecedentedly large withdrawal of 2.3 million ounces from Brinks' vaults!


*Brink's had a massive withdrawal of 2,346,587 ounces out of eligible vaults

*Delaware had a withdrawal of 6,999 ounces out of eligible vaults

*HSBC had a withdrawal of 406,010 ounces out of eligible vaults

*No Changes for JP Morgan or Scotia Mocatta

*TOTAL REGISTERED SILVER was unchanged at 32,563,955 ounces
*TOTAL ELIGIBLE SILVER declined a net 2,759,596 ounces to 73,322,667 ounces
*TOTAL COMEX SILVER INVENTORY declined to 105,886,622 ounces

Over 1 million ounces of MF Global clients' silver remains in the custody of The Morgue:

*Registered ounces of metal currently not available for delivery as
of 11/4/11 due to MFGI bankruptcy. Included in above totals.

Brinks 210,320
Delaware 65,706
HSBC 793,734
Scotia Mocatta 351,156

Clearly COMEX silver inventory volatility is increasing almost exponentially now, as customer confidence in the integrity of the exchange itself is now shattered in the wake of the MF Global theft as the CME has refused to make the customers good on the MF Global/JPM theft, and the bullion banks scramble to shift the remaining phyzz under their control around to meet delivery requests and put out fires.

Regarding yesterdays hits on Gold and Silver:

Silver = "holy crap"
From Dave in Denver, The Golden Truth
Gold o/i dropped 814, not much considering the magnitude of the hit. Dec o/i dropped 11,819 but there's still 166,545 open December contracts. This is quite a bit considering there's only 5 more trading days to first notice, including today.

Silver o/i went UP 4405, and December o/i INCREASED 997 contracts to 33,585.

Make your own inferences, but this indicates that someone is either trying to squeeze silver a lot higher and maybe clean out the inventory on the Comex OR JP Morgan is going to make the most aggressive attempt we've ever seen at taking down silver...

Understand that 33,585 Silver contracts represent 167,925,000 ounces of Silver.  The CRIMEX ONLY has just over 32 MILLION of Silver registered for delivery [roughly 6,500 contracts worth].

Options on the December Silver contract expired today.  First Notice Day is Wed. Nov. 30.


And if the CRIMEX boys didn't have enough problems finding Silver to cover their obligations in the futures markets, I'd like to make mention again of this important news:

Eric Sprott just filed a 6-K in Canada so that he can buy an additional $1.5 BILLION in silver (PSLV was $500 million). This may be approved in as little as 2 weeks from now.

TORONTO, November 16, 2011 — Sprott Asset Management LP announces that it has filed a preliminary short form base shelf prospectus containing information relating to units of the Trust with securities commissions or similar authorities in all provinces and territories of Canada. Under the shelf prospectus, the Trust may offer from time to time during the 25 month period after a final receipt is received for the prospectus up to US$1.5 billion of units of the Trust.


I do not know if you were in the room in Spokane when Eric Sprott was at the podium and said that when he went to the market recently to buy approximately 20,000,000 ounces of silver, that it was really difficult to source that amount. It took him three months to receive it all and that approximately 50% of that silver was actually MINED during the three month wait. It shows what a joke the paper silver (and gold) market is when it gets pounded continually but if you actually try to acquire a large amount, it is difficult to source.

Yesterday that would have been around 48 million ounces. With the rise in the price, that means a lesser amount, but that is a lot of investment demand silver in a market that we believe is very tight to begin with.

Couple of comments…

*It is my understanding that Sprott has the approval, but has not made the decision yet that this is a go and nothing has been put into play. However, they now have the right to do so.

*It sure makes sense when you are already as long as much silver as Sprott is in a very tight market. This new buying can only goose the price and make their existing silver investments become more profitable. Yes, there is a chance they might not even be able to buy that much over a short period of time. But, boy would that spook the shorts.

*Yes Frank, I was in the room. Eric knows how tight the silver market really is because he is a major source actually doing some heavy buying. What he told the audience was not conjecture, it is reality. This understanding is a huge factor in the GATA camp’s bullishness and it has been that way since $16.

*On that note, here you go…
Just to put it in perspective, here is a list of recent bullion purchases by PSLV and CEF...

