silver train leaving the station?

[metalman]

Re: JPM silver story is a complete farce!!!

Look at the stock price! If any this were even remotely true, the arbitrage (and JPM's own traders) could make a fortune shorting the stock and buying futures contracts on silver. Anyone passing usless information like this is simply trying to keep a lid on JPM to buy stock cheap (unlikely). I've been trading for 31 years (I'm only 49) and following investment/speculation theory since I was 14. Plays like this are the stuff of fools dreams. Sorry to be so harsh but I get so annoyed with how carelessly people throw away money on amateurish investment theses.

nice... 31 yrs. what's your take on trading a 'peak cheap oil cycle'?

[dropthatcash]

JPM silver story is a complete farce!!!

19 February 2011

Silver Bankers May Be Sitting on Big Derivatives Losses and the Fed May Be Funding Them

My question is simple. What are bankers like J.P. Morgan and HSBC doing playing in such size in this market? What is the economic and productive benefit? Perhaps there is a good answer. The taxpaying public certainly deserves to know. The CFTC says they have looked into this, but the detailed results of their findings remain less than forthcoming.

IF this is legitimate hedging then all well and good, but then there is no justification for secrecy. If these are trading positions held by the bank, or by the bank as agent for speculators, then there may be a greater reason for secrecy, but the magnitude of the shorts is far out of bounds in size. Ten years of production is not a short position, but the entire market and then some.

The CFTC certainly appears to be acting poorly as the market regulator for the people. Given the regulatory failures of the past ten years that lead to the financial crisis, it would be useful if the Congress were to make very pointed inquiries regarding this situation. But given the performance of the Congress, and their affinity for the deep pockets and big contributions of the financial sector, that may be too much to hope for.

The comment and analysis below is from Harvey Organ's most recent commentary.

"The huge rise in silver price has caught the silver bankers totally offside on the silver banking. The BIS data released in November (www.goldexsextant.com) shows that the G 10 bankers have collectively sold forwards and swaps to the tune of 4 billion oz and short naked calls for another 3 billion oz. The total, 7 billion oz represents 10 years of production. If you just do the forwards, then it is 7 years of annual silver production.

Let us say the average cost of acquiring these derivatives and forwards equate to $15.00 for silver. Thus collectively the entire G10 bankers are feeling massive pain (losses) to the tune of:

7 billion oz of silver( 32.30-12.00) = 7 billion x $17.30 = 121.1 billion dollars of losses.

This is in a market of only 14 billion dollars. It begs the question to what economic need was this done.This is still off balance sheet.

If you include only the forwards or swaps (the lending of actual metal to which nothing has come back yet) then the losses are:

4 billion x 17.30 or 69 billion dollars.

Regardless how you look at it, the bankers are in serious trouble with this huge rise in silver prices. I hope you understand the severity of the situation."

This situation merely highlights Obama's failure as a reformer, and the general failure of both parties to act in positions of trust for the American people, rather than the special interests that provide them money and sincecures after they leave office.

As I noted on my own silver chart, I am no longer will to forecast anything but intermediate targets for silver, given what appears to be widespread imbalances and crisis-inducing leverage in the market, especially given the strong demands on the bullion market from the sovereign and individual buyers in the BRIC countries.

It is never pretty when a fraud collapses, and this one in particular is difficult because it seems to encompass those stewards of the market upon whom one generally relies for information and some measure of confidence in the data.

The market will clear when it clears, and seems to be defying 50% margin requirements increases and well placed disinformation campaigns in the process.

http://jessescrossroadscafe.blogspot...ng-on-big.html

Look at the stock price! If any this were even remotely true, the arbitrage (and JPM's own traders) could make a fortune shorting the stock and buying futures contracts on silver. Anyone passing usless information like this is simply trying to keep a lid on JPM to buy stock cheap (unlikely). I've been trading for 31 years (I'm only 49) and following investment/speculation theory since I was 14. Plays like this are the stuff of fools dreams. Sorry to be so harsh but I get so annoyed with how carelessly people throw away money on amateurish investment theses.

[chedir007]

Re: silver train leaving the station?

