Sorry, There Is No Silver Conspiracy 46 comments
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I was sent this link yesterday by A.N. Other with the message "what do you think?” Well, the answer is that I think it's just another waste of bandwidth talking about a trade that somebody uses as evidence for an 'it's not fair' pet theory. Part of the report had this chart...
...which supposedly shows the so-called "commitment of traders" in the silver market (aka "COT silver") and how there was a recent spike in shorting the metal that comes from two major banks, and how that short position coincided with silver's drop from $18 or so to $13 or so.
Yes it does coincide, but the same kind of COT silver open interest chart, when looked at from a longer time span, shows that there isn't really much you can read into a short-term position. I've scribbled on this chart underneath.......
...that shows COT silver in relation to the price of silver since 2005. We can see that:
- 60% short position in COT is not that unusual
- In 2005, short interest dropped hard, but it didn't affect the price of silver in the slightest
- For a long time through 2006, 2007 and 2008, short interest moved in conjunction with the price of silver. That means that when there were more shorts on board, the price of silver ignored the commercial traders and just moved on up (and vice versa).
You can't have your cake and eat it, I'm afraid. The worst chart-watchers in the world and the ones that give the discipline its bad name (which is largely deserved, by the way, though there are some shining exceptions) are the ones that decide what they want to read into a chart before looking at it, and use the chart to confirm their own prejudices.
This is not some massive plot. This is people speculating, winning and losing. It's normal market stuff. One thing to note is when the "big players" bet on something to go up and it does, people rush to say "oh how clever, oh how wise". But if they bet on something to go down and it does, they're called manipulators, frauds, inside traders and every name under the sun.
This is especially true in the gold and silver markets, which are populated by tinfoil hat permabull gold and silver bugs that just can't understand why gold isn't already at five zillion dollars an ounce. These people WANT the
I own gold and silver bullion, but I don't delude myself. They are there to anchor my portfolio solidly, not to be the cutting edge of my alpha gains. Capital preservation is still the order of the day in this market.
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This article has 46 comments:
You've completely misunderstood everything about precious metals, who buys them, and why. Metals should reflect the state of fiscal discipline (or lack thereof) of governments, their currencies, and central banks. Gold and silver are barometers to tell idiots that they're in trouble. Suppressing those prices is giving license for the Fed to engage in moral hazard and passing it off as "innovative policy". Every passing day this continues, our grandchildren are that much closer to becoming slaves.
Way to completely miss the point.
I find it telling that during this event, the buying in the bullion ETFs has skyrocketed. You know, it is possible to have short and long postions at the same time, through separate entities.
Google is your friend!
www.rapidtrends.com/bl.../
Otto
sell me your PM's
I will give you top....paper
? How can x banks SELL mega amounts of Paper silver, at the very same time, the US mint has massive shortages....
What a con game....
WHY is it allowed to sell a commodity they don't have in bulk, and then of course it drops, since every trader is geared x 10 - 25 + +
Except for those that just BUY in paper CASH 1:1
We still have it since 4-5-600$
SOON even the Arabs will smell a rat that they sold
½ OF ALL THE OIL FOR DOLLARS THAT ARE S..T WORTH TODAY.
conGRATULATIONS...YOU ARE NOW king OF...fANNIE MAE.....HAHA
$$€€€€£££££ = SCAM OF THE MILLINIMUN...GRRR...CE...
Sheesh, Otto, I've read a few of your articles on mining companies and country risks, etc. Not bad my boy. You should stick to something you know something about. Your article reminds me of Archie Bunker in his LaZBoy chair pontificating on all known world topics who upon seeing some Arabic woman completely covered up walking outside in the hot Middle Eastern sun has a moment of revelation and yells to Edith that he now knows why erl [that's oil, of course ;)] prices are so high, and Edith in her screeching voice asks why is that, Archie, and he reveals that it's b/c they have to keep their A/C so high it must use up 80-90% of all the erl on the planet, along with almost all the camel patties found in that there neighborhood, or whatever else it is dem Arabs use.
