CRIMEX Desperate, Have They TIghtened There Own Noose?

"It's true that allowing America to default would be irresponsible. But it would be more irresponsible to raise the debt ceiling without simultaneously taking dramatic steps to reduce spending and reform the budget process."
 -House Speaker John Boehner

If you read anything today, please find time to read this piece by Avery Goodman posted on Seeking Alpha yesterday.  The manipulative smashing of Silver prices last week has only made the short side situation for our criminal CRIMEX bankers worse.  Did these crooks really believe that marking down the paper price of Silver by 35% was going to destroy demand for this Precious Metal?  This is a MUST READ:

Anatomy of Silver Manipulation - How Low Can It Go?
By Avery Goodman

The so-called “spot” price is now largely irrelevant, but short sellers have still not acknowledged that fact to themselves. Intense physical silver demand continues. This is amply illustrated by continued backwardation. Dealers at COMEX and the LBMA may create fake prices at will, but the cash market is their achilles' heel. Short sellers have put paper silver on a fire sale at the futures exchanges. Yet they have not improved their position by doing so. They have, instead, insured a worse problem. Cash buyers put the fear of God in the hearts of silver manipulators. Cash buyers can put them into bankruptcy, destroy their power over the market, and discredit the futures markets, LBMA and the central bankers by inducing multiple defaults.

New “urban” myths about mysterious eastern billionaires buying up silver have spread quickly. On April 28, 2011, silver was selling for a high of $49 per ounce. The open interest had fallen to as low as 129,711 as short sellers slowly capitulated, and serious cash buyers took the bait. Allowing higher and higher fiat prices was effective in allowing open short positions to be closed, which is what short sellers must do before it is too late. On one day, for example, in early Asian trading, prices rose temporarily by over 10%. Asian short sellers were breaking ranks and buying back positions at any price. Then the bull-headed spirit of their European and American comrades awoke, and the current attack on silver prices began.

The market is NOT becoming dispirited or shell-shocked, as would have once been the case under similar conditions. Instead, we are seeing heavy buying by well capitalized long buyers who have probably read Andrew McGuire’s emails. They now know the score. They know that this is simply a manipulation event. As of May 5, 2011, the open interest had already risen to 134,804. The evil “Empire” is facing 5,093 new long positions. Two hundred sixty six of those are “same-month” positions, bought with a 100% cash, and need to be delivered this month.

Tens of thousands of other positions have changed hands. The trading “bots” managed to close most of their intra-day shorts into margin calls and stop loss orders, but have not accomplished much in terms of the level of open interest. Tens of thousands of existing contracts plus 5,093 additional hard long positions were unintentionally created by the trading bots, and all of these are now transferred from undercapitalized longs who would never have taken delivery, into much stronger hands.

The percentage of contracts, going forward, that will be forced into delivery as the months pass, will rise as a result of the transfer from weak to strong hands, and the silver short sellers’ problem is now bigger. New buyers have streamed in and bought at lower prices. That is the natural response of any bull market to a major manipulation event like this one. Silver is in a secular bull market. That has not changed as a result of a manipulation event. In fact, nothing has changed, except the unfavorable position of the silver short side manipulators, who are facing a much worse picture now than they did before they started this manipulation.

Price drop makes silver an even hotter investment in India

Chinese and Indian money "Buying the gold and silver bloodbath"

The "bloodbath" in Silver is, in the long run, clearly a bonus opportunity for Silver Bulls to buy Silver bullion "one more time" at fire sale prices.  We should not expect prices in Silver, or Gold, rise in a straight line back to their recent highs, but we should expect them to get there sooner, rather than later.

Gold goes into June delivery on May 30.  June is the second biggest delivery month of the year [December is number one].  Silver clearly has delivery issues this month of May, or we would not have had this severe manipulative take down in price in an effort to get longs to cough up their metal to meet demand.  I guess with the rise in demand because of the "sale price", the Silver shorts will have an even more difficult time meeting delivery demands in July.

The battle may have been won by the CRIMEX crooks, but the war rages on.  Success for our criminal bankers can only be measured by how long they can keep prices "down here".  Recent history suggests that no matter the initial success of criminal banker induced drops in Precious Metal prices, the resulting low price is short lived as rising demand for the metals on falling prices quickly overwhelms available supply.  The days of "long recoveries" to get back lost ground by the Precious Metals bulls are behind us.  The whole world knows the Precious Metals markets are rigged, and a quickly coming to the realization that the "jig is up".

James Turk - “Silver Will Hit New Highs in a Matter of Weeks”
So what is ahead for this current correction? Repeats of 2004 and 2006, or another 2008? My guess is none of the above. It took several months after these three previous corrections before silver climbed above the high price that preceded the correction. This time I expect silver will take only several weeks before exceeding $49.78, the 31-year high reached on April 25th. The reason?

As evidenced by silver’s backwardation, which began in January and continues to this day, the demand for physical silver has really accelerated. As a result of last week’s price decline, backwardation has roughly doubled in size. This is clearly a a signal of strong demand for physical silver, and further evidence of a point I have been making for some time, that the paper silver market is losing its significance as a price discovery mechanism.

Plenty of Dollar negative news this morning to put a smile on a commodity bulls face:

China trade gap widens to $11.43 billion in April
China's monthly trade surplus grew for the second month in a row, in April.

The world's second largest economy reported a whopping $11.43 billion surplus in April, up from its $1.68 billion surplus recorded in the same month last year, China's General Administration of Customs said Tuesday.

