Sunday, May 8, 2011

It's there for all to see...

The eagerly awaited Commitment of Traders (COT) Report came out on Friday.  When the data is combined with the May Bank Participation Report (BPR), the stunning story of what happened in Silver this past week is all there for everyone to see.

Starting on April 29th, a co-ordinated attack was launched against Silver to drive the price down and allow the banking cabal to cover some of their massive short position.

And the depth and breadth of what has occurred is stunning.

As you know by now, it has been a tumultuous week.

When Silver was originally touching $50, a host of stories started popping up in the media warning the Silver was due for a crash. 'A bubble ready to burst' the headlines screamed.

By dumping unprecedented volume in paper contracts on the market, a 'double top' had been painted on Silver charts, an unmistakable sign of an impending collapse to 'chartists'.

But it wasn't a bubble that was bursting, it was a carefully scripted attack on the metal. 

And that attack began in earnest with two hikes to trading margins in the last week of April.  As Silver went into the weekend, investors trading on margin were squeezed. With some markets closed on Monday, positions that had to be liqudated were done so in a market that was trading on thin volume at the opening of trading on the Globex.

The result? Silver dropped by $6.10 in four minutes.

And the attack continued.

By the close of business tomorrow Silver will have been sacked with 5 seperate margin hikes in 9 days. Never before has this been done. In addition to these hikes, significant margin hikes were also raised at brokerage firms for silver traders. Margins at brokerage firms were doubled from what margins were at the CME.  What this ultimately meant for traders is that you had to have five times as much money as last week in order to carry Silver contracts.

This intensive attack on those trading silver on margin was devestating. It wiped out all the small investors trading in Silver and many of the mid-sized ones. As those margin accounts were desperately liquidated, the price of Silver was hammered down from it's high of $49.75 to it's low two days ago of $33.10... an almost 35% cascading waterfall of a drop.

On Monday and Tuesday alone, Silver dropped an astonishing $7.10.

Looking at the COT report you can see that, in the Non-Commercial category - where the technical funds trade - the large traders net long position is now down to a tiny 23,354 contracts. This is the lowest number in that category in a long, long time.

They are the ones who got hit bad; well and truly squeezed until there is very little blood left in this stone.

Meanwhile the data extracted from the May Bank Participation report, which was also issued Friday, and from the COT report for positions held of as this past Tuesday show that 4 U.S. Banks (probably only 2 that matter: JPMorgan and HSBC) decreased their net short position by a whopping 5,757 Comex futures contracts.

They are now down to 18,830 contracts held short (and remember... each contract represents 5,000 ounces).

This is the lowest Comex futures short position that JPMorgan has had in silver since they took over Bear Stearns' short position back in 2008.

The 12 non-U.S. banks reduced their net short position in silver by 1,157 Comex contracts and are now down 3,608 contracts held short. The speculation here is that the bulk of these short contracts are held by just one foreign bank... our own Bank of Nova Scotia (ScotiaBank).

[And just to emphasize the concentration,  note that JPMorgan's short position (18,830 contracts) is almost five times the size of the entire short position of the 12 non-U.S. banks combined (which is 3,608 contracts).  That is astonishing.]

In a nutshell, the BPR shows that the world's bullion banks decreased their Comex short positions in silver by almost 7,000 contracts up until the close of trading on Tuesday.

7,000 contracts representing 35 million ounces in 1 week!!!!

And it goes without saying that if you could factor in the last three days of this past week (Wednesday, Thursday and Friday), the final totals would be massively higher than 7,000.

This has been a down-side clean-out of biblical proportions in Silver.

This tells you everything you need to know about where the Silver market is going.  If Silver were in a bubble, if Silver was on it's way to crashing to $22 and below, would the Banking Cabal cover off so much at between $33 - $40?

This was nothing more than an act of desperation. The bankers are in dire straights and desperate times demand desperate measures.

And that's what this past week was... an act of desperation.

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Please read disclaimer at bottom of blog.


  1. It wiped out all the small investors trading in Silver and many of the mid-sized ones.
    You mean the ones that you have been urging with the fervor of an realtor to jump into silver with both feet?
    I'm sorry to jab, but this trading business is kinda dangerous, and the way you have been boosting silver is doing no-one a favour.

  2. Congratulations, you have just figured out that the markets are rigged, always have been, always will be.

    Many people had shorted CITI, BAC, JPM, MS and many more banks to go tits up in 08, which they would have without government bailouts, the small guy doesn't count, the banks always win.

    You can bet on another Silver price spike if you want and you might get it, just know when to get the hell out.

    If you have a chance for 50% price gains, cash out and don't get greedy.

  3. Whisperer, I appreciate your insights into the silver market. It's funny how short-sighted some 'investors' are. The minute they sense things are heading south, they freak. In the long run those of us holding physical silver will be rewarded. For now, just BTFD.

  4. That was a greet description of the Silver market, which helped make the case for a massive increase in Silver.
    Of course, markets are rigged and that is why Silver has traded at such a low price.
    From AlexCanuck "It wiped out all the small investors trading in Silver and many of the mid-sized ones.
    You mean the ones that you have been urging with the fervor of an realtor to jump into silver with both feet?" No, you are dead wrong Canuck, the small investors own physical, not paper contracts.

  5. Always read the disclaimer, and don't spend what ya can't afford to lose is the way I look at it. Personally, I'm thankful to Whisperer.

  6. I was in no way trying to knock the whisperer, just pointing out that one needs to cash in his chips at some point. Nothing goes straight up. I believe that the future is bright for Silver, but what needs noting is that someones always betting against you and the markets are far from fair.

    This is a great blog that I read often.

  7. I too read and appreciate this blog. I just feel that the one-sided silver boosting with no regard for the real risks in the real market was getting rather absurdly unbalanced. Leaving that attitude to the realtors would give greater credibility to the other well-thought-out ideas Whisperer is capable.

  8. Looks like they are lining up crude oil for a "spill" tomorrow. Margin hikes across the board on all energy futures.

  9. These margin changes... hitting over the course of 24 hours... I cannot fathom how any of this is anything but outragious. Its like changing the regulation size of the net just as the ball is kicked.

    All it says to me, its just another sign of what we all know is coming our way at the speed of sound.