from bill murphy
posted on
Jul 23, 2010 08:15PM
SSO on the TSX, SSRI on the NASDAQ
bill murphy of gata writes that he expects the price of silver to go nuclear:
*How much the price of gold has risen the past 30 months compared to silver.
*How low the silver open interest is compared to gold in a relative sense, but more importantly, how low it is compared to other times when it was at the same price.
*The gold open interest has risen as the price has gone up, but the silver OI is 1/3 less than where it was at its highest levels, with the price the same.
*That very high silver OI level north of 180,000 contracts was right before JP Morgan took the price of silver down from a high of $21.50 to $8 an ounce, raping speculators in the process. No doubt in my mind a huge hunk of that short position was JPM. Think of the money they made on that kind of move.
What is so wrong and fraudulent about that is what we learned from Andrew Maguire at the CFTC hearing on March 25 of this year. Morgan set up an orchestrated attack, which is illegal, with numerous trading partners and then went after the market with a vengeance. This is exactly what Maguire conveyed to the CFTC by telling them in advance of raids from November through last March were going to occur … and THEY DID!
*The low silver OI tells us that a number of commercial shorts are not comfortable being short at these price levels. The risk is too high for them. However, a low OI does not, in and of itself, mean the market is set up for a substantial move to the upside. On February 15, 2005 the OI was 96,021 contracts, but the price was only $7.34. Higher prices naturally attract more interest.
What also has my attention…
*The OI has come down to relatively very low levels as the Comex inventories are dwindling.
*Over the past many months we have heard of delays in taking delivery of Comex futures positions.
*The panicky way the Bank of Nova Scocia is handling clients who want to take possession of the silver they own, such as were tje cases with Toronto’s Harvey Organ and the Toronto cancer victim. The bank is petrified of losing any of the physical silver it has on hand.
*The likelihood is that JP Morgan’s silver short positions are naked and not backed by physical silver in London. As far as I know, Morgan has never produced proof to the CFTC their massive short positions are hedged …except maybe Texas hedges (shorts backed by more shorts). This tells me they are very vulnerable should a flurry of physical buyers decide to take them on.
*The coming Sprott silver EFT could be just the vehicle which sends JP Morgan scurrying before they have to declare force majeure, or default. But Morgan has a big problem should that occur because of all the flap over their monstrous short positions by the GATA and Ted Butler camps. How can they say all has been kosher with their operations and then default? Can you imagine the lawsuits?
*With the silver shorts in such a vulnerable position, the bombshell I keep waiting for could eventually be a market mover and deal breaker for them. It has been delayed for good reasons, but is still in the works, frustrating as that is to hear.
*We know the gold market is under stress as pointed out so aptly by Adrian via his analysis of the BIS swap, the low or negative gold lease rates, the lack of any selling of gold by the European central banks, etc. That said, there still has been some gold around to handle emergency situations, as per the BIS swap. While growing scarcer, it’s still there. Silver is a different story. There just isn’t any excess visible supply around as in gold.
*Commodity prices are on the move with QE right around the corner. Silver has been a noticeable laggard and has a long way to go to catch up.
A market does what it does until it doesn’t, as Yogi Berra might like to say. Silver has been held in check for what seems like eons by JP Morgan and other Gold Cartel thugs. It seems to me numerous constructive market factors are gradually coming together which are going to send the price of silver SHARPLY higher, perhaps in nuclear fashion. Silver is a ticking time bomb waiting to go off … a tinder box waiting to be lit. Match please!