Just came back from the "Silver Summit" Investment conference held in Glendale, AZ (Feb 18/19th) - a free event hosted by Cambridge House or something. First time ever I attended such an event. At a macro level, did not learn anything earth shatteringly new but it was good to get confirmation from live/breathing speakers of all the things one gets to read anyway from certain effective internet sources (iTulip, King World News, JesseCafeAmericain etc).


Some takeaways:


1) A lot of talk/questions about Silver "backwardation" and according to speakers, how this is truly an abnormal/unprecedented for Silver. Apparently a sign that paper markets are loosing control. Some nuances obviously exist (Antal Fekete mentioned that although his friend Jim Turk is saying "silver is in backwardation", he says we are not effectively there "yet" but the trend is definitely going there); overall, high optimism for silver (what else at a Silver Summit?)

Antal also mentioned the silver miners (having learnt from their gold miner cousins' mistakes in past years) are strategically mining and selling the "tougher to reach" ores now and keeping the easier stuff for later. This point made me perk up: I have avoided investing too much in gold miners (EJ has mentioned in past how poorly run companies in general this sector can be) - but could silver miners be different from gold miners in terms of effectivity in running a business? No further details were given on this topic at the talk - but as David Morgan pointed out recently, silver miners are still lagging (e.g. SIL) the recent explosion in silver prices.


Ted Butler also gave some talks and it was interesting to hear he doesn't think Silver will be monetized since there is not enough to go around and its industrial usage.


2) Michael Berry (of Morning Notes) gave an interesting talk on "Critical metals" and next investment opportunities- including Manganese (critical for making steel), and graphine (for nanotechnologies of the future). It was stunning to hear how much USA currently depends on China and other countries for such elements besides REEs.

[oddlots]

Re: silver train leaving the station?

I have no way of truly knowing. BTW, can anybody find a definition of who exactly "managed money" might be?

My money is conspicuously "unmanaged" at the moment so I'm stumped.

The use of that phrase by anyone claiming competence seems very suspect to me (and I don't mean it's use by you adeptus.)

Just sayin.

[jpetr48]

Re: silver train leaving the station?

Whatever is being fixed in these markets is two steps ahead of where we are now.
Two suggested goals: 1) buy on dips, hold, repeat - don't sell with volatility high 2) position for junior miners in next correction and junior oil producers - these guys are not buy and hold. I am using software and research service as cover.

I doubt Wynter is one of Blythe's monkeys. She and JP have enough of PR and hounds on her door step. No big company wants the headlines JP has received from this silver shakeout.

A CS Lewis fan will be posting all of Wynter's postings with his forensic take at http://screwtapefiles.blogspot.com/

[Adeptus]

Re: silver train leaving the station?

Nice work on possible causes Adeptus. I think managed money are the Goldman Sachs and UBSs of the world. The bullish sentiment is very strong. Seeking Alpha had 5 articles today on the front page and the FT had an article on silver (not front page yet). For entertainment, go to the yahoo message board for slv. Someone named Wynter Bentor is posting messages giving very reliable signals ahead of time. They declared their last posting on Wednesday of this past week. This person is training a group of sharks to hunt after blood.

Thanks, found her messages here:
http://search.messages.yahoo.com/sea...thor&within=tm

I just spent all Saturday reading up on silver, and now all this plus 5x Seeking alpha articles. There goes my Sunday, oh well, at least I should feel a bit more confident come Monday I managed to enter the market at $13, and then recently again at $30 just before this recent 7% spike. I can still make a couple more sizeable entries, but I'm also a bit skeptical about this whole Hedge Fund/Wynter Benton trying to crash the COMEX for a 20-30% profit for non-delivery. Historically, price always dips around Options expiration dates. Could Wynter Bentor possibly be one of (warning: swearing) Blythe's Monkeys suckering in all the retail investments for another massive raid?

Speculation is fine but I'd rather know who is at the other end of the table or wait until the shorts shake the leaves off the trees. Let's try to make the complex simple and if we cant, buyer beware.

Agreed.

[jpetr48]

Re: silver train leaving the station?

Largo Winch,
Thanks for the recommendation.
PALL is a superstar. I check it on my charts and there is not much upside until we have a decent pullback with stock market. Though not the best looking girl/guy at the dance, PPLT platinum and like equities have a greater reward/risk ratio.
Joe

[jpetr48]

Re: silver train leaving the station?

