...talk about squeezing..
posted on
Apr 25, 2012 12:00AM
San Gold Corporation - one of Canada's most exciting new exploration companies and gold producers.
Dear Reader,
I’m Peter Krauth.
As a global resource specialist, I’ve been rubbing shoulders with the speculators… miners… traders… and “insiders” who have set and moved the price for metals for over 30 years.
And I want to tell you about a situation that’s developing with silver prices right now that could mean massive gains for those who act quickly.
I’m sure you’ve read how silver demand has increased right along with technology. Then there are the folks in China and India buying and hoarding the metal like crazy…
And it’s clear that supplies are decreasing. In fact, the last time the supply of silver was this low was the year 1300 A.D.
Yet if you’ve followed silver at all, you’ll know the precious metal’s value has crashed repeatedly over the past couple of years.
But let me assure you, that won’t stay true for long, because the last time this scenario occurred investors pocketed upwards of 195% in just a few months.
And the stage is set for those who move now to do even better.
The backstory here is quite a tale of intrigue and possibly, high-finance trickery…
Recent class-action lawsuits allege manipulation of silver prices on the part of BIG players like JPMorgan going back to 2008.
The allegations are disturbing…
On March 16, 2008, Morgan completed the purchase of Bear Sterns – and acquired that company’s enormous short positions on silver. On the day Bear went out of business, silver reached a multi-decade high of $21 an ounce…
Yet within DAYS, silver plummeted 17%.
In the months that followed, Morgan continued to load up on the short positions – it’s alleged that the company held 33,805 silver futures contracts on the COMEX (The world’s foremost metal exchange located in Chicago).
That would be equal to 20% of the global annual mine production…
And silver continued to drop like a stone. Between July 14 and Aug. 15, it went down 33% to $12.82. By October of 2008, it was at $9!
Was this skill, luck, or something else?
Whatever the answer, it prompted an amended class-action complaint in U.S. Federal court.
The suit goes on to state that…
During just one day’s price drop, from Aug. 14 to Aug. 15, 2008, JPMorgan allegedly pocketed approximately $220,000,000 in PROFIT.
According to an informant listed in the complaint, Morgan’s traders allegedly devised a plan to invite their “outside” trader friends to get in on the action by sending “signals” just prior to a big move.
It’s thought that by “hitting the bids” hard with their enormous cash reserves, they believed they had the potential to absorb any uptrend in price and get the desired results for their massive short contracts.
And it doesn’t end there…
As the negative press over these allegations heated up in August of 2010, JPMorgan started reducing their massive short positions. And sure enough…
From September to April of 2011, silver prices TRIPLED from $16 an ounce to more than $48 an ounce.
That’s a gain of 195%.
That would have been 7.5 times more growth than the S&P 500 returned over the exact same time period.
Now if you’re like me, you’d take a TRIPLE in a heartbeat. Wish we’d been along for the ride…
But the reality is…
195% is a small gain compared to what’s on the horizon…
Eric Sprott is CEO of Sprott Asset Management LP and with $8.5 billion under management, he’s one of the foremost experts in the metals market. In an interview with Silver Invest News in the summer of 2011 he stated, “I believe it was a manipulation. There was no market, it was a setup. The people who were short that were caught… were losing gargantuan amounts of money and therefore, they initiated the attack on May 1.” |
That’s because – regardless of the legal actions…
In March of last year, JPMorgan AGAIN upped their short positions – this time to 25,000.
Then short sellers attacked on May 2, and silver was again collapsing. By May 6, 2011, it was down 29.8%.
At the same time, the COMEX increased their initial market requirements from $11,745 to $21,600.
That meant that silver futures traders
had to come up with 84% more in additional cash – or liquidate their holdings.
Unsurprisingly, thousands of investors dumped their silver holdings at any price they could get; no matter how low or how much money they would lose.
Yet despite all this, silver has withstood the attacks.
And it’s just re-loading…
You see, there’s one HUGE difference between what’s happening at this moment, and what occurred in 2011 – when unexplainable price volatility created a rebound in silver prices to the tune of 195%…
There’s a squeeze on silver like never before.
Last year, 43 million ounces were held in short positions.
But, according to CoinWeek, between Jan. 17 and Feb. 7 of THIS year…
COMEX Commercial traders bumped up their short position
by over 71 million ounces.
So when silver rebounds, it’s going to blow WAY past 195%…
Our research says investors who act fast could see gains of over 600%.
