Silver Futures Show Markets Are Acting Strangely 30 comments
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One need look no further than the Silver futures to see just how strange the markets are right now.
October Bank Report - 2 US Banks are short 38,375 Silver Contracts. This is 29.1% of all Commercial Short Positions (91,723). Total Contracts: 131,801. Why does this matter?
- Traders are supposed to be limited to 6,000 total positions in the futures market. Even if you divide the contracts evenly, both banks (which of course remain unnamed by COMEX) would be short 19,000+ or more than 3 times the position that "normal" traders can possess. That gives these two banks three times the clout that you or I could possibly possess.
- Short position is 191 Moz of Silver sold short. That is almost a third of the entire YEARLY world production of silver sold short by two US banks. You decide what kind of an effect that would have on prices.
- Total Contracts cover 659 Moz of Silver. World Production last year was 670 Moz.
- Commercial Short Position of 91,723 is 458 Moz. Commercial Shorts were 82.4% of all short positions in the COMEX. If that doesn't represent manipulation, I'm not sure what does.
- The Bank Participation Report is an increase of 8500 contracts short in just 30 days. That's 42 Moz of Silver sold short at a time when Silver went from $16/oz to 17.63. I think that would qualify as applying the brakes on prices.
In other Silver news, the gap between what the COMEX can actually cover on its contracts, compared to what it counts, is continuing to widen. A couple of months ago the balance between Registered (what the COMEX actually controls to honor redemptions) and Eligible (What could be used, but is owned by others, yet counted to COMEX) shifted past the 50/50 mark to the deficit. It has since widened to more than 5 Million ounces of silver. Registered Stocks have fallen to 55 Moz while the Eligible is now close to 61 Moz.
The Registered stocks took a major hit on Monday when COMEX admitted to a major error in Silver added to HSBC Bank, USA (New York). Apparently COMEX originally counted 1.8 Moz of silver as Registered when it is actually owned by someone else.(Eligible). Even so, COMEX is leveraging the Silver it actually owns by a factor of 12 (55 Moz to cover 659 Moz in contracts).
One final note for now. Those same two US banks who are short 38,375 contracts in silver also have some long positions. Those long positions total 38 contracts (no joke). But hey, that's an increase from the 13 reported in September!
Disclosure: Long GLD/SLV, physical metal, retirement accounts
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This article has 30 comments:
Psychopaths are beaten only one of two ways:
1. By a bigger psychopath; or
2. By refusing to submit to the psychopath.
But at least in this article, Ed provides some information to back my position.
Ed states, correctly, that the position limit for silver is 6000 lots.
But under NYMEX Rule 559-A, the exchange can grant an exemption to the rule for hedgers, as follows:
" The Market Regulation dept may grant exemptions from position limits for bona fide hedge positions as defined by CFTC Regulations 1.3(z)(1)."
Gee, Ed, so I guess maybe these large banks really do hold offsetting positions of forward silver, or physical silver in New York, or London or anywhere else on the planet. And maybe they short more contracts on COMEX as the price rises because at higher levels, more physical silver comes to market.
Where's the conspiracy??
All the silver, both Registered and Eligible, is "owned by someone else". COMEX doesn't own silver.
Do you understand how this whole system actually works?
Do you believe a bond broker/dealer who hedges his municipal bond inventory by shorting US T-bond futures is a manipulator?
On Oct 21 11:28 AM GMiki1 wrote:
> They're hedgers? Meaning they're producing silver and hedging their
> production? I don't think so. They're manipulators, pure and simple.
> Where are Gary Gensler and the CFTC and reform?
On Oct 21 11:28 AM GMiki1 wrote:
> They're hedgers? Meaning they're producing silver and hedging their
> production? I don't think so. They're manipulators, pure and simple.
> Where are Gary Gensler and the CFTC and reform?
You can pretend that you know that b/c they have the status "broker/dealer" and can therefore CLAIM to be hedging for hmmmm...for whom exactly??...that therefore they actually ARE hedging for anyone but themselves...WHO DO NOT MINE GOLD OR SILVER, and therefore should NOT be able to "hedge" as you say, since that was the whole intent of being able to hedge on the COMEX in the first place.