How in the world are you missing the elephant in the living room, Otto?? You've been stepping in it's patties for years now. Forget the word "conspiracy"...it's been successfully demonized by TPTB thru the MSM. Go read Ted Butler's recent article (end of last week-- news.goldseek.com/TedB...) called "The Smoking Gun." Go look at those numbers, then go read up on what the CFTC is supposed to be there to prevent. Then come back and give us a report on the article and the data...that is if your ego isn't too big to admit that the there-ain't-no-silver-... society needs to grab their seeing-eye dogs, go home and rethink this thing. jt
The link...paste it together if necessary...is
news.goldseek.com/
TedButler/1219417552.p...
And the last line should read "there-ain't-no-silver... society" (or "there ain't no silver conspiracy society" if the compiler doesn't like all those hyphens perhaps?)
LOL
(But DO read Ted Butler's article...unless you, too, just like to reject anything called a "conspiracy" out of hand...in which case enjoy life in LaLaLand, but remember...LaLaLands and their inhabitants tend to suffer frightful ends when the "conspiracies" out of "nowhere" turn out to be realities.)
Fortunately, as the comments show, there are freethinking individuals out there who can see through gimmickry verbal ploys that cause uninformed citizenry to recoil when they should investigate. If your argument is sound and you can prove your point, then there is no need to even mention a “conspiracy.” Your homework should speak for itself. Unfortunately when you play the verbiage game, and more informed peers review your work, they will call you out on your position. It paints you into a corner.
I just hope the populace will eventually wakeup and stop being toyed with via trigger words or conditioned responses. The sooner society becomes informed and thought provoked, the sooner we can start evaluating claims on their own merit and stop being led by catch phrases, slogans, and sound bites.
Conspiracies do exist, sir. This is why the word is defined in the dictionary as, “an evil, unlawful, treacherous, or surreptitious plan formulated in secret by two or more persons; plot.” There are formal legal charges for conspiracy in law. These charges are made in court all the time. But, just like ALL claims, they are not always true.
So in the future, let your words speak for themselves, don’t hide behind them.
A: Because our bullion dealers don't have any silver.
Posters: You guys are GOLD! (and SILVER, too)!
A desperate and devious prez has made it illegal before, what's to keep him from doing it again?
Those shadowy spooks, who pulled off 911 have achieved the ultimate goal of putting all of us under the yoke of the patriot act, can and would confiscate it again. Those forces are not accountable to anybody's Law, only to their own aims.
We can't make use of PMs in the concentration camp.
Houston, we have a problem!
Again people if you truly BELIEVE in silver (like I do) it doesnt matter what otto, or butler or anybody thinks. You have the power. Let's just keep on buying right up till the market cracks wide open.
Then we will be some smilin' muther F$$$er's!!
* 60% short position in COT is not that unusual
* In 2005, short interest dropped hard, but it didn't affect the price of silver in the slightest
* For a long time through 2006, 2007 and 2008, short interest moved in conjunction with the price of silver. That means that when there were more shorts on board, the price of silver ignored the commercial traders and just moved on up (and vice versa).
...or will you just keep your collective heads in the sand about COT silver and its proven lack of influence on the metal?
Those that know me (not pretend they can guess about me) know that i'm happy to admit that I'm wrong about any issue. It's one of the things that makes me a successful investor. However, all i've seen so far from these comments are a bunch of peope who feel hurt that someone dared point out the obvious, and either
1) rely on words from their mentors (who, by the way, called silver and gold dead wrong when it dropped and then scambled to cover their tracks with conspiracy theories. All except, perhaps, Ron Rosen)
2) use personal insults to hide their impotence in the face of facts.
1. Are the identities of, and possition size of the 8 largest silver traders kept secret?
2. How are you allowed to trade many times more contracts than there is silver to back them?
3. how can there be naked shorts allowed in the ETF?
4. how can the price of silver being going down, signifying weak demand, yet I cannot buy any from my bullion dealer? And the spot price is 5/oz lower than the selling price on Ebay!
