ed steer of casey research expects a sharp decline in the silver price:

From Ed Steer:

As I mentioned in my closing comments yesterday, gold hadn't done much in Far East trading and early London trading...but I also mentioned that this would change as the day wore on in London...and certainly once the Comex opened. Well...I was right about that...unfortunately.

The jobs numbers hit the tape at 8:30 a.m. in New York and the U.S.$ headed south and the precious metals headed north...for about five minutes. Then it was obvious that the President's Working Group gave the order and the dollar went straight up...and gold and silver went straight down. Nothing free-market about that. From the lows at the London p.m. gold fix, gold and silver made rally attempts...but both got squashed...and were bashed further in electronic trading once the floor trading session was over. The Kitco gold chart tells all.

click to enlarge

Open interest numbers for Thursday's big rally were no surprise. Gold o.i. jumped another 5,776 contracts to 401,699 [the highest open interest since August 6, 2008]...and volume was a healthy 124,373 contracts traded. Silver had a huge o.i. jump...up 3,101 contracts to 109,274...with another big volume day of 38,654 contracts. Ted says that the rollover into the July contract [and later months] is already on in earnest, so that's the reason why there have been big increases in silver trading volume this week.

The Commitment of Traders report showed that there was only minor deterioration in silver's [Commercial] net short position by JPMorgan et al...as they only increased their net short position by a measly 195 contracts. Ted and I were both expecting much worse...so it's plain that 'da boyz' do not want to short the silver market any more than they have to. The Commercial net short position is roughly 43,000 contracts...215 million ounces. The '4 or less' traders [bullion banks] in the Commercial category are short 47,700 contracts...238.5 million ounces of silver...more than 100% of the entire net short position in silver. These '4 or less' traders have been more than 100% net short the Commercial category of the COT silver market since July 29, 2008.

The deterioration in gold was worse than awful. The Commercial [all bullion banks] net short position increased a whopping 18,385 contracts. They are now net short 22.65 million ounces of gold. '4 or less' bullion banks in this Commercial category are short 17.7 million ounces of that. This is monstrous and grotesque.

To give you a further idea of how unbelievable this is, the Bank Participation Report for May came out at the same time as Friday's Commitment of Traders report...with the same cut-off date...the end of trading this past Tuesday, so we can compare apples-to-apples. Of the above 22.65 million ounce short position that the bullion banks have in gold, '3 or less' U.S. bullion banks are net short 12.3 million ounces of that...more than15% of world mine production. This is a new record high. And to show you how much the U.S. bullion banks dominate the world's gold market, the report states that twenty-one [21] 'Non-U.S. banks are only net short 410,000 ounces of gold between all of them!!!’

In silver, two [or less] U.S. bullion banks are net short 27,500 contracts...137.5 million ounces. The Bank Participation Report shows that twelve [12] Non-U.S. banks are net long the silver market by 5,200 contracts...26 million ounces!!!

Ted Butler says, and I totally agree, that this has to be resolved...one way or another. The bullion banks are either going to get overrun with a huge short position on in both metals...or they're going to smash gold so they can beat the living snot out of the silver price. Unfortunately...as both Ted and I have already gone on record as stating...the end result will most likely be the latter, not the former. We figure that it will be quick and ugly. Very ugly. We'd both LOVE to be proven wrong on this one...but past history [with the COT in this configuration] is not on our side. Sorry!

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