Exports rose 29.9% year-over-year to $155.69 billion in April, trouncing the December record, and imports rose at a 21.8% rate, to $144.26 billion.

U.S. import prices climb 2.2% in April
WASHINGTON (MarketWatch) — U.S. import prices climbed 2.2% in April, the Labor Department said Tuesday, marking the first time prices have climbed over 2% in consecutive months since June 2008.

The April advance follows the 2.7% jump in March and was stronger than the 1.6% gain that economists polled by MarketWatch had anticipated. Prices of imports are up 11.1% compared to April 2010.



Imported fuel, accounting for 80% of the April 2011 gain, shot up 6.7% on the month.


But excluding fuel, import prices also are up, rising 0.6% on the month and 4.3% over 12 months. Industrial supplies and materials accounted for most of that gain, the Labor Department said.


“We see the import price data as a clear and present danger on the inflation front — although it is a perspective that has not been shared by Federal Reserve Chairman Ben Bernanke,” said analysts at RDQ Economics. Bernanke has often said he expects the commodity price impact on inflation to be “transitory.”

Treasurys Prices Dip Ahead of New Supply
NEW YORK (Dow Jones)--Treasury prices edged lower Tuesday as investors positioned themselves for this week's sale of $72 billion in new U.S. debt.

Regional banks and hedge funds were among the sellers, traders said. As expected, three-year notes underperformed the market ahead of a 1 p.m. EDT $32 billion auction Tuesday. But their yields remain below 1%, leaving some market participants wondering whether a sufficient concession has been built to attract strong buying at the sale.

A concession is when market participants push down prices ahead of a debt sale, making the security more attractive at the auction.

"It's hard to love threes at 95 basis points...and we're less sure of outright interest with positions so neutral and yields so low," said David Ader of CRT Capital Group. The last four sales of three-year notes offered an average yield of 1.239%.

In early New York trading, the three-year was down 3/32 in price to yield 0.946%. Bond prices and yields move inversely.

Benchmark 10-year notes fell 7/32 to yield 3.168%, not far above the lowest yield level since December. The 30-year bond lost 10/32 to yield 4.320%. Both securities face their own batch of supply later this week, with $21 billion of new 10-years Wednesday and $16 billion of new long bonds Thursday.

Boehner opts for 'red meat' on debt ceiling
House Speaker John Boehner indicated Monday that he plans to hold a hard line in debt-ceiling negotiations.

Among his demands: Spending cuts in exchange for support to raise the debt ceiling -- and the cuts will have to be greater in magnitude than the ceiling increase.

"Without significant spending cuts and the way we spend Americans' money, there will be no debt limit increase. And the cuts should be greater than the accompanying increase in debt authority the president is given," Boehner said in a speech at the Economic Club of New York. (Debt ceiling: What you need to know)

Boehner reiterated his stance that the spending cuts should be in the "trillions, not just billions" and that simply agreeing to spending and deficit goals for the future won't suffice.

"They should be actual cuts and real reforms to these programs, not broad deficit or debt targets that punt the tough questions to the future. And with the exception of tax hikes -- which in my opinion will destroy jobs --everything is on the table," Boehner said.

Import prices have now risen for seven straight months, how long is Bumbling Ben Bernanke going to continue explaining away obvious inflation as "transitory" [temporary]?  Where is the line when it comes to "temporary"?

The Chinese trade surplus is reported as a shock.  It should not be shocking at all.  It certainly is not going to be welcome by our conniving Treasury Secretary.  He will no doubt renew his demands for faster Yuan appreciation versus the US Dollar.  Of course should the Yuan rise, the Dollar will fall, and blow holes in Timmy Geithner's claim that the US supports a "strong Dollar".

There will be no strong Dollar as the US debt burden continues to escalate.  Another $72 BILLION of new debt will be added to the books in just this week alone.  And were it not for some "questionable" book keeping entries at the Treasury, this weeks debt offering will hurdle the current debt ceiling.

The debt ceiling debate is sure to bring serious pressure to bear on the US Dollar.  Recall the days leading up to the budget agreement that halted the threat of US Government shut down.  The debt ceiling debate will make that previous budget debate look like a carnival road show compared to what this coming Congressional battle royal over raising the debt ceiling is going to present.

The US Dollar may be technically due for a rally and strong bearish sentiment may support the need for that rally, but dead cats only bounce so far.

Silver and Gold have now both retraced close to half of their recent declines.  Selling pressure may resume here as overhead supply may begin to way on both in the very near term.  Do not be discouraged by a dip in price here.  A retest of recent lows would be beneficial to both Precious Metals moving forward, and help establish an interim low that the Bulls can build a base from, before moving higher in the weeks to come.

A dip towards $1480 in Gold should be bought vigorously if it holds.  A dip towards $35.50-36 should be bought vigorously if it holds.  Successful retests of recent lows should begin to clear some shorts from these markets, and invite the bulls back into the battle.  A base in Silver between $36 and $42 would be very constructive as would a base in Gold between $1480 and $1530.  That being said, a move above $42 in Silver and $1530 in Gold may signal a resumption of the long-term trend towards much higher prices in both Precious Metals.

The Silver Market Manipulation: A Near Death Experience For JP Morgan

By now, we all recognize that last weeks assault on the Silver market was the result of multiple margin increases in the Silver futures contract traded on the CRIMEX in New York, AND NOTHING ELSE.  There was no fundamental reason for a 30% takedown in the price of Silver over the course of "one week".  Silver prices were definetly overbought and due a correction "technically", but what we witnessed last week was far from a "normal technical correction".  No, what we witnessed last week was clearly "market manipulation" on the highest order. 