There are four things you need to know to profit from this rare opportunity:
You can get the full report at no cost to you. You’ll see exactly how in a moment. It’s called: The Profit Squeeze: How to Ride Silver as it Climbs to $200. You can get it within minutes, just by going here.
Now, at this point, there are two questions astute readers need to ask:
When analysts need to assess the global demand for silver, they turn to GFMS Ltd. and The Silver Institute. These two organizations are the “gold standard” for above-ground supply, inventory and usage statistics.
Yet by their own admission, GFMS and The Silver Institute acknowledge that their reported data for “implied net investment” (that means institutional and retail demand for physical silver) is not an “observed” figure.
When you strip away the jargon, it means one thing:
Just recently, silver expert Eric Sprott discovered that the actual demand for silver, especially for investment, has been staggeringly underreported.
As you can see from his chart below…
More than 225 million ounces of silver demand was “missing” from figures for the decade-long stretch that ended in December 2009.
And that figure doesn’t include the demand from 2010, where the amount of trading in silver to ETFs and other investing vehicles was, according to Sprott, approaching 800 million ounces – a day!
You see, at the same time, demand for silver is on the cusp of hitting historic highs.
Silver’s use in industrial applications increased 20.7% last year to 487 million ounces.
That means as much as 50% of silver’s total annual production is for industrial use… and that number is expected to rise another 36% by 2015.
As the world’s greatest conductor of electricity – manufacturers use silver to make switches and fuses found in washing machines, computers, vacuum cleaners, drills, dryers and ovens.
In addition, billions of silver-zinc batteries are manufactured every year for use in dozens of electronic devices such as cameras, remote control car keys, TVs and watches.
The list of products that need silver is enormous – and constantly growing… including the two biggest areas of all:
Yet amazingly, silver prices remain well below the all-time high of $50.35…
And that was reached in 1980, more than 30 years ago.
In addition, the supply of silver is on a downtrend of historic proportions.
And that doesn’t even tell the whole story. Did you know that unlike gold, silver is 98% consumable? Most people don’t.
What that means is:
(By comparison, of the 5 billion ounces of gold ever mined, about 2 billion are available above ground in bullion form.)
That’s because the rest has been consumed. Most silver, such as the metal used in electronics, is not recoverable. There’s no viable way to get it back for reuse.
In 1970, it’s said there were 140 months of available above-ground silver, and by 1990 that shrank to 50 months. By 2010 it shriveled to perhaps as little as 11 months.
Even more telling…
The details on supply and demand can fill whole books.
Bottom line: It’s harder to get… And manufacturers and investors will be paying through the nose to own it.
We’re not foolish enough to believe that the market will not be gamed again for the gain of big institutions. I believe it would be one of the finest days in America if that were the case.
Sadly, if money can be made bending the rules, it will be done. In the evolution of rigged markets, the next ingenious scheme has not even been thought of yet.
But there are two big changes right now that you need to know about.
These two new developments will likely free the price of silver (for a time, anyway) and make this historic run-up possible.
The first game changer is building steam and getting bigger by the day. It has certain players running scared.
Yet it’s playing right into the hands of those savvy enough to get in early.
For years, there’s only been one game in town. If you wanted to buy or sell silver contracts you had to trade through the Chicago Mercantile Exchange (CME).
If you’re not familiar with the CME, they also run the NYMEX (the world’s largest physical commodity futures exchange), the COMEX (the global exchange for gold, silver, copper and aluminum) and the CBOT (for trading options and futures contracts on a wide range of products including gold, silver, U.S. Treasury bonds and energy).
They even control the Dow Jones Industrial Average.
Outside of the U.S. it’s seen as a monopoly because…
1. You have to trade in dollars.
2. You have to abide by their rules.
Everybody. Throughout the world. No exceptions.
That means that China has been shut out from taking delivery on silver – unless they purchased contracts through the CME.
Yet the recently opened Hong Kong Mercantile Exchange (HKMEx) is about to rewrite the book for silver buyers around the globe. It’s going to make it very rough for the schemers to use their same tricks.
You see, this is the first time in history that the Chinese (and silver investors all across Asia) can purchase silver futures contracts… and actually take delivery of the metal – in Hong Kong no less.
No longer will the enormous Asian market have to answer to Wall Street when it comes to buying silver. There’s little doubt that this will quickly become the gateway to silver into China – and likely all of Asia.