CEF total silver: 77 million (currently)

PSLV total silver: 22.3 million ounces (currently)

CEF -> April 6, 2011 1.7 million ounces

PSLV -> Jan 13, 2011 (finished acquiring on this date) 22.3 million ounces

CEF-> May 10, 2010 7.2 million ounces

CEF-> Nov 9, 2009 5.2 million ounces

At current prices 1.5 billion dollars works out to 45 million ounces. After this PSLV will still have less silver than CEF but it will triple in size from it's current level.

Even including CEF purchases the total amount of silver is still nearly double what these two funds took off the market last year. If nothing else, this purchase will finally put to rest the question about a silver shortage, a shortage of physical silver would be very difficult to hide when this much incremental bullion is taken off the market.

Peter at http://www.stockreflex.net/

More TRUTH from Bill Holter this evening at the Lemetropole Cafe :
Random thoughts

To all; the "Super committee" failed to reach any consensus to cut even $1 from future spending. Gee, what a huge surprise! Did anyone really believe back in August that Congress would cut any spending anywhere for anything? The bottom line is that Congress MUST spend to keep GDP from imploding statistically and the debt MUST increase (now exponentially) to keep the debt bubble from imploding. The only way for The Treasury to "pay their past bills" is to borrow more. Revenues alone cannot (have not for many a moon) pay the bills. With normallized interest rates, revenues will not even pay more than the interest on accumulated debt. Broke is broke, enough said.

Meanwhile the sovereign debt contagion in Europe is spreading to France and Belgium while Germany's Commerzbank is doing it's best to pull a "BankAmerica". They need another 5 Billion Euros in capital that they have said in the past that they don't need. Foreign bank holdings at the U.S. Fed have ballooned again illustrating the faith and trust (lack of) amongst banks. Make no mistake, we are living through an electronic bank run, no lines or shuttered doors in this Greatest Depression because it is all done with computers. The fact that we don't "see it" in videos or on the news makes it that much more likely that a surprise bank holiday will eventually result.

Yesterday Sprott management filed a $1.5 Billion shelf registration for their Silver ETF "PSLV" to which I say BRAVO! Of course it would have been better were this already filed earlier so they could have bought from all the panicked sellers around for the last 4 trading days. I of course say this in jest because the "sellers" were only selling fraudulent and unbacked pieces of paper supposed to represent Silver, PSLV only buys the real deal as per prospectus. Maybe the next time an option expiration comes around, Sprott can be waiting to buy real Silver and call the paper fraudster's bluff?!

As for the offering of $1.5 Billion, is this much real physical Silver even for sale? The COMEX says they have something like 32 Million ounces registerd and available for deliver, this is less than $1 Billion. Where will it come from? To put this amount in perspective, it is less than 12 HOURS of the federal DAILY DEFICIT. So we have sort of a "double perspective" here, on the one hand $1.5 Billion is a huge, huge number compared to actual available physical supply yet on the other hand, it amounts to less than a ham sandwich when compared to the big picture! Think about it, $1.5 Billion nowadays is nothing, in some circles it is less than nothing. Can you say a "disconnect from reality"?

I wrote yesterday regarding Gold finally being talked about to "save the system". I would like to add a little because this is very dangerous to the powers that be. On the one hand, Gold is hushed up, muted, muzzled and price suppressed to support sovereign issuance of paper. On the other hand, it IS the answer. You must understand that Gold would not be spoken of (other than as a joke of an asset class) if there were not a huge and now unsolveable problem. The fact that it was even mentioned in such "polite circles" means that something has gone very wrong and the end is very very near. The financial system is spinning out of control as the paper bubble has gotten far larger than it's master creators. The paper bubble has bankrupted the banking system and sovereign treasuries, they must (and will) be recapitalized to start anew.

Revaluing Gold has always been the answer and now as the biggest paper bubble in all of history implodes, it will be revalued as never before in direct proportion to the bubble that was blown. The entire system must be recapitalized, it must be "reset" back to zero. Savers in paper will have to start all over again as has been done many many times throughout history. In essence, debtors will be forgiven and savers punished. This is not fair I agree, but it is the way it is and always has been. Savers do not have to be wiped out, all they need to do is change the medium they are saving in before this all passes. A few have and will, the masses will not which will amount to governmental confiscation of their savings. Some things have never changed from the beginning of history.

I wish you all a Happy Thanksgiving! Regards, Bill H. P.S. One can never know what they really have until they lose everything.

Is Silver on the cusp of the Mother Of All Short Squeezes?

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