Warren Bevan, in his Precious Metal Stock Review summarized last weeks fall in Silver prices best, "...
the swift and blatant nature of the move is suspect."

He continues:

I have never seen a commodity falling and still have its margins risen. It may have happened, but I don’t recall ever seeing it.

Normally if the powers that be at the CME think a market is a bit too frothy they may raise margins to reduce speculation. This act just increases the amount of money a trader has to lay down initially in order to trade a contract in said commodity.

Silver has had its margins raised numerous times during this latest run that began in August 2010. Every time we’ve seen a correction. Mostly they’ve been sharp and relatively shallow before moving back into new highs.

This time however, after each correction the CME raised margins again, and again, and again, for a total of five times in only 8 trading days. The last margin increase was announced late in the week and will take effect on Monday May 9th.

If this were a fight, it wouldn’t be fair. It would be like hitting your opponent with a knockout punch. Letting him fall then get to one knee before hitting him with another and another and another. The fight would have been stopped by observers after the first and certainly the second punch. But no such luck when the CME is involved.

You’d get more jail time if you robbed the old lady next door of her piggy bank while she was out of town than if you just robbed wise investors who see the merit in silver of billions of dollars in only a few days.

In the world of ultimate fighting silver has been trying to tap out for the last $10 but the referee/CME is ignoring them putting silver/the fighter in great harm. Although I’m not worried for silver’s sake. Its underlying fundamentals haven’t changed, it’s only gone on a blowout sale, and it’s likely to be very short-lived.

Make your calls and place your orders now. We may see slightly lower prices so perhaps place half your order now and the rest in a few days or a week is best, but this gift is much better than the one you’ll get this coming Christmas as it will keep on giving and giving for years to come.

Who is this CME Group?

CME Group at a Glance
Serving the Risk Management Needs of Customers Around the World
Building on the heritage of CME, CBOT, NYMEX and COMEX, CME Group serves the risk management needs of customers around the globe. We provide the widest range of benchmark futures and options products available on any exchange, covering all major asset classes. Our collective vision is one of ongoing global growth, innovative product development, continually enhanced technology and the highest level of service available on any exchange.

"...serves the risk management needs of customers around the globe."  Unless of course they happen to be
Silver investors and traders!  The CME is not interested in managing the risk of market participants from the general public.  No, they are only interested in covering the asses of the crooks that operate above and beyond the commodity laws of the United States.  And their own asses as well.  Should the CRIMEX member banks default on their obligations in the CME managed futures market, the CME, as the clearing house, would be held liable for CRIMEX member banks losses, and resposnsible for covering them.  In effect, the CRIMEX banks mounting losses over the past month in the Silver market, due to their "illegal" short positions, put the entire CME Group at risk of destruction last week.  The one question that begs to be asked is, "where were the margin increases as prices galloped higher during the month of April"?

Only when the risk of collapse of the CRIMEX became real did the CME react by raising margins in the Silver market [only].  The CME was not protecting Silver futures market "participants" in general, they were solely protecting the likes of JP Morgan and HSBC, the lead criminal bankers on the CRIMEX.  Quite frankly, by protecting JP Morgan, they were protecting the US Federal Reserve.

How real was the risk of a CRIMEX collapse that the CME Group was forced into action to protect JP Morgan, and came out swinging a hammer only Thor could appreciate?  The risk of collapse was very real if you look at what we have learned over the past few months browsing the Internet.

In a post here in this blog on March 22, 2011, IS THAT A SILVER BULL TRAP? I shared the following:

JP Morgan has a vested interest in keeping Silver prices below $36 an ounce. Any substantial rise in price above this point would potentially cost JP Morgan BILLIONS of Dollars, and possibly put the banks solvency at risk. We learned this about JP Morgan last November when Wynter Benton's Friends Of Andrew McGuire were attempting their December delivery assault on the CRIMEX:

"WB: JPM is in worse shape then we ever dared to hope 20-Nov-10 07:06 am
Blythe,

This is what I am now hearing from traders on the floor. These traders are not even sure if Blythe knows the full extent of JPM's silver exposure.

When I first started to realize that JPM has shorted far more silver than they could ever hope to cover, my first question was "why would they do that?" Not only that, why do it with a commodity where you must report your positions through the COT and Bank Participation Report? After all,the whole world can see what you are doing. [my added comment: Ted Butler included!]

Now I know the answer. According to Max Keiser and now a couple of other independent sources, it seems the reasons why first Bear Stearns and now JPM are so desperate to manipulate the price of silver down is due to the fact that BS and JPM shorted billions (yes billions not millions) in ounces of silver through their derivatives.

Just like Joe Conason at AIG, silver shorting through derivatives have caused literally billions in losses not the millions that we know about publicly. That is why JPM has been so desperate to manipulate the price of silver downward so blatantly. If I am right about this, then JPM will be dead when silver hits $60 or so. Based upon the COT and BPR, if silver hits $60, JPM will lose around an additional $6 billion dollars, a large number but not nearly large enough to bring down mighty JPM.

But what is not known is that due to the way that its derivatives are written, JPM's losses are exponentional once silver breaks $36 or so. Rumors has it that JPM could be losing as much as $40 billion once silver is above $50. It has something to do with how the derivatives are written with payment tied to the price of silver.Since JPM was a price manipulator with respectt to the price of silver, JPM assumed that any derivative payments tied to silver would be less than they would be tied to some other index like the CPI or TIPS implied inflation index. JPM's inability to hold down the price of silver relative to other measures of inflation will cause unbelievable losses due to a mismatch in their derivative structures.