5. how can major banks sell silver and gold certificicates yet admit in court that they do not buy the metal to back them, then charge storage on non existent metal claiming it's "standard Industry Practice"
WTF!!
I'm the first one to dismiss conspiracy nuts but the metals market is seriously damaged and the recent break between the paper and phyiscal prices of silver is certainly proof its not working in a natural manner.
"Thanks for all the ad-hom comments that only show your lack of decent, mature rebuttals."
You ask to get beat up by the disdainful, in-your-face title of your article, then you whine when it has the if not desired results, then results that should have been expected. You proved nothing. You just threw out some data and a few lines of condescending "thought" and somehow expected that those of us who have been following this and involved in it for years would go WOW!!!...Otto...you ROCK man!!! Your article calls US stupid!!!...yet you get your hackles up when we return the favor. Then you shouldn't be writing these kinds of articles...you need some thicker skin first...or better yet...better information.
"Meanwhile, would anyone like to address the three points made in the article...."
Meanwhile, why don't you address the points in Ted Butler's article?...maybe that would give YOU some point of entry into what WE know and what WE think...if you actually give a crap. If all you wanted to do was spit out an article blasting "conspiracy theorists"...well dude...Congrats!! You just did it!! Walk away with a sense of accomplishment. If you think you already know everything there is to know about the topic (as it would appear)...you will be treated with disdain by those who obviously know a lot more. If you want to learn, then perhaps you should follow the advice of those here who I guarantee you DO know more, and get some more and better information.
In the meantime...if you can't take the heat...get out of the kitchen.....
This list will be getting larger and larger, they are just releasing the names slowly to minimize market reaction. These banks are also experts at manipulating their books.... just like Fannie and Freddie.
So anyway, you have a choice NOW, that you won't have later, at least not this cheap...So, you decide if the risk is worth it to you, and your family...
And don't even let "investment" come into your thinking. Just consider it trading in pieces of paper on their way to finding their true innate value for REAL money that has and always has had REAL value...thru all time periods and thruout the world. If the investment part turns out well (as most of us suspect it will)...hey, that's a bonus. In the meantime, it's about wealth preservation. If you're willing to trust your wealth to the full faith and credit of the USGovt...hey...buy up that green paper and stuff it under mattress. jt
I have $1,000,000 I will trade you for market price of silver go get it in 30 days. I want physical not promises to pay silver. Heck will give you my promises for the real stuff...
Oh, what, what's that you can't get it? Shame and I though if people where selling silver there will be plenty to buy. My bad I missed that day in economics where prices go down when there is no supply.
The second chart tells me that every time the commercial net short positions as a percentage of open interest dropped below about 35%, it was immediately followed by a surge in the silver price. Here in the states, we call that "cause and effect".
Without these few large commercial shorts, silver would be much higher than it is. If you really want to put on your investigative journalist cap, ask the question, "Do these guys really have the silver to back up their positions?" I remain convinced, that they do not.
Well now, what more do you need to hear? Do you think Asia will bail us out? Europe? Do you think the Fed will hit the printers again??? I do. Nobody want's to buy the banks bad paper - most of it is based on defaulting mortgages.
The US will print more $$$ so that they can prop the currency in hopes that it will convince everyone that things are still manageable ...and then we will see what happens post-election... Then who will be left holding the bag?
And he uses the term "commercial" losely. Butler has just shown that these "commercials" are not commercials at all, but BANKS, who have NO commercial interest in silver or gold (except...and this is really the elephant in the living room...as CURRENCY...in competition with their fiat!!). Commercials by definition, to be allowed to hold the kinds of positions they can on the COMEX and with their special margin allowances, are supposed to be those who actually buy the physical metal as normal course in their particular business, in order to hedge prices against drops / jumps. These huge shorts...those who put on the absolutely HUMUNGOUS shorts directly before the tank in the prices of silver and gold...are banks!!!!
Others have all but proven that the only banks that could have done this are those connected to (actually part owners of) the Fed itself!!! IE, it would appear quite probable that the Fed, thru it's bullion bank / investment bank lackies / owners tanked the gold and silver markets, using OUR money, to stifle, or try to stifle, the one and only REAL competition to their useless fiat "money" hegemony.
