http://seekingalpha.com/article/245676-the-mechanism-of-china-s-silver-accumulation

Just after I posted a copy of the Dec 26th article to CKMX on reasons why China might be behind shorting through JPMorgue, I read his latest article on seekingalpha.com.

In this article he expounds on China being short and long but however says shorting would be through HSBC not JPM.

"I now consider it much more likely that the Chinese Central Bank has it’s short COMEX silver position with HSBC bank, the largest international bank in China. The bank is known to have a huge silver short position, (which is unlikely to be a legitimate producer hedge) and probably has its corresponding long COMEX silver position with JP Morgan, although this might also be with HSBC. I am just speculating that keeping the positions at two different banks, under two different names, would help to camouflage China's strategy of accumulating precious metals and dumping U.S. dollars. With all the global banking secrecy, there is never any shortage of opportunity to unload a bunch of U.S. dollars. But their window of opportunity is closing because of the historically low inventory levels of silver at the COMEX.

This opportunity appears to be coming to an end with looming delivery defaults at the COMEX. In September 2010, there were 3002 silver contracts standing for delivery at the COMEX on first notice day, August 30, 2010. Of those, 84% of the holders (2519 contracts totaling 12.595 million oz) actually took physical delivery,

In the next delivery month, December 2010, there were were 17,208 contracts standing for delivery on first notice day, November 26, 2010. Presumably 16%, or probably more, were talked into settling in cash, likely at a hefty premium to the contract’s value based on spot. Using the same 84% ratio of contracts that actually took delivery in September then, that leaves 72.3 million ounces of silver actually delivered to long contract holders by the COMEX in December 2010. A figure representing more than six times as many silver bars as delivered three months earlier in September. As of January 6, 2011 the COMEX released inventory figures of only 48.9 million remaining ounces of silver registered for delivery.

There is an internet rumor going around that billionaire hedge funds (on the advice of former JP Morgan traders and in competition with the Chinese) settled their December long contracts at expiration for large cash premiums by posting the necessary cash and demanding (threatening) to take physical delivery on their long contracts. This would help explain the 9% gain in the price of silver during November, on top of a 14% gain in September and a 9% gain in October. In that time, silver never once fell below the 20 day, 50 day, or 200 day Moving Average during those three months.

Here is a link to a financial message board. On it, an apparent market insider posted Wednesday that the participants were so happy with their easy COMEX silver profits in December that they plan to make much larger purchases of COMEX silver long contracts in the last few weeks of February, 2011, and stand for delivery in March, the next delivery month for COMEX silver.

I will be looking at the March COMEX silver delivery figures with great interest, and will not be at all surprised to see major gains in the February and March price of silver. The post also warns of a planned takedown of gold (and indirectly, silver) during the month of January in order to cover some of their silver shorts (scare investors into selling their silver) in time to minimize the banksters’ pain in March. This is portrayed as a desperate, last resort tactic since there are enough existing gold inventories available for the banksters to work with, but no silver and buying silver on the open market would only spike the price."