But, back to your claim...bet you can't come up with even a small fraction of the total amt they're short that belongs to ANY client (other than others in the anti-gold bankster cartel) who is hedging their mined metal prices. Go look--those with big hedges...hedges that are way beyond totally underwater, such as Barrack (a company the meaning of whose name in Hungarian matches their soul and their modus operandi...oh, it's f**k_s**t BTW...yep, the name given it by Munk...go look it up) et al are actually trying desperately to COVER their hedges, not put new ones on.
But of course being the scum-defending lawyer you are, you'll tell me that those names are "confidential" and don't have to be released...like everything else these banksters do, under the guise of being "federal" like the Fed...all private and for themselves only. This is and has been shown definitively to be and will be proven publically to be in the future a totally manipulative scam set up by and run for many decades now by the anti-gold intl bankster cartel to prop up their massive, largest in the history of the world, fiat currency counterfeiting scheme. And I for one would love to see the group as a whole be hung publically...along with those who knowingly defended them....
I hedge metal on COMEX. I have physical metal positions that I deal as premiums move up and down on physical metal and coins.
Same thing the bank broker/dealers do. It's called "hedging price risk". Been doing it for 30 years as my prime source of income.
The banks buy and sell physical metal and forward positions and use futures as hedges.
That you don't understand the precious metals business is OK, that you don't understand the function of COMEX is OK. There's still lots of money to be made in metals.
And just because you get all worked into a lather by the banks, maybe you could read the COMEX rules about how if the hedgers do exceed position limits, the exchange can audit their hedge book to see exactly what these guys are doing. But let's not get comfused by facts. It's so much more fun to see the conspiracy, right???
And I'm a bullion dealer/ trader...not a lawyer.
On Oct 21 12:50 PM jt wrote:
> kohlakid you sound like a mob lawyer...they're innocent b/c they've
> got a gun to the wife of the guy testifying who is an eye-witness
> to the crime of which the mob is not guilty b/c the witness won't
> testify b/c his wife has a gun to her head, and he won't talk.
>
>
> You can pretend that you know that b/c they have the status "broker/dealer"
> and can therefore CLAIM to be hedging for hmmmm...for whom exactly??...that
> therefore they actually ARE hedging for anyone but themselves...WHO
> DO NOT MINE GOLD OR SILVER, and therefore should NOT be able to "hedge"
> as you say, since that was the whole intent of being able to hedge
> on the COMEX in the first place.
>
> But, back to your claim...bet you can't come up with even a small
> fraction of the total amt they're short that belongs to ANY client
> (other than others in the anti-gold bankster cartel) who is hedging
> their mined metal prices. Go look--those with big hedges...hedges
> that are way beyond totally underwater, such as Barrack (a company
> the meaning of whose name in Hungarian matches their soul and their
> modus operandi...oh, it's f**k_s**t BTW...yep, the name given it
> by Munk...go look it up) et al are actually trying desperately to
> COVER their hedges, not put new ones on.
>
> But of course being the scum-defending lawyer you are, you'll tell
> me that those names are "confidential" and don't have to be released...like
> everything else these banksters do, under the guise of being "federal"
> like the Fed...all private and for themselves only. This is and
> has been shown definitively to be and will be proven publically to
> be in the future a totally manipulative scam set up by and run for
> many decades now by the anti-gold intl bankster cartel to prop up
> their massive, largest in the history of the world, fiat currency
> counterfeiting scheme. And I for one would love to see the group
> as a whole be hung publically...along with those who knowingly defended
> them....
Freedom and democracy is only real when useful for people so not freedom for bankers ruining your USA country should be allowed.
You need to send to prison at least one hundred of these high managers to show all of them example of what could happens to "financial terrorist".
Their casino and ambitions will ruin America and Europe ... The more dangerous terrorists are inside your financial and lobbying system ....
They are making a casino of your country
Good luck to Americans people is your "civil" war you should success first
Only the long term price trend would be out of their hands.
But I agree that the long term trend is out of their hands.
