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A Deep Walkthru For Silver Manipulation - Redux
Now that silver continues hitting nominal high after high (except of course for the record price hit during the Hunt Bros period), and there is a very distinct possibility we may see an unprecedented melt up in the price of silver to over triple digits for a variety of previously discussed factors, here is a post we produced a year earlier, courtesy of a "deep insider" which dissects with exquisite detail the nuances of silver market manipulation, which in retrospect may have been just a little early. Considering that every single trope mentioned is now in play (even the unmasking of Buffett's unbelievable PM bashing hypocrisy when he himself was one of the people who utilized blatant silver market manipulation for his own purposes when it suited him back in 1997 to send silver soaring), we believe readers should re-read this post in its entirety as it presents a walk-thru for the mechanics, and strategy, of the ongoing unprecedented move higher in the shiny metal.
From A Deep Insider's Walkthru To Silver Market Manipulation, posted originally in April 2010, when silver was lower.... way lower.
As the topic of physical delivery has gained prominent attention
recently, it is crucial to complete the circle and show how this
weakest link in the PM market is (ab)used by the big boys: Phibro and
Warren Buffet. Pay particular attention to the analogues between the
methods employed in the 90's commodity market and how the PM (and
equity) market is being gamed currently. And to think that each new
generation of traders believes it has discovered something new... (All emphasis below is ours)
Background
- As
a market maker in silver options from 1989 to 2000 I was present during
both the 1994 and 1997 silver events. They were seminal in my education
of gamesmanship in trading and how probabilities can come up short. - Prior
to going out on my own, I traded at a small market making firm. When a
trader finished training there, he had top-tier options knowledge but
was not educated in whom the players were, the fundamentals of the
markets, and how probabilities were useless when information was
asymmetric. That wasn’t their business, they taught option’s theory.
Since I had drunk the kool-aid, I thought fundamentals and gamesmanship
were useless in the face of the almighty Standard Deviation model. That
was a mistake.
Phibro Early Exercise
- In
April 1994, the Thursday before Easter, the trading day ended with a
rather unusual run up of 15 cents near the close to finish at 435ish
around noon. Options expired that day at 4pm but we weren’t anywhere
near the closest strikes (425 and 450) so most of us left. It was a 4
day weekend in the U.S. but silver traded globally, albeit il-liquidly
in Asia. Comex wouldn’t open until next Tuesday. My education in
gamesmanship started that afternoon at JFK airport as I was waiting for a
flight, my first vacation in 5 years. - My backer paged me at the
airport to inform me that someone was exercising the K 450 calls. I
scoffed thinking it was a retail sap that was talked into exercising
some 5 lot piece by an overzealous broker. “Great I said, let them, the
options are out of the money.” And I hung up - 10 minutes later
he had me paged again. “You don’t understand, it’s Phibro exercising.”
Again I naively said, “So what, they are energy guys.” But I was
curious, “How many? “ I asked. “All of them, five thousand, he replied.
Now I was really curious, but still woefully ignorant that it was I who
was the sap at the table. “Why would they do that?” and he explained it
to me. I nearly shit myself and bent over in the cab vomiting on the
ride back. - Cancelling my trip, I headed back to the office to
assess the reality of what would happen, probabilities were no longer
important. Survival was important. I had no money and was trading on a
$25k note lent to me by my backer. - We covered by buying futures
on my entire short open Interest equivalent of EXPIRED OUT OF THE MONEY
OPTIONS in Singapore with a dealing firm. We did this prior to even
actually knowing if I was exercised, probabilities be damned. How did I
know they exercised? The price covered at was $462; that is how. The
450s were already in the money by 12 cents. - Phibro exercised all
5k lots. I had a fraction of that but big enough to be carried out on a
stretcher had the rest of my position not bailed me out/ performed on
Tuesday next week. - The weird part was, the market stabilized
that Tuesday and did not run to “infinity” as it could easily have. We
found out later it was because Phibro’s exercise was a no-no and Warren
Buffet ordered them to shut the trade down as it was too big of a
potential scandal. Especially in light of his coming to Solly’s rescue
and lending his good name to fix their most recent Treasury scandal. A
couple head’s rolled there if I remember correctly. - My guess was
that the client was a Buffet or Soros type. Someone that would only go
to Phibro, as these guys were the best at preventing information
leakage, and always aligned themselves with client interests, where as
if IB had an order and acted in dual capacity as a dealer, he would
potentially front-run the order or stop it out poorly on an exit. Phibro
didn’t take other side of their client’s orders. They ran with them,
and took care of the clients first. - Phibro got a big order for a
client to buy silver, one that had to be handled expertly, and filled
over time, no information leakage would be tolerated. These guys were a
prop desk that took orders as brokers once in a while. - They accumulated options for their own account (K 450C) to piggyback but not front-run the client.
- They must have bought futures for themselves as well as the client with his permission.
