Last comments on Silver for 2010

Last post on Silver before 2011, the year of the Rabbit.

If you had a chance to read the Sprott report referenced in yesterdays post, you got to read an excellent a summary of the large short position held in Silver by JP Morgan and HSBC.

This week a Chicago law firm announced another class-action lawsuit against JP Morgan Chase & Co. and HSBC Holdings PLC for manipulating the silver market.

Despite mounting pressure, the attempts at manipulating both the gold and silver downward continue.

The precious metal markets have become almost comically predictable lately.

You have JP Morgan (with their massive buying of shorts to drive down price) squaring off against some very large buyers who step in and counter the downward manipulation with strong buying.

These two forces are the primary drivers of price right now and there is almost a predictable pattern to what goes on.

Lately JP Morgan raids the market twice daily between approximately 8:00am EST and 9:00am EST. Once that happens, the large buyers step in and buy the dips driving the price of silver back up.

Take Wednesday Dec 29th, 2010.

Silver was raided at precisely 8:20 EST, taking $0.11 out of the price in under a minute. As usual, they sat back and watched for five minutes and then struck again at 8:25am, taking out another $0.11 in about 30 seconds. Then the large buyers stepped in and silver rebounded.

Now for today, Dec. 30th, 2010.

Silver shot up to $30.93 on the overnight trading.

To the bankers, this is a horrid development. Left to it's own devices, silver will end the week, the month and the year over $30, the highest levels since the 1980s.

Many observers believe that this is something that the bankers will simply not allow. Thus everyone watched the markets keenly for a significant raid today.

We weren't disappointed.

Silver was driven down from $30.93 and suffered two significant raids (just like yesterday) at 8:26am EST and then again at 8:31am. Silver was ultimately driven down to #30.30.

That's when the strong buyers stepped in again.

This is unprecedented in the last 30 years. Normally such sharp drops in the silver price in that span of time scares off investors who fear the price will collapse. This is how the price has been so effectively controlled in the past.

But the market has changed. You have significant buying by extraordinarily strong buyers happening (rumoured to by China and Russia).

Instead of triggering a freefall in the silver price, buying starts up again and drives Silver back up.

At 9:45pm PST tonight, Silver was up to $30.75 again after having been driven down over 60 cents.

Amazing.

I will be watching with keen interest tomorrow morning for a significant attack on silver in a last ditch attempt to shake silver below the $30 level before the year ends.

After that, watch for silver to take a huge jump on Tuesday.

Why?

First, the markets will be closed on Monday because of New Year's Day.

That takes us to Tuesday.

An analyst I follow closely recently make a keen observation. After observing the metals markets for years, he noticed that weekly gains are often made early in the week and selling usually occurs later in the week. The pattern repeats so frequently that it was clear it was not coincidence.

He concluded that JP Morgan is trying to hide their malicious intent from the weekly Commitment of Traders report. This is a report on the market that comes out every Friday but it is based on the previous Tuesday. So, any new short positions initiated JP Morgan on a Wednesday will not show up on the CoT until the next Friday. Thus JP Morgan has until the next Tuesday to cover any brand new shorts they just initiated if their raids fail.

So every week, down go metals mid-late week on fresh paper-metal selling; up go metals early the following week if shenanigans fail, the shorts are covered before new CoT survey.

Tuesdays are almost regularly raid free days.

Last Tuesday, Silver was up over a $1 an ounce without interference. Likewise, Silver mining stocks also go up significantly on Tuesdays.

Therefore I would humbly suggest to you that the first trading day of the New Year on Tuesday will see a huge jump in the Silver price.

Let's see what happens, shall we?

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