Nice work on possible causes Adeptus. I think managed money are the Goldman Sachs and UBSs of the world. The bullish sentiment is very strong. Seeking Alpha had 5 articles today on the front page and the FT had an article on silver (not front page yet). For entertainment, go to the yahoo message board for slv. Someone named Wynter Bentor is posting messages giving very reliable signals ahead of time. They declared their last posting on Wednesday of this past week. This person is training a group of sharks to hunt after blood.

Silver will continue to outperform gold as long as stocks continue up and probably hit 38-40 before end of March/April time frame. The question we have to ask ourselves is why is silver outperforming gold at almost a pace of 12 to 1 growth the past 30 days. Do the fundamentals support this growth?

IMHO we have many speculators who are counting their fortunes of how much they will be worth when silver hits $150. I almost fell into that trap. I think EJ is 100% gold. Turk is 70% gold and 30% silver.

Speculation is fine but I'd rather know who is at the other end of the table or wait until the shorts shake the leaves off the trees. Let's try to make the complex simple and if we cant, buyer beware.

[Adeptus]

Re: silver train leaving the station?

There's a LOT of reasons that may explain the recent 2x day 7% rise in silver (not to mention the recent continuous rise from just under $27).

Here's what I've found so far:

1. The CFTC publishes a high level view of who's buying/selling silver at the COMEX in a report called Commitment of Traders. One blog guy I found has taken this data and put it in a pretty chart to look at. It looks to me like "managed money" has come back into the silver market in a relatively big way recently and may be the primary reason why the price has shot up, although why exactly this is occuring, I have no way of truly knowing. BTW, can anybody find a definition of who exactly "managed money" might be? I'm guessing the Investment Advisor or Hedge Funds, but that's a total guess.

http://traderdannorcini.blogspot.com/ <-- awesome blog btw.


2. ARABIC REVOLTS: As you no doubt have been witnessing on CNN et all, there's a little bit of civil unrest going on around the world. This past week alone we've seen:

YEMEN protests
BAHRAIN protests
LYBIA protests
IRAN protests
IRAQ protests
JORDAN protests
USA Wisconsin protests
EGYPT celebrations
(note: I likely missed a few countries in the list)

Why is this happening? "When people have nothing else to lose, they lose it!". In part because of high food inflation in poor countries where food consists of over 50% of the net earnings spent per earner (skip to 1:55). When food doubles in price, people either go hungry or make great sacrifices. Why is food inflation occuring? Aside from ever increasing world population, and decreasing farmland, and crop yields no longer keeping up with demand, environmental catastrophes like Australia recently (caused spike in wheat costs), plus no recent magical technological method of increasing production yields (GM's aside - I hope this never becomes standard) , you get food inflation autmatically. But I think the trigger point may have a lot to do with Fed printing $$ and then POMO'ing it, and exporting inflation abroad (more dollars coming into a country chasing after the same or decreasing ammounts of agricultural assets). Anyway, I digress... this ongoing printing & QE / POMO ($105 BILLION in DEC 2010) is obviously devaluaing the dollar against all other assets and resulting in PMs rising in price.

3. CHINA: The inflationary pressure in China is resulting in Chinese civilians showing an "EXPLOSIVE" growth in gold/silver purchasing. (paraphrase): "In 2010, a total of 15 tonnes of gold were sold in China to citizens. In the single month of January 2011, 7 tonnes were sold.". Assuming not further growth and a linear extrapolation that's 7x12= 84 tonnes in 2011 vs 15 tonnes in 2010. A potential FIVE FOLD INCREASE!!