In essence,JPM has bet (a huge amount)through derivatives that silver will never outperform inflation. And why not,since JPM assumed that it will always be able to manipulate the price of silver. We have now come to understand that JPM's loss exposure to silver is much greater than we have ever dared to hope.

WB: In an effort to clear up some recent confusion regarding my latest posting, I will try to explain what I have recently uncovered.

JPM's current short silver position is estimated to be approximately 150 million ounces down from the recent 180 million ounces in August. The losses from these positions are easy to figure out. For every $10 rise in the price of silver, JPM will lose $1.5 billion. But what I have recently discovered is that through its derivative positions, JPM will lose about 5 times that amount ounce the price of silver is above $36. And ounce silver is above $45 dollars, JPM's losses will increase to 8 times the amount of losses in their short positions. The reason is that as the price of silver increases, certain provisions get activated which multiplies the losses.One reader asks the question why isnt the price of JPM going down to reflect the lossesd in silver. My answer is that the price of silver is not high enough to begin to trigger losses in their derivative positions. But once silver approaches this critical level say around $36, then you should begin to see the price of JPM stock begin to reflect these losses.

In fact, traders are saying that once the price of silver surpasses the stock price of JPM, then for every dollar the price of silver go up, JPM should lose around 70 cents or so. This means that if silver hits $60, JPM will be a single digit stock.

JPM market cap is around $170 billion. If silver losses are as great as $40 billion in cash , then JPM will be insolvent. Period.

From your former traders (whom you dismissed so callously)"

If this information from November 2010 were accurate, it might be safe to say the JP Morgan AND the CRIMEX were both on the verge of collapse with the price of Silver quickly approaching $50 an ounce on April 25, 2011 when we saw the first of the five margin increases announced by the CME.  Silver prices predictably fell on the announced margin increase, but what shocked JP Morgan and the CME is how quickly prices rebounded back towards $50.  Within 24 hours of the margin increase taking effect, and a $5 an ounce haircut, Silver was back knocking on $50.  At this point the CME decided it was in "their own" best interests to bring their hammer to the party and pound Silver into submission.  Their repeated margin hikes last week saved JP Morgan from default, and prevented the CME Group from being left holding the bag.  These margin hikes of course royally screwed the investing public, but who are we to complain?  JP Morgan was saved!

Does the CME Group have a Code Of Ethics?  You might be shocked to learn that they do.  Of course, what is a Code Of Ethics, if it not enforced or aheared to?

I found these choice headings in the CME Group's Code Of Ethics amusing:

Compliance with Laws, Rules and Regulations
Obeying the law, both in letter and in spirit, and behaving in a manner consistent with CME Group's values is the foundation of CME Group's ethical standards. All directors are expected to conduct their business and affairs in compliance with applicable laws, rules and regulations, and to encourage and promote such behavior for themselves, officers and employees.

Fair Dealing
Each director should deal fairly with CME Group employees, customers, members, shareholders, regulators, competitors and suppliers. No director should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair dealing practice.

Reporting Illegal or Unethical Behavior
Directors should promote ethical behavior and encourage an environment in which CME Group encourages employees to talk to supervisors, managers or other appropriate personnel about illegal or unethical behavior. CME Group has established avenues of communication to enable employees or others to report suspected misconduct, including CME Group's Compliance & Ethics Helpline (1.877.338.4545). No one will be subject to retaliation for a good faith report of suspected misconduct. Directors should communicate any suspected violations of this Code promptly to the Chairman of the Board or the Chairman of the Governance Committee.

Enforcement of the Ethics Code
The Governance Committee of the Board of Directors shall determine appropriate actions to be taken in the event of violations of this Code of Ethics. Such actions shall be reasonably designed to deter wrongdoing and to promote accountability for adherence to the Code. In determining what action is appropriate in a particular case, the Governance Committee shall take into account all relevant information, including the nature and severity of the violation, whether the violation appears to have been intentional or inadvertent, and whether the individual in question had been advised prior to the violation as to the proper course of action.

Waivers of the Ethics Code
CME Group will waive application of the policies set forth in this Code only where circumstances warrant granting a waiver. Waivers of the Code for Board members may be made only by the Governance Committee of the Board of Directors and will be promptly disclosed as required by law or regulation.

In a blog post on Mrach 9, 2011 JP Morgan Looking To Napalm Silver Market I included an essay by Bix Weir, Silver "Scorched Earth" and The END of Market Manipulation .  In this essay Mr. Weir makes the case that the US Banks that are grossly short Silver on the CRIMEX may have no choice but to continue to short the Silver market to the point at which they, the US Banks, have to bailed out to prevent the collapse of the themselves, the CRIMEX, even the global monetary system:

THEY HAVE DECIDED ON A "SCORCHED EARTH" SILVER SHORTING STRATEGY BY INCREASING THE SIZE OF THEIR SHORT SO MUCH THAT THEY BECOME...TOO BIG TO FAIL IN THE SILVER MARKET!

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.

Although I've never been a fan of this saying we're about to witness why...

"GREED IS GOOD!"

I think the US Bank COMEX short will continue to grow such that they will have such a large and dangerous short position in silver that they will either beg for a "Get Out of Jail Free" card or TAKE THE ENTIRE SYSTEM DOWN WITH THEM.

BE PREPARED!