Take a second to think how much of an impact this could very well have on the silver market.
The Chinese are already the biggest consumers of silver on the planet – accounting for an astounding 23% of global silver consumption last year! In fact, in 2010 silver demand rose 67% in China alone.
And that’s with having to jump through hoops to get it.
Now that the Hong Kong Mercantile Exchange has been created to give them exactly what they want, demand is expected to increase dramatically in the next several years.
And even better: It comes at a steep discount too.
You see, for those who want to trade silver futures contracts, the new Hong Kong Merc only requires investors to buy “in” with a 1,000 troy ounce minimum.
This is dramatically less than what is required back in the states where the minimum contract allowed by the CME is 5,000 troy ounces.
What’s more, the Hong Kong Merc has signed up a whopping 22 of the biggest brokerage trading firms in Asia.
It’s already setting up a squeeze of historic proportions.
Hard-money heavyweights including Ben Davies of Hinde Capital, Jim Rickards of Tangent Capital Markets, Euro Pacific Capital CEO Peter Schiff and QB Asset Management Co-founder Paul Brodsky have predicted at least another double in silver in a few months alone.
By some estimates, silver could well return 10 times investors’ money for the early crowd.
Think about what that could mean…
In just a few, short months… a hypothetical…
$5,000 could become $10,000… or $35,000 or $50,0000
$10,000 could become $20,000… or $70,000 or $100,000
$25,000 could become $50,000… or $175,000 or $250,000
THAT’S A POTENTIAL QUARTER MILLION DOLLARS… on top of holding one of the world’s most treasured commodities.
While the impact of the Merc is expected to outmode the schemers and skyrocket silver prices, another development is making this pressure cooker for silver prices explode.
The Pan Asia Gold Exchange (PAGE) is about to open soon. Estimates are by June 2012…
Again, please commit this date to memory: June 2012. It could be one of the most significant moments in financial history. A moment that can put a decade of market misery behind you.
And PAGE will enable all 320 million retail customers – and 2.7 million corporate customers – of the giant Agricultural Bank of China to simply use their Renminbi, the Chinese currency, from their bank accounts to trade gold and silver.
This no doubt is a historic event.
Here’s how Andrew Maguire, a trader on the London Metal Exchange for more than 40 years, recently described the scenario to King World News:
“I believe the leveraged and naked existing short side concentration in silver will be blindsided by this. In my opinion it will create a massive short squeeze.
“None of this potential new physical demand has been factored in by analysts and I expect a large and unanticipated drawdown of physical gold and silver over the next few months, ahead of the international contracts going ‘live.’”
Maguire continued:
“This factor will ultimately destroy the remaining short positions in both gold and silver… In my opinion it will create a massive short squeeze.”
So what happens when silver is finally unfettered? How high could it run?
We believe that initially, $200-per-ounce silver would be a fair value. And we’re not alone.
Renowned gold industrialist, Rob McEwen, recently explained to Mineweb.com that as gold goes up… and if you use the 16-to-1 ratio… “$200 is conservative.”
And how much could you make on the upcoming squeeze? Well, quite a lot.
Take a moment right now and get our Report: The Profit Squeeze: How to Ride Silver as it Climbs to $200.
Find out:
The report is free, as a special gift to you. You’ll see how to get it in a moment.
And if there’s any doubt that now is the perfect time to buy silver, consider the man who’s making a $1.5 billion bet on it… Eric Sprott, perhaps the smartest silver investor on the planet.
When it comes to silver, Sprott had this to say to Financial Sense:
In fact, he recently filed a prospectus for the purchase of an additional $1.5 billion worth of silver bullion to cover expected demand for his company’s exchange-traded fund.
Frankly, you don’t invest that kind of money on a whim. You only invest that kind of money when you firmly believe there’s going to be a payback.
That’s why it’s so important to get our latest report: The Profit Squeeze: How to Ride Silver as it Climbs to $200. You’ll find out about the chance to see potential gains of 660% and more on the impending run.
I’d like you to get this. If the run begins, $1,000 could quickly turn into $6,000 or more, depending on how you choose to play it.
The story outlined in the class-action complaints… the inexplicable pricing of silver… and the movement of capital is a great example of how vital it is to have complete, behind-the-scenes information before making any move.
It’s also a great example of how those with that information can make a ton of money.
When you understand the entire backstory, silver is clearly one of the most powerful weapons you could have in your arsenal if you’re going to come out ahead in today’s rocky markets.
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