The silver demand was also enourmous. 13 tonnes in Jan 2011 (156 Tonnes!! if anualized), vs 33 tonnes in all of 2010. Again a near 5 fold increase!
URL: http://www.reuters.com/article/2011/...71F1MO20110216

Similar (but to a lesser degree) surges in retail silver are also being seen by:
Canadian Mint: http://www.planetinsane.com/silver-m...t-year/269588/
US Mint:http://www.marketoracle.co.uk/Article25933.html


4. COMEX DEFAULT!?!? (Yes, I know we've heard this rumour 10x before on the Internet, but its making blogosphere headlines again):

source: http://tfmetalsreport.blogspot.com/s...&max-results=7

Posted Feb 16, 2011:
"If someone wants to purchase physical silver through the Comex, they must first buy a future or option contract for a "delivery" month. The current delivery contract is the March11. Before the close of trading on 2/28, any holders of March contracts must sell their positions or be forced to take delivery. Those unwilling to take delivery typically "roll" their position into the next month, which is May. If an investor does intend to take delivery, that person must, by the close on the 28th, show in their account enough money to pay for their acquisition. A single contract is for 5,000 ounces so, at $30/oz, you must show available funds of $150,000. For 10 contracts, you must have $1.5MM. This is kind of a "put up or shut up" thing. It keeps goofballs from claiming they want delivery when they really can't afford it. On the 28th, you've got to have the dough in your account to "prove" to TPTB that your are serious. Every delivery month, the Evil Empire/Comex plays this game and, every month, enough longs simply roll instead of standing for delivery so that the Comex has yet to default on their obligations to deliver the physical silver.

Now, here's the problem...Monday was 2/14. Only 10 trading days to go until the critical 28th. Heading into Monday's trade, there were still 62,692 open contracts for March."

As of today Feb 19th, we are around 53,000 open contracts + or - a few hundred. Monday is a holiday in the USA, so that leaves trading 5 days to roll over 52,000 contracts. There's also been rumours elsewhere that some hedgefund with who knows how many millions invested at the Comex intends on taking delivery. Not to mention, the grass roots movement of http://standfordelivery.com/stand.php claiming in 37 days they will remove another 3 Million ounces (so far). Note: COMEX supposedly has around 103 Million or so, so, these guys alone, if even real, won't crash the COMEX. Rough calculations suggest that aprox 20,000 contracts would have to stand for delivery (at 5000 oz per contract) for all 100 Million ounces to get taken from the COMEX. Personally, I'd be very surprised if the COMEX was busted this time around, but at this rate, by 2012 or 2013, it could be a real possibility, same with the LMBA!


5. Silver / Gold Ratio: A day doesn't go by when I don't read somebody bringing up the fact that silver is still only at a ratio of 45:1 when compared to gold, when the historic range was closer to 15:1. In other words, there's room here for 3x price surge in silver in the next year or two (or so).

6. Technical Analysis shows silver correction is OVER (for now). Could climb to $37+ in short term.
Feb 17: http://www.youtube.com/user/IraEpste.../2/rsTHJ2dbypo
Feb 18: http://www.youtube.com/watch?v=eevzf...&feature=feedu

I could cite all kinds of other Internet material from various supposed 'expert' analysts stating their 2011 targets which roughly range from $37 to $60 (excluding the crash JP morgan $500+ oz crazies), as well as the recent shortage at various retail dealers of 100 oz and 1kg silver bars (although, this is likely only temporary, and I still think retail investment is miniscule compared to commercial at this time), and all of this may very well be putting a LOT of pressure on JPM/HSBC or whomever has the massive ammounts of silver shorts, and perhaps we are seeing the beginning of a larger short squeeze.

Adeptus

PS. Got Silver?

[LargoWinch]

Re: silver train leaving the station?

I would not despair. There will be significant volatility over the next several months and opportunities to join in the fun.
Attached is a graph courtesy of Jordan Roy Byrnes showing the relative strength of miners to silver. I ran these on my own program and confirmed the relative strength of the miners to the metal is weak. Don't miners usually lead major moves?

Be patient the best is yet to come. We probably have another 4-6 years before this market ends.

Thanks for the chart jpetr48.

Two things I would like to point out:

1) Palladium explosive run - even better than silver:




2) Rhodium being under-priced within the PM/Commodities complex?
(The obvious problem with rhodium are the spreads which are currently just under 10%!!!)