On Oct 21 05:54 PM TERN wrote:
> Kohala: If they are hedging, these banks may not have significant
> net positions, but if they both dominate the short and the long side,
> they have ample opportunity to fluctuate the prices as they please.
>
>
> Only the long term price trend would be out of their hands.
Think about it, it only takes 100,000 people who want to buy 1000 ozs of silver to equal 100,000,000 ozs of physical demand. 1000 ozs of silver still costs far less than a fully loaded Toyota Corolla. Imagine individuals with higher net worths that decide they might want 10,000 ozs or more. Silver demand is going to BLOW AWAY the shorts. Keep at it everyone. Silver mine supply is completely used up by industry and the silver investors will be the price movers. Should the price dip substantially at any point, ADD.
Most people will not realistically think too hard about selling until silver is at least trading near old high of $50 IMO.
10,000 people who want to buy 100,000 ozs = 1 BILLION ozs!
(think about high net worth individuals who can pay $1.8 mil
100,000 people who want to buy 10,000 ozs = 1 BILLION ozs!
(think of professionals who have $180 grand laying around)
1,000,000 people who want to buy 1,000 ozs = 1 BILLION ozs!
(think of solid middle class who can pay $18,000 for silver)
10,000,000 people who want to buy 100 ozs = 1 BILLION ozs!
(think of Joe Sixpack who wants to squirrel away $1800 safely)
100,000,000 people who want to buy 10 ozs = 1 BILLION ozs! (think about Chinese and Indians in this example)
THIS IS WAY WAY WAY more than all the silver available ANYWHERE aboveground!!! In my estimation, all of the above examples could easily be met as more and more people are looking at alternatives ways to protect their wealth, or even just to diversify holdings)
BUY SILVER BULLION! Tell you friends and family they should. Get the involved in a some good mining stocks before the price breaks out hard over $20 and they will get the "silver fever" and become even more enthusiastic after they get a taste of success!
On Oct 21 09:46 PM 5142152-337 wrote:
> kohalakid: the words of Kathy Griffin are appropriate here....SUCK
> IT!
Second, the definition of Commercial Trader isn't something I made up. A Commercial Trader is a hedger.
On Oct 22 06:52 AM sdavid0419 wrote:
> This Kohalakid guy makes the Hunt brothers look like saints. He
> keeps falling back to the rules which we all know these wall street
> geniuses have bought and paid for from our duly elected representatives.
> Even using his rules the unmentioned banks have more than his rule
> even allows for. I know I've emailed all of my friends advising
> them to buy real silver even if only one ounce at $17.48. Like the
> guy wondering above what happens when the settlement date comes and
> those guys are short? My worst fear is that this Obama schmo will
> bail them out with taxpayer money!!!!
While he is correct that hedgers can get exemptions, such outlandish exemptions (three times what anyone else can have) all to the short end would indicate extremely deep pockets that could sustain any manner of loss while pressuring prices downward for much smaller investors. (The short position would equate to 8 Billion dollars at $17.63, of course the total loss position would be significantly less, more on the order of less than a billion, which such large banks could absorb with impunity while continuing to add to their short position.)
Of course he doesn't mention that the CFTC is looking at setting limits that could force limits in silver to mirror limits in other futures markets (1500 vs current 6,000). Ted Butler has commented on the CFTC moves.
The point Kohalakid doesn't want to address is the point of manipulation in any single market. The silver futures short position is beyound anything else in the market and while he derides my postings as "silly", they are showing what is actually happening in the paper market. COMEX can't settle the contracts that are out, at least not in actual silver. COMEX silver stocks, registered and eligible are falling and world silver production is pretty much spoken for.
The only reason you short a market is because you think the price will fall. The only reason to short a single market this much by this few is to keep the price down.
There are 2 possible solutions to this situation.
Everyone and their mother is melting their silverware. All those cash for gold companies also buy silver and they need to hedge their positions that can easily be greater then 3X annual production.
The other possibility is the banks mentioned are the FED and it doesn't want inflation to show it's ugly head just yet.
Normally I wouldn't consider possibility 2 but as Ed feels, we do live in interesting times, the government is doing unexpected thing and it is a bigger possibility then it ever was before.