Now...there's some meat to chew on, otto...and we don't have our names under the article presuming to be the "expert." But even we non-experts seem to know a whole lot more about this topic than the "expert"...it would appear. Find Butler's article, otto...read...learn......
Meanwhile, after haveing read through the latest batch of huffing and puffing i note that no attempt to rebut the three main points of the article, so just in case somebody feels like enlightening me, here they are again
* 60% short position in COT is not that unusual
* In 2005, short interest dropped hard, but it didn't affect the price of silver in the slightest
* For a long time through 2006, 2007 and 2008, short interest moved in conjunction with the price of silver. That means that when there were more shorts on board, the price of silver ignored the commercial traders and just moved on up (and vice versa).
Or maybe you're waiting for Butler to do it for you?
You have now officially become the stupidest person I've ever encountered. When the short interest dropped in 2005, silver doubled in the next six months.
That's like saying cutting the dividend doesn't make a stock drop by 50%, because it didn't all happen on the same trading day.
Seriously though, you have clued me in to a very powerful buy signal.
No 'manipulators' were holding it back. Or if they were, they sure did a piss poor job of it.
These tin foil hat kool aid drinkers do indeed wish for economic armageddon so they can be proved 'right' but what they don't ever manage to see, is that the huge debt, expanding money supply, fiat currency, etc, has not prevented the U.S. from becoming..and remaining...THE premiere pwoerhouse of economic growth, innovation, wealth creation, standard of living, GDP, productivity, job creation, and any other major metric you want to employ.
The glass is half full not half empty, when you look at economies like the vaunted Eurozone with its broker infrastructure, very high unemployment relative to U.S., total lack of innovation and progress, lower productivity and lower GDP per capita BY FAR Then the U.S. etc etc etc etc.
Are we supposed to envy the Chinese and be worried they get U.S. paper while we get their goods? LOL!! They are polluting theor country to death, have a terrible standard of living overall, and will be repaid in devalued dollars in teh coming decades. They aren't exactly to be envied.
You tinfol hat wearers are one trick ponies who simply miss the big picture and fail to see how well off you are...and will remain...relative to the REST of the world.
it necessary to take a hard look at those paper
instruments. They must be asking, in light of
current markets, does this paper really
represent what it says it does? They
have to ask "where's the beef" so to speak.
Is a 5,000 ounce silver contract really backed
by 5,000 ounces of silver? Comex shows
138,000,000 ounces currently in the warehouse.
With 135,000 contracts being traded, or
about 675,000,000 ounces, it would seem like
there is only enough to honor 20% of those
contracts should physical delivery be demanded.
The investor must ask himself, "what if there's
a run on the bank" so to speak. For the situation
is like a bank in a sense. The bank (comex warehouse)
would fail if everyone suddently wanted to withdraw
his contracted silver.
They (Comex) has already limited delivery to
1.5 million ounces per customer per month.
That's a mini default in itself. It would take
only 90 well heeled customers at 1.5 million
ounces to clean out the vaults.
So, if the paper silver is backed by only 20%
of the real stuff, it would seem prudent to
discount the value of that 5,000 ounce
"contract" accordingly. Say to 20 cents
on the dollar? If paper silver is worth
$13.00 an opunce, could real, actual,
physical silver be worth $65 the ounce?
We don't have to answer your three questions, Otto, as they aren't necessarily relevant to the realities involved.
I find it surprising that people get hot and bothered about gold and silver being "manipulated" by "governments". Governments play with the value and interest rate of their currency relative to other curencies all the time - it is known and accepted. Therefore you should thank governments when they do the same to gold and silver's "FX rate" with other currencies and their lease rates - by doing so they are legitimising gold and silver as money. The worst thing would be for them to ignore gold and silver as irrelevant.
I also think that attacks on COMEX as manipulated because short positions are allowed to build up is missing the real issue. It is things like JohnSt mentions such as delivery restrictions - the market should be able to operate openly. Restrictions means arbitrage is less efficient, allowing prices between markets to diverge excessively and thus sending incorrect signals to the restricted market. Does anyone really think this is a good thing?
