ed steer of gata on how the price manipulation will end:

Ted and I had another intense chat about gold's 200-day moving average yesterday. I've been harping on it for quite a while...and almost no day goes by now without me bringing the subject up...much to his consternation at times. We both agreed that silver [after yesterday's pounding] is in an even more bullish position that it was at this time last week...and the COT structure is also better than it was back in October with silver at $8.70. But...in a word...the COT for gold sucks big time. Not only is the 200-day moving average still intact...but the bullion banks were still net short about 14.0 million ounces of gold as of last Friday's COT...about 5-6 million ounces higher than what it was when the gold price was back at its lows in October. That represents 50-60,000 Comex contracts...and [potentially] big dollars to the downside. This is the dichotomy of which I have often spoken. Are the bullion banks saving this short position for a reason? Are they going to crush the price now...or later? Or is this the best they can do? If/when they do, gold will certainly be used as a club to beat the living crap out of the silver price so JPMorgan and HSBC USA can cover their huge short positions. [According to the last Bank Participation Report, these two banks (or maybe JPM all by itself) hold 98% of net Commercial silver short position...which works out to around 123 million ounces!]

The '8 or less' bullion banks in the Commercial category are net short roughly 13.0 million troy ounces of gold as of yesterday's pounding. That's a hair over 400 tonnes of the stuff. The physical gold exists to cover this short position right now...and I'm not talking about what the central banks are alleged to have. They could cover it any time they wished to...with not too much problem if they did it quietly over a period of months. And let's not forget about all that scrap gold that's shown up this last quarter. If there's as much as they say, that would cover it with lots to spare.

But silver is another animal entirely. Except for what's sitting in the Comex-approved warehouses [every ounce of which is owned by hundreds of different people or organizations...almost half of which is not currently for sale] and in the ETFs, there isn't an ounce to be found in size anywhere. If there was lots of it, the Comex-approved warehouses would be bursting at the seams. They're not...as inventory levels have been falling for the last year or so. The physical metal does not [and will probably never] exist to cover this huge short position that JPM and HSBC have. If they can't deliver the physical, then they either declare force majeure and let the NYMEX/CME pick up the tab...or arrange to cover their short position losses in cash. One way or another, that's the way Ted [and I] see this whole thing ending. It won't be with a whimper...but with a bang. I suppose they could close the exchange for trading in these two metals...but that would just make matters worse. When that day arrives, it will be one for the history books.

So...when these bullion banks are through pounding the price of both gold and silver to whatever price point it takes to cover the maximum number of short positions that they can in both metals...we will be at the moment of truth once again...as we have been so many times in the past. If, and only if, the bullion banks do not show up to short the next rally...the price management scheme will have come to an end. At that point, maybe the world will 'discover' the true free-market price in both metals. Because no man or woman, living or dead, knows what those prices are. And that's precisely what banks and governments have been trying to prevent.

And how will we know when that day arrives? As Ted Butler said to me over and over..."just look at the price and you won't have to ask ‘Is this it?’...because it will be self-evident.”

http://www.caseyresearch.com/display...