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Message: Comex data reveals why silver might have found a bottom - wynter_bent
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_J/threadview?m=tm&bn=10073&tid=384771&mid=384771&tof=31&frt=2
Here is the reason why silver might be at a bottom. Yesterday, there was an increase of 1300 contracts in the Mar OI. Most assuredly, the buyers of these contracts will not have a liquidity issue and can stand for delivery if needed. Look at the massive contractions in the Feb gold contracts. The OI for Feb gold started the week at 213,000 contracts and now has only 54,000 contracts left. How many of these contracts will actually stand for delivery starting on Tues/Wed of next week? Around 10,000 contracts.
The same thing will apply to the Mar OI as we approach March 1st. Right now the Mar OI is 67,413. How many of these contracts will stand for delivery? If we based it on last year's number then only 3,800 will stand for delivery like last Jan 09. If we base it on the last month of Dec 2010, then around 5,200 contracts will stand for delivery. Of course last Jan 09, close to 4,000 contracts were actually delivered while in Dec 2010 only 1845 contracts were delivered. Now do you see the problem?
First of all, like I stated earlier, our group will not be buying until after the first week of February. There are some who said I was inconsistent when I suggested that it was our group who was buying the Mar contracts yesterday. I clearly speculated that Blythe realized that she was selling contracts to "these people" whom she thought would stand for delivey come March. Clearly I was right, as there was an increase of 1,300 contracts in the Mar OI today. I do not know for a fact that "these people" were in fact buying, but by the way the price stopped going down, I suspected as much.
Continued
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_J/threadview?m=tm&bn=10073&tid=384772&mid=384772&tof=8&rt=2&frt=2&off=1
continued...
Which gets us back to what will happen as March 1st approaches. The last thing that Blythe wants is for the Comex to show anywhere near 10,000 (or 20,000) contracts standing for delivery come March 1st. Even if she managed to pay enough people off and make physical delivery on a few thousand contracts, it would signal to the world that the Comex had to pay people off because they couldnt deliver the physical. That is what happened in December as Comex started paying people off in order to show only 5,200 contracts standing for delivery instead of a much bigger number. Of course, Comex only delivered on 1,845 contracts, so how would it have looked had 10,000 contracts stood for delivery?
The other way to pay people off is to spike the price of silver as March 1st approach thereby enticing people to sell and making it that much more difficult to raise the cash and stand for delivery.
Which gets us to the financing part of the story. Suppose we want to accumulate enough contracts to raid Comex and we wanted to finance a 1 million ounce purchase (this is a strictly hypothetical illustration). The current price is $27 which means we need $27 million to deposit on March 1st. Suppose a hedge fund had only 5 million and needed to borrow 22 million to finance the purchase. This means that even if the hedgies got silver delivered, it can withstand a 5 dollar decline before it would be forced to liquidate. That is the risk if somehow Blythe found enough silver to deliver 1 million ounces. Now imagine the risk if the price of silver were at $36. The same 1 million ounces would now need $31 million to finance and the risk is much larger should there be delivery. Of course, if Blythe doesnt want the Comex to show a huge number of contracts standing for delivery come March 1st, then she must spike the price of silver to make it more difficult to finance and to accumulate enough contracts to effectively blackmail her.
These are the dynamics that hedge funds will face in Feb as they decide how much and when to accumulate the contracts. Again I will not have much input into these decisions. My purpose is to inform as much of the public as possible about the dire situation at the Comex in particular and silver in general. My financial fortune will be tied to what silver does as March 1st approaches. Good luck to physical silver holders.
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_J/threadview?m=tm&bn=10073&tid=384772&mid=384793&tof=8&rt=2&frt=2&off=1
I guess I was a little unclear. Assume the hedge fund has $5 million in equity, then if silver is at $27, it would need $22 million to finance a 1 million ounce purchase, but if silver was at $36 then it would need $31 million to finance the same purchase (36-5=31).
We need the public to help drain as much physical silver as possible so that the silver shorters can't deliver when we "buy enough". That "buy enough" quantity is going up because Blythe is buying as much physical as she can get her hands on right now. You can see it in the SLV, at the US Mint, and all the large dealers across america. If she doesnt stop us in March, then her problem only exacerbates as we show up again with ever increasing forces.
It really is like a Ponzi scheme. Blythe must come up with physical silver faster than we can come up with cash to blackmail her. The longer it takes her to find physical silver, the more physical she must find in order to hold us off.
Someday this will end if the price of silver goes up high enough so that ordinary investors no longer want to invest in physical silver. Then we cant blackmail her because she can now find physical silver faster than we can buy contracts. Such is the case now with the gold market, but silver is another story.
Blythe in her convoluted thinking was hoping that if she slam the silver price (by slamming the gold price first), small investors would stop buying physical silver. We are here to counteract her efforts with our own. We want to encourage as many people as possible to purchase physical silver.
Our interest are perfectly aligned with your interest.
We need the public to help drain as much physical silver as possible so that the silver shorters can't deliver when we "buy enough". That "buy enough" quantity is going up because Blythe is buying as much physical as she can get her hands on right now. You can see it in the SLV, at the US Mint, and all the large dealers across america. If she doesnt stop us in March, then her problem only exacerbates as we show up again with ever increasing forces.
It really is like a Ponzi scheme. Blythe must come up with physical silver faster than we can come up with cash to blackmail her. The longer it takes her to find physical silver, the more physical she must find in order to hold us off.
Someday this will end if the price of silver goes up high enough so that ordinary investors no longer want to invest in physical silver. Then we cant blackmail her because she can now find physical silver faster than we can buy contracts. Such is the case now with the gold market, but silver is another story.
Blythe in her convoluted thinking was hoping that if she slam the silver price (by slamming the gold price first), small investors would stop buying physical silver. We are here to counteract her efforts with our own. We want to encourage as many people as possible to purchase physical silver.
Our interest are perfectly aligned with your interest.
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Jan 28, 2011 02:41PM
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