[LargoWinch]

Re: silver train leaving the station?

interesting price action today in AG (and of course now that eye want to pull some files to post here, their server isnt servin...)

but it looks like was quite a wild day, starting at about 31.75, bouncing upto about 32.90, b4 settling so far at 32.50; CDE was up appx a buck at one point, but looks like they closed at 27.32

so guess the question is: is it up, UP AND AWAY, parabolic style, from here?
or will there be another drop, as it seems we're bubbling back up to frothy once again..

potential china krash vs geopolitical sitch vs JPM(et al) short squeeze prediction for march still seem evident?

dollar poised to look better, suddenly, that the rest of the fiat-failures?

comments?

oh, hey - kitco back in action:

Today 5d 1m 3m 1y 5y 10y
	52wk high:	28.20
	52wk low:	13.50
	EPS:	-1.38
	PE:	N/A
	Dividend:	N/A
	Yield:	N/A
	Market Cap:	2.44 b
	Volume:	3.51 m

Where is icm63 when you need him? (just teasing man!)

[Spartacus]

Re: silver train leaving the station?

The only person I know of that's argued that is Gary North.

I don't think EJ likes silver because the central banks don't hold it.

If gold becomes a currency again (a big if), then I think it is likely that silver will too.

[don]

Re: silver train leaving the station?

19 February 2011

Silver Bankers May Be Sitting on Big Derivatives Losses and the Fed May Be Funding Them

My question is simple. What are bankers like J.P. Morgan and HSBC doing playing in such size in this market? What is the economic and productive benefit? Perhaps there is a good answer. The taxpaying public certainly deserves to know. The CFTC says they have looked into this, but the detailed results of their findings remain less than forthcoming.

IF this is legitimate hedging then all well and good, but then there is no justification for secrecy. If these are trading positions held by the bank, or by the bank as agent for speculators, then there may be a greater reason for secrecy, but the magnitude of the shorts is far out of bounds in size. Ten years of production is not a short position, but the entire market and then some.

The CFTC certainly appears to be acting poorly as the market regulator for the people. Given the regulatory failures of the past ten years that lead to the financial crisis, it would be useful if the Congress were to make very pointed inquiries regarding this situation. But given the performance of the Congress, and their affinity for the deep pockets and big contributions of the financial sector, that may be too much to hope for.

The comment and analysis below is from Harvey Organ's most recent commentary.

"The huge rise in silver price has caught the silver bankers totally offside on the silver banking. The BIS data released in November (www.goldexsextant.com) shows that the G 10 bankers have collectively sold forwards and swaps to the tune of 4 billion oz and short naked calls for another 3 billion oz. The total, 7 billion oz represents 10 years of production. If you just do the forwards, then it is 7 years of annual silver production.

Let us say the average cost of acquiring these derivatives and forwards equate to $15.00 for silver. Thus collectively the entire G10 bankers are feeling massive pain (losses) to the tune of:

7 billion oz of silver( 32.30-12.00) = 7 billion x $17.30 = 121.1 billion dollars of losses.

This is in a market of only 14 billion dollars. It begs the question to what economic need was this done.This is still off balance sheet.

If you include only the forwards or swaps (the lending of actual metal to which nothing has come back yet) then the losses are:

4 billion x 17.30 or 69 billion dollars.

Regardless how you look at it, the bankers are in serious trouble with this huge rise in silver prices. I hope you understand the severity of the situation."

This situation merely highlights Obama's failure as a reformer, and the general failure of both parties to act in positions of trust for the American people, rather than the special interests that provide them money and sincecures after they leave office.

As I noted on my own silver chart, I am no longer will to forecast anything but intermediate targets for silver, given what appears to be widespread imbalances and crisis-inducing leverage in the market, especially given the strong demands on the bullion market from the sovereign and individual buyers in the BRIC countries.

It is never pretty when a fraud collapses, and this one in particular is difficult because it seems to encompass those stewards of the market upon whom one generally relies for information and some measure of confidence in the data.

The market will clear when it clears, and seems to be defying 50% margin requirements increases and well placed disinformation campaigns in the process.

http://jessescrossroadscafe.blogspot...ng-on-big.html

[jpetr48]

Re: silver train leaving the station?

Wise and I am thinking the same that it might retest January low. Until we see some momentum in Gold second half of year this might be the silver casino.

[aaron]

Re: silver train leaving the station?

I am selling my options when it hits 34. I think it will pull back to its bottom trend line at that point. However, this time could be different