IMPORTANT: I'm not saying that silver investors are out of the woods when it comes to silver market manipulation BUT we are very near a dramatic END GAME for silver manipulation. "THEY" can still place the price of silver anywhere they want and until the computer rigging programs are turned off be prepared for ANYTHING. I have no doubt they have more High Frequency Trading rig jobs left up their sleeves BUT if you are on the sidelines with physical silver, out of their reach, you will be more than fine.

Could we have just witnessed the capitulation of the Silver Market Manipulation that Silver investors have endured for years?  With this obvious bailout of JP Morgan by the CME Group, will we now see the banks that have worked in unison to suppress the price of Silver jump over to the long side and ride Silver to the Moon?  Will global investors, the "smart money", now rush into the Silver market at these sale prices and snap up the remaining Silver confident that this manipulative game at the CRIMEX has at last finally ended?

Only time will tell, but I seriously doubt the CME Group is going to risk their existence further on the games of JP Morgan and their masters at the US Federal Reserve.  It would not surprise me to see, in the very near future, the CFTC finally come forward with new position limits in the precious Metals and energy sectors as a result of what we have witnessed the past week on the CRIMEX.  If in fact JP Morgan has "seen God" at $50 an ounce Silver, will they just stick their hands in their pockets here, lucky to still be alive, and just let the Silver market rocket higher from here?

King World News interviewed John Hathaway of the Tocqueville Gold Fund.
When asked about the smash in the metals Hathaway stated, “I think people go crazy over these price changes and I understand that. I understand how it affects the psyche and all that, but the idea is you have physical (metal), it’s an asset. Whatever it’s valued at one day to another in paper money is irrelevant, you don’t price your house every day.”

When asked about silver specifically Hathaway had this to say, “My instinct is that this was too quick for this to be final. It’s like a haymaker (in silver) and it knocked everyone for a loop. Could it go to $30, could it go to $28? Yeah I suppose so, it could, but it wouldn’t bother me.

The long-term fundamentals for silver are no different at $35 than they were at $45 and what they were at $15. It’s a hard idea to get across, but I think people get too wrapped up in current price action.”

When asked about gold Hathaway remarked, “Well gold has hardly corrected. I thought silver by comparison was very spikey and for it to go to $60, it couldn’t have done it from $45 without doing this first. This is just a correction for gold that may not be over, it may take more doubters. It’s a shakeout, we had this huge run and a lot of investors and traders probably got in too late if they were short-term in their thinking, but that is not the big picture.

The precious metals markets may just chop around for a bit. After that, gold and silver should set new highs. I think people will be amazed at what gold does. Once it (gold) had the last breakout, it did tack on close to $200 in no time flat, I think it will do the same thing again on the next breakout.

You’ll see an advance that nobody gets, nobody anticipates, and it all comes down to the fact that there is a lot of money to go into a very small space. Somebody likened it to trying to put the Hoover Dam through a garden hose. If money wants to move into gold just stand back because who knows how high the price will go.”

The Institutional Gold Rush
By Peter Schiff
The point here is simple: the total investable funds around the world are immense relative to the size of the gold market. It's not hard to perceive what a simple move from 1% to 5% of the average institutional portfolio would do to the price of gold, and this why the University of Texas' bullion delivery is so important - it's a vivid indication that such a move is now taking place.

Gold remains widely neglected among the big-money players, but it's clear that they're beginning to come to terms with the US dollar's terrible prospects. After all, while fund managers don't want to veer from the herd, they also don't want to follow the herd off a cliff.

The University of Texas, with its billion-dollar stash of physical gold, is one institution that has finally seen the cliff. The physical delivery of this purchase exemplifies the severity of the threat that UT's endowment board perceives.

The average investor should recognize that there is little time left to purchase precious metals before substantial new demand drives the price of gold higher. A very small percentage change in large institutional investment is all that's required for massive gold price increases.

I believe we are on the cusp of a smart-money gold rush. It will drive gold to a record in real terms, even before retail investors join in. Though you may have missed the last decade of gains, there is still a chance to buy in before the stampede.

Hong Kong Mercantile Exchange's 1 Kilo Gold Contract To End Comex Gold Futures Trading (And "Bang The Close") Monopoly
By Zero Hedge
One wonders how many short positions current Comex board members have on now. Yet by dint of being a monopoly, the Comex had and has free reign to do as it pleases: after all, where can futures investors go? Nowhere... at least until now. In precisely 9 days, on May 18, the Hong Kong Mercantile exchange will finally offer an alternative to the Comex and its alleged attempts at perpetual precious metals manipulation.

The next "dip" in Silver prices may be your last chance to buy at these remarkable sale prices:

Silver And Gold: THE JOKE IS ON THE FEDERAL RESERVE

"The once great nation of America is now a goat rodeo where the electorate is both confused and ignorant yet stubbornly believes itself otherwise. Adroitly ruled by corporate and banking elites whose deadly threat remains unrecognized, America today is bereft of leadership and options, a shadow of the nation intended by its founders."
 -Darryl Robert Schoon

Economy Adds 244,000 Jobs, Rate Ticks up to 9 Percent.- AP
Employers added more than 200,000 jobs in April for the third straight month, the biggest hiring spree in five years. But the unemployment rate rose to 9 percent in part because some people resumed looking for work.

And Santa Claus lives at the North Pole...

Funny, when the unemployment rate drops, they bury the notation that "people stopped looking for work" at the bottom of the story.  Never mind the fact that the REAL unemployment rate is 22%.  "Rate Ticks Up To 9 Percent", what a joke.

