The market structure for silver and gold have been flashing buy for months. All the way down. In fact, the COTs in gold and silver are more bullish now, in many important sub-categories, than they have been in years. With that background, what are the new developments in the COTs that I opened this article with? Let me give you the conclusion up front - I am shocked with the extent to which the big shorts have gone to liquidate every possible long silver and gold position held by traders in the non-commercials and non-reportable categories.

In fact, the big shorts have even managed to recently liquidate some big long silver positions by other commercials (the raptors), held in the form of long silver/short gold spread positions. About a month ago, I noticed an unusual liquidation of raptor long silver positions over a two week period, in the amount of around 8,000 contracts (40 million ounces). What made it unusual was that I had never seen the raptors (the smaller traders in the commercial category, other than the 8 largest) liquidate long positions on a decline in price. For a while, I couldn’t figure out why many different traders would liquidate positions held for a long time so suddenly. Then it dawned on me (in a conversation with Izzy) that it had to be silver/gold spread liquidation brought about by changes in margin and/or margin collateral requirements. These changes were dictated by the big shorts themselves, who undoubtedly cleared the accounts for the raptors. For the first time, the raptors were forced by the big shorts (read JP Morgan) to liquidate long silver/short gold spread positions. Talk about a clean-out of silver long positions.

The most recent COT report, as of the close of business November 25, indicated another shocking liquidation of long silver/short gold spreads, this time by those held in the non-commercial category. Roughly 15 different non-commercial traders suddenly liquidated at least 5,000 additional long silver/short gold spreads. I would submit that the only way you could get 15 separate accounts to act in unison would be if you forced them to act. And just like the earlier forced liquidation of raptor spread positions, the only way you could force them was by radically altering margin collateral requirements. Who decides to radically alter margin collateral requirements is the prime broker who holds and clears (guarantees) the accounts (read JP Morgan).

What this means is that new and unprecedented efforts have been made to forcibly liquidate the long silver holdings of any account not held by the big shorts. Those shorts are resorting to tricks never employed before. The COTs were already wildly bullish before this blatant silver/gold spread forced liquidation. What comes after wildly bullish? All this should make you think. Why is the big short so intent on liquidating every long position he does not hold? The answer should be clear. Because he knows the real story in silver, and that the price will soon reflect that reality. He is determined to buy as much silver as possible, through any means available. So should you. The fact that the big short is forcing as much silver liquidation as possible, should harden your resolve to own silver.

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Comment: We have all been anticipating the day when the filth would turn from paper seller to physical buyer. Is that day getting close? In the not too distant future we may all be remembering buying silver at less than $10 and get cramps in our cheeks from the smiles. What little i have was all bought between $2.50 and $6 I wonder what it will be this time next year?