Your last paragraph gives away the game. You really have no idea how the market works or what a dealer/broker does or how they profit.
I am short dozens of Dec COMEX gold contracts. I am NOT short because "I think the price will fall". I'm short because I'm a hedger and have a corresponding quantity of physical gold that I buy and sell as premiums move up and down. I actually believe the price will probably rise, but I'm not in the business of speculating, I'm in the business of running a hedged book and making my profit on premiums. It's the difference between betting on a sporting event and running a sports book. The large bullion banks run the same business. If they can source funds at good rates and then turn their metal many times in a year, they can make a nice, relatively safe profit. I've been doing it for 30 years.
The reason they have such large positions on COMEX is that unlike gold, which trades worldwide on dozens of exchanges with good liquidity, silver only trades in size in 2 places, New York and London. And since London is not a futures exchange but a OTC spot and forward market, the COMEX offers the worlds most regulated venue for silver futures trading. The fact that the US is also close to such huge silver producers as Mexico and Peru also makes it a natural choice for hedging and delivery.
If the CFTC decides to decree that COMEX must lower it's position limits, that doesn't affect the hedgers ability to short against his physical position. He just does the trade in London. It's not as efficient and much less transparent, but it will get done.
COMEX is not designed as a cash market. It's designed to offer a place for speculators, hedgers, producers and consumers to gather for price discovery. Taking and making delivery at COMEX is kinda a pain in the butt, so if you are moving physical metal there are cheaper ways with more flexible delivery terms.
I can't think of one United States futures exchange traded product that has 100% backing of the physical commodity for every outstanding contract. That's not what they exist for.
If you think strict position limits for anyone, including hedgers, are a good idea, as Obama and his crew apparently do, it will move business offshore and you'll have even less visibility.
Har, de-har-har-har.
On Oct 22 11:15 AM Ed Zimmer wrote:
> Kohalakid ignores the fact that these two banks, hedgers or not,
> are dominating the silver futures market by shorting more than 80%
> of all outstanding short contracts while holding just 38 long positions
> out of 111,000 contracts. That is a more dominant position than what
> the Hunt Brothers held when they were long silver.
>
> While he is correct that hedgers can get exemptions, such outlandish
> exemptions (three times what anyone else can have) all to the short
> end would indicate extremely deep pockets that could sustain any
> manner of loss while pressuring prices downward for much smaller
> investors. (The short position would equate to 8 Billion dollars
> at $17.63, of course the total loss position would be significantly
> less, more on the order of less than a billion, which such large
> banks could absorb with impunity while continuing to add to their
> short position.)
>
> Of course he doesn't mention that the CFTC is looking at setting
> limits that could force limits in silver to mirror limits in other
> futures markets (1500 vs current 6,000). Ted Butler has commented
> on the CFTC moves.
>
> The point Kohalakid doesn't want to address is the point of manipulation
> in any single market. The silver futures short position is beyound
> anything else in the market and while he derides my postings as "silly",
> they are showing what is actually happening in the paper market.
> COMEX can't settle the contracts that are out, at least not in actual
> silver. COMEX silver stocks, registered and eligible are falling
> and world silver production is pretty much spoken for.
>
> The only reason you short a market is because you think the price
> will fall. The only reason to short a single market this much by
> this few is to keep the price down.
Of course they do.
But Ed's complaint is not with the speculative traders.
His beef is with the Commercial Traders who are, by definition, hedgers. If they have a hedged position, they don't care whether the price rises or falls.
They may also have spec positions and they can use they push to take prices higher or lower in the short term, but those trades would not be put in the commercial category that Ed frets about so often.
A hedge fund holding a couple hundred lots would have more interest in pushing the price around than a commercial trader with a hedged position. So why doesn't Ed pick on the specs??
On Nov 04 12:31 PM ManAboutDallas wrote:
> Ed, the 'Kid falls into the tar pit of believing that just because
> he's using the COMEX for legitimate purposes, everyone else using
> it is doing so for legitimate purposes also; so, 'Kid is guilty of
> nothing more than being incredibly naive and thinking just because
> he's playing by the "rules", everyone else is, too.
>
> Har, de-har-har-har.