What a joke...  That is the theme of our missive today.

Does anybody find it a bit odd [it ain't funny] that since Monday, with the US Dollar up ONLY a pithy 2%, Silver is down 33%, Gold is down 7%, and Oil is down 16%?

US dollar soars as euro and commodities slump

Dollar Surges On Euro Purges, Commodities Trashed

Dollar soars against euro

US dollar soars as euro and commodities slump

A 2% dead cat bounce in the US Dollar, and it is reported as "soaring"?  The Wright Brothers were closer to soaring at Kitty Hawk than the US Dollar is to soaring today.  ...and the unemployment rate "ticked up to 9 percent" today.

What a joke...

To anybody that has been keeping score, Bumbling Ben's QE2 plan to "keep interest rates low, and save the economy" has been a dismal failure.  Interest rates have risen since QE2 began in November 2010.  The economy has begun to collapse again as GDP has fallen from 3.5% in Q410 to 1.9% in Q111.  Housing has officially double dipped.  Silver and Gold are at 31 year highs.  Oil prices are surging.  But Ben and the Fed can not be viewed as failures!  What would that do to confidence in the Con Game they manage?

And so, with the official "end" of QE2 fast approaching, the "appearance" of success MUST be shown to the public.  Unfortunately, that appearance of success will likely never see the headlines.  The damage associated with QE2 has either been done already, or is baked into a cake that is about to blow up in the faces of those that are in the kitchen at the Fed.

Bumbling Ben might publicly deny that his QE2 is to blame for rising inflation...that the effects of rising commodity prices is only "transitory".  Transitory?  Ben, why not just say "temporary"?  Is "transitory" supposed to make you look smart?  No one would believe you if you said the rise in prices will be "temporary"...far to blue collar.  But what common American would argue with "transitory"?  Hey this guy must know what he is talking about.  BULLSHIT!  "Transitory" is but one more effort by the Fed to obfuscate the truth.  I can use big words too Ben! 

Obfuscate: [ob-fuh-skeyt, ob-fuhs-keyt]
–verb (used with object), -cat·ed, -cat·ing.

1. to confuse, bewilder, or stupefy.

2. to make obscure or unclear: to obfuscate a problem with extraneous information.

3. to darken.

The Fed has made the 2008 Financial Crisis far worse today, than it was then.  Every communication from these "Fed Heads" is an attempt to "obscure" the TRUTH.  Our financial system is closer to collapse today than it was when the Congress was conned by Henry Paulson into funding TARP.  Silver at $50, and Gold at $1575 are screaming the TRUTH.  The Fed will do anything and everything to silence and/or obscure the TRUTH.

If the US Dollar does indeed collapse, and confidence in the financial system goes down the drain with the Dollar, what need do we have for the Federal Reserve?  IS it clear now why the Fed goes to such great lengths to obfuscate the TRUTH?

Maybe somebody at the Fed can explain to us how putting Silver on sale at 33% off is going to lessen demand for the Precious Metal?  Seriously!  If you need a new pair of jeans, do you wait for the price to go up, or do run run out and buy two pair when they are on sale 33% off?  I fail to see how "forcing" the price of Silver down is going to dry up demand for it. 

By bailing out JP Morgan from their colossal losses on the CRIMEX, the Chicago Mercantile Exchange [CME] has only exposed the TRUTH about the futures markets in New York...they are a fraud...a corrupt entity with US Government sanction.  JP Morgan was saved because JP Morgan IS the Fed.  Destroy JP Morgan, destroy the Fed.  Destroy the Fed and free our financial system from the shackles it now endures.
ONLY when the Fed is chased from existence will the economy and our financial system have any hope of recovery.

Collusion by Fed officials and Commodity Exchange heads has its intended effect
By Dan Norcini
The truth is that the exchanges are money hungry bastards that want the fees generated by the HFT crowd and do not want anyone to mess with their golden egg laying goose.

Regardless, this collusion on the part of the players involved has accomplished, for the time being only, what the Fed has been trying to do ever since it instituted its second round of QE, which by any standard of objective measurement, has failed. To wit - keep long term interest rates low to generate borrowing.

Unfortunately for the Fed, the bonds were not cooperating and were actually moving lower for a while as commodity prices were responding to the breakdown in the Dollar and holders of long term bonds were balking at hanging on to an "asset" that was priced in a collapsing currency while being threatened with a serious outbreak of inflation as a result of all the reckless money creation.

What could be done especially with the US Dollar within a mere point of crashing through a critical support level which would have seen the onset of a currency collapse and a resultant crisis?

Commodities Bubble Bursting? Not By a Long Shot: Pros
Four hikes in margin requirements in as many days have been cited for the precipitous drop in silver prices. But over a longer time frame, experienced traders say the opposite may prove true.

After the selling period abates, the rise in margins effectively will have cleared out the smaller players, leaving the trade the domain of deep pockets who could step in and drive prices still higher. Indeed, traders doubted whether enacting a similar margin squeeze in oil would help drive down prices as well.

"Actually we could see a parabolic move back to the upside," Lincoln Ellis, managing director of the Linn Group's Asset Management group, told CNBC. "With nobody else to sell to you could see a move right back up."

SILVER:  Realize that you are not trading in this market when the margin clerks are the ones determining the price action.

Silver’s Paper Driven Sell Off to Be Confronted by Continued Significant Physical Demand
Some nervous physical silver buyers and more speculative physical buyers have sold today and this week but those buying for diversification and financial insurance are strong hands and have not sold. Indeed, physical buying and buying the dip has continued yesterday and today.