Has it been considered that the short position is simply a bank seeing excess demand in COMEX that began to create a diversion in the futures price relative to spot and then profited by that by going short COMEX, long spot market. In other words, arbitrage?
Any futures price is simply a mathematical function of the wholesale spot price and the interest rate on money and lease rate on the precious metal. If a diversion occurs, then arbitrage will be created and someone will come in to trade that diversion away at a profit to themselves.
If........
1) I were sitting on the trading desk of one of those big two/four/eight anonymous banks that certainly play PMs both ways, and
2) I saw the ST structural weakness beginning to develop in gold due to a pending dollar rebound, and
3) I knew that Ag traditionally gives me leverage to Au, and
4) my boss agreed with my call, and his boss with him...you know what? I'd short the hell out of silver as well.
It may come as a shock, but it's not unusual for large financial institutions to trade assets to make paper gains. However, a single successful trade to the short side is not proof that there's a conspiracy. It's an asinine argument. What happened was that somebody was smart, made the trade and won. Period. That's what markets are designed for the last time I checked.
But as the last three years of spot silver vs COT clearly shows (and nobody has even bothered to try and refute this) is that there is no automatic relationship between "COT short up = silver down". In fact, for most of the last three years the situation has been "COT short up = silver up" (and vice versa).
Mikel makes a good point, too. If what happened really were illegal, the proposed Butler class action would be a pretty easy win for the oppressed masses. It may come late, as SEC should be swarming all over the Ag pit by now, shouldn't they?
Oh yeah...forgot...they'r... illuminati PTB, too. But all the same, the Butler cheerleaders should at least ask him if he's going to file some sort of action.
Love it. And judging by most of the 42+ comments here, these bugs are plentiful, vocal, reactionary and thin skinned.
I stopped reading most Alpha comments because of this craziness.
It's just like 1980 except with different players and as far as I can tell, no Armageddon. Not then, not now. Talk to me in 5 years and I don't give a rat's as* who gets elected.
FUD. Fear, uncertainty, doubt. Salesmen, politicians, markets thrive on it and create it whenever possible.
That said, there some glaring questions that need to be considered: Did the purchasing power of the dollar suddenly increase by 40% when compared to all other tangibles? If not then why did gold and silver lose 40% of their purchasing power almost over-night?
Were there any fundamental reasons that can be used as evidence for the lower price?. There haven't been announcements by custodian banks that they really do hold your physical. I haven't heard of a new Bonanza size stockpile coming to market to offset the physical shortages. There hasn't been a dumping of silver onto the market by bullion banks or CBs. There hasn/t been a major mine discovered of recent date. Comex hasn't dropped their delivery limitations.
This concentrated selling by the two banks on the COMEX has not been about price dicovery, it has been a concerted effort to drive the price down using the size of their size, position and unlimited cash. Their short position is illegal and IS raising questions by politicians in the Sates (See the Automatic Earth blog)
Why would there only be two banks involved?
Why are they allowed to hold such large unbacked positions to the short side when there are delivery limits to the long side?
If there are delivery limits then why are there not position limits of the same size?
Why is the COMEX holding such small amounts of physical when there are so many promises to deliver out there?
Do the promises to deliver really have the same purchasing power of the physical these days? It seems not when you compare the price on EBay!
It's all about the fundamentals of purchasing power, long term.
This aberration, too. shall pass.
www.investmentrarities...
Theodore Butler has been around for a good many years. Why hasn't somebody taken him on for what appear to be, at best, his inflammatory language. Some of the things he says might even be construed as libelous. I've had my say, now I wonder if it will see the light of day.
[ED: This comment has been edited to remove abuse.]
These guys see precious metals as their prime enemy, as an increase in precious metals prices will cause the market to gravitate toward it and away from fiat US dollar, which can be printed to infinity.
I have my suspicions that these big banks are the same big traders constantly shorting precious metal prices.