Store of value, safe haven bullion buyers should hold their nerve and continue to accumulate and to maintain a core holding in gold and silver bullion. In the same way that the sharp falls from over $20/oz to below $10/oz in 2008 are now seen as a wonderful buying opportunity so this sell off will be seen as another buying opportunity.

Those who sell on this sell off and fail to reenter the market or maintain a core holding in gold and silver bullion will likely regret it in the coming months and years.

Lost in this weeks headlines of "surging Dollar" and "commodities bubbles bursting" was this little note from our Treasury Secretary to raise the debt ceiling by $2 TRILLION.  Excuse me?  How does raising the debt ceiling contribute to a strong US Dollar, let alone steer the Congress towards necessary spending cuts?  Does raising the debt ceiling $2 TRILLION make you want to sell your Silver and Gold and receive US Dollars in return?  LOOOOOOOOOOOOOOOL! 

What a joke...

Treasury suggests $2 trillion debt cap raise: sources
(Reuters) - The Treasury has told lawmakers a roughly $2 trillion rise in the legal limit on federal debt would be needed to ensure the government can keep borrowing through the 2012 presidential election, sources with knowledge of the discussions said.

Obama administration officials have repeatedly said that it is up to Congress to decide by how much the $14.3 trillion debt limit should be raised.

But when lawmakers asked how much of an increase would be needed to meet the government's obligations into early 2013, Treasury officials floated the $2 trillion working figure, Senate and administration sources told Reuters.

Gold and Silver Storm the Fed
By Darryl Robert Schoon

THE SURGING PRICE OF GOLD AND SILVER AND THE COMING COLLAPSE OF THE FEDERAL RESERVE

When the US could no longer convert its US dollar to gold in 1971 as required under the Bretton-Woods agreement, paper currencies everywhere became only government promises to pay. For the first time in history, all money became fiat.

Central banks rightfully became concerned that the value of their currencies, when no longer convertible to gold or silver, would loose value; and, indeed, that is what began to happen.

Governments everywhere began printing more and more money as gold no longer had to be exchanged for excess currencies held by other countries; and, of all the countries that abused the new found ability to do so, the US was the greatest transgressor.

This is why the US soon had the largest trade imbalance in the world. The US took advantage of the reserve currency status of the US dollar to begin buying more oil from the Middle East and more goods from Asia.

First Taiwan in the 1970s, then Japan in the 1980s, then China in the 1990s and 2000s found themselves with increasingly excessive amounts of US paper money. Lacking the need to exchange gold for its dollars, after 1971 the US went on a worldwide spending spree with its increasingly worthless US dollars; and, today, the rising price of gold and silver reflects the world’s growing unease with still growing US deficits in both its domestic budget and foreign trade.

Of the 21 trading days in April, the price of gold reached record highs on 15 of those days. The ascent of silver was even greater. Today’s acceleration of silver and gold is an indication that Fed’s attempts to continue central banking’s 300 year hegemony are failing.

Instead of being afraid of the future, Americans should be rejoicing.

FRAUD AT THE FED

Is the Fed engaged in fraud?

Does a bear sh*t in the woods?

Do hemorrhoids hurt?

That the Fed would engage in fraud to perpetrate the ponzi-scheme of which the Fed is the principal is not to be unexpected. The Fed is engaged in a fight to the finish, although the Fed does not yet know the end is far closer than believed.

What economists perceive as a series of unexpected exogenous shocks are instead the signs of systemic instability caused by the collapse of their debt-based paradigm. Bankers will be surprised when their control over the world’s wealth and resources ends along with the paper money that made it possible.

The bankers’ self-centered concern about the future is justified as the Fed is vulnerable as never before—and while this may be bad for the Fed, it will be good for the rest of us, especially America..
"Rising prices of precious metals and other commodities are an indication of a very early stage of an endeavor to move away from paper currencies...What is fascinating is the extent to which gold still holds reign over the financial system as the ultimate source of payment."

 -Alan Greenspan, 9 Sep 2009

Bernanke boxed in
But there is a crucial difference today compared with 30 years ago. The level of private sector debt is substantially higher, and shows a strong tendency towards contraction. High interest rates are not actually needed to reduce demand, because bank credit, which is the counterpart of private sector debt, has been contracting of its own accord. It is this that frightens the Fed most, because contracting bank balance sheets are very difficult to manage without risking a full-blown banking crisis.

So it is the difficulty of keeping the banking system running while there is credit deflation in the air that actually pre-occupies the Fed. This is more important than the official mandate of maintaining a low rate of inflation consistent with high employment. But by focusing on keeping the banking system solvent, the Fed is taking enormous risks with monetary inflation. The unprecedented growth in raw money, reflected in the increase of the monetary base since the Lehman Bros crisis, has been designed to offset the contraction of broader credit, and is deemed by the Fed to be non-inflationary overall.

Economists generally support this view, taking comfort from the build-up of bank deposits on the Fed’s balance sheet in the form of non-borrowed reserves. They argue that only when the banks draw down on these reserves to use as a base for further bank lending will the inflation risk escalate. But this argument ignores the fact that this money is already in circulation through government spending.

THE JOKE IS ON THE FEDERAL RESERVE

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
...one may wonder just how "justified" the fall in silver price has been over the past 2 days.

Silver Streak Derailed By Margin Hikes

A Sunday Vertical Drop of Gold, Silver, Platinum and Palladium
By EconMatters
I was fully expecting a non-eventful Sunday afternoon when out of no where, precious metals started their contest of vertical drop, as shown int the following live charts from Kitco.com as of Sunday, May 1, around 7:00 pm EST.

As expected, silver is the undisputed champion, dropping about 10% from the previous day's close, gold, platinum each went down about 7.5%, while palladium lost about 2%.

For now, there does not seem to be any significant event that could prompt such a move in precious metals. So, my best guess is that this Sunday sell-off is most likely related to the recent margin hikes by CME and MF Global that finally took their toll on the Silver market, forcing some big players to liquidate positions triggering a cascading stops to be executed.

According to Inside Futures, MF Global implemented a 175% margin increase over the CME's recent 9% margin hike. Moreover, Bloomberg reported on the evening of Sunday, May 1 that the CME imposed another increase of the initial margin by 13% to $14,513 per contract from $12,825, to take effect after the Friday close. Margins were $4,250 a year ago.

Such a huge margin increase typically will trigger a mass liquidation and reduce traders' participation in the silver market, which would also trigger sell offs in other commodities. Crude oil and copper were both traded modestly lower, partly responding to the movement in precious metals.

What we are witnessing this evening in the Globex market and early Asian trading is stunning even for the always volatile Silver Market.  With the US Dollar up ONLY one pip [0.01 on the Dollar Index], Silver is down over 9%.  Gold has so far has only been hit for 1.5%.  The behaviour of out criminal bankers at the CRIMEX can only be described as outrageous this evening.

This evening's swan dive in Silver had been expected by me when Silver reached $37 in early March.  That it has come here as Silver sniffed $50 an ounce last week is not shocking in and of itself, but the brutality of the take down is quite remarkable none-the-less.  At it's $49.77 peak on Monday last week, Silver was 80% above it's 200 day moving average.  And when considering it was ripe for a correction when it reached just 40% above it's 200 day moving average, the elevator shaft drop here should surprise no one.

I have preached caution with regards the Silver Market since mid-march, and was because a moment like this was inevitable as the market grew more unstable with each percentage move above the 200 day moving average.  Though the fundamentals of the Silver market certainly support higher prices [much higher] no market goes straight up.  Silver will likely be very volatile in the near-term as the Bulls and Bears slug it out now.  This might be best viewed from the sidelines until your targets are hit.

I found this commentary at the bottom of Ed Steer's blog, Gold and Silver Daily, on Saturday morning and had planned to develop a post of my own supporting this view...but the Silver market beat me to it.  It is really quite to the point that Silver was due this take down...nice call:

Here is a contrary view on silver from a serious PM investor. Longs in May COMEX Silver Flee April 29th, 2011 The daily CME report on metal future products has come out — PG62 Daily Bulletin #82 for April 28, 2011 — and shows that a pathetic 2,143 positions remain open in the May 2011 COMEX silver futures contract going into first delivery notice. That represents a theoretical 10,715,000 ounces to be delivered in what is usually one of the busiest delivery months for silver. This remaining open interest is quite a bit less than even the most pessimistic estimate would have predicted and utterly destroys any argument that longs are somehow in a position to, or capable of, squeezing the available supply of silver on the COMEX. Watch the excuses now start to pile up about how JP Morgan and the rest of the cabal forced the longs out of the May contract. Or how the longs in May COMEX silver still have the upper hand and will be holding evil Blythe for ransom once again to settle contracts for cash at a huge premium to the market. But who knows, maybe Blythe has already paid another 80% premium (around $85 per ounce) to close out all the naked short May silver contracts held by JP Morgan? Unfortunately it appears that we are now in a late-stage move on the back of hot money speculation with a bit of periodic help from bigger silver bulls like Eric Sprott and the Internet mobs with their Don Quixote-like attempts to “crash JP Morgan” one roll of silver American Eagles at a time. Of course the background support of a sickly dollar and strong gold along with high commodity prices is definitely a big part of this as well, but these easy conditions for silver will not last forever. While the price action warrants the possibility of further upside, even significantly so (to say $60-70 silver by the mid-June time frame), the forthcoming correction could be absolutely brutal. Watch for further spiky moves with a possible intra-day reversal range of as much as $7-10 to mark the final exhaustion. That said, a rational market predicated on longs squeezing this market until the silver supply is bled dry would absolutely require an immediate and vastly different evaluation of bullish prospects given the poor showing in the May COMEX silver futures as noted above. That silver prices seem oblivious to the situation so far is a sign of irrationality for which the market may seek severe retribution sooner than later. Caution flags should now be bright red and flying high with defensive positioning and speculative trades to be completed soon. We have already provided some ideas for subscribers and will continue to do so on both the bullish and bearish side. I will say something now for the first time in a long while that the tender ears of some hotheads will probably not abide: we are now reaching a stage in this market where it would be prudent for you to sell some silver. Yes, I mean the physical stuff especially if you’ve never done it before. Look, I’m sure most of you have learned by now how to buy; well, now it may be time to start learning how to sell. No, I don’t mean your core holdings that you hopefully have buried somewhere on your property under several tons (or tonnes outside the U.S.) of concrete. At minimum consider trading some of your silver in for a bit of gold. Especially since a blow-off stage (assuming we are in one) often has gold playing catch up to silver. David Zurbo .

If you ready anything today, READ THIS ESSAY below

Things That Make You Go Hmmm: "My Name Is Grant Williams And I’m a Precious Metals Bug"
As seen on ZeroHedge
Yes, silver is extended. Yes, gold has performed incredibly well. But the point here is to understand WHY you bought them.