- They beat the VWAP by gunning the market on light volumes 1 hour before a 4 day US holiday. [TD: compare and contrast with the daily patterns seen every single day in the endless move up in the S&P]
- They
exercised the 450 Calls that day and then lifted the offers of the 1 or
2 OTC metals dealers left open during Singapore hours, running them
over during illiquid markets.
Never Again!
- I became infatuated with Phibro gamesmanship and made it a point to understand that particular type of player.
- Libertarian
Darwinist that I was I did not blame them. At the time It was a
buyer-beware market for big businesses and they did nothing wrong. They
took risk and they aren’t bigger than the market. I wanted to play with
the big boys, and that was the price. - For me it was about
learning how to read the signs and not be on the wrong side of one of
those events again, even if I was not privy to their meetings.
Here is some of what I learned:
- In
metals (and energy and anything else with an OTC market) the IB firms
have dealing desks along GS, MS, Republic, JPMorgan, Scotia Mocatta, all
were essentially broker dealers in precious metals. All had clients:
miners who hedged production and hedge funds who speculated OTC. They
provided liquidity by taking the other side of their client’s trade and
“back-to-backing” them in the futures markets or held onto them in their
prop books as counterparty because of something else they saw. - Their
client left resting orders with them in the IB’s Central Limit Order
Book (CLOB) which served as good information to trade around for the IB.
Sometimes they front-ran the client, other times they go for stops to force the client to puke. Sometimes they’d just make markets, depending on many things. It was poker to them. - Phibro
was different. These were smart guys but they weren’t a dealing bank.
They exploited imbalances in markets and took positions. They had
ideas. They also took orders for heavyweights who needed absolute
discretion. They did not make it their business to fleece their own
clients and instead aligned their interests. And they made the banks
look like pikers when a client came to them with an order. - For
the next 4 Years I paid attention to how those dealing banks and phibro
played the markets. It was all about gamesmanship, Bayesian probability,
and knowing your counterparty’s motivation with these guys. Information
and misinformation.
Some methods:
- How
I.B firms would use a thinly traded floor to print the price that would
trigger a massive stop loss in the OTC markets and bury their own
clients. Or how they would buy for their own accounts in front of
resting limit orders for clients and simply use their clients to stop
themselves out if the market printed thru their buy levels. Or how they
would use dual representation to show loudly they were buyers on one
side of the ring, while they were selling quietly upstairs to other OTC
dealers. Trading with themselves in multiple entities, etc. - An
IB with a Commodity Index was in heaven. Prop trading, captive client
flow from IB deals and OTC dealing and Brokerage. The good ones knew how
to integrate and hedge macro risks, whether to front run their own
index clients or get out off their way. “Chinese walls” did not exist
in Commods. - Commods were mostly self regulated and that lead to predatory yet mostly legal behaviour.
- Some
of these were necessary to protect their interests with such a small
number of players. Some were possibly unethical, but most were legal.
Their clients were all big boys who left resting orders with the IBs at
their own risk. Clients themselves had to resort to some of the same
tricks to keep the IB desks honest, like Coming in backwards,
“spoofing”, leaving buy stops to get sell orders filled. The alternative
for these clients was to put massive orders in the floor where
liquidity was subjective, non continuous and information leakage was
massive.
1997- Warren Buffet.
- I got my chance to not get run over in 1997, when Warren Buffet gave an order to Phibro to buy silver.
- Short version. Here is what went down.
- Buffet gives Phibro the order- fact
- Phibro
begins filling it as a broker using various OTC dealers as
counterparties, and letting the I.B dealers sweat getting out of the
risk. - fact - Phibro buys options for their own account (no exercise game this time tho)- fact
- Phibro buys futures for their own account. – not confirmed.
- One
by one the IB dealers start to catch on that this is no ordinary order
Phibro is handling. They back away and liquidity gets harder to find.-
fact - Other bigger hedge funds in the small circle of professionals, and other smart firms start getting long.- fact
- Silver
starts getting delivered from the Comex vaults. Some of it actually
removed. Some of it just “covered with a sheet” for removal. But ounces
begin to be removed from the warehouse. Phibro was rumored to be taking
delivery and beginning to telegraph fear in the markets to start
spoofing the VWAP. Rumor was they had a warehouse in Red Hook where they
stored it. Never confirmed. - Point here is, the saps for the
last part of this play were the producers and refiners who were
complacently net short and dependent on above ground silver to satisfy
delivery requests. - Producers had been over-hedging for years in
this market, as silver was cheap and they had business cash flow issues.
It was their habit to sell forward production not yet available to
them. And if forced to, they would lease already above ground silver and
make delivery, collateralizing it with silver yet to be mined. Their
positions were habitually synthetically long the contango as they rolled
their deliverable production further and further out the curve in an
attempt to squeeze much needed cash (cost of carry)for their businesses.
The net effect was that sometimes they had to borrow silver for prompt
delivery while they rolled their production hedge back further. – my
interpretation of what I learned. May not be accurate to the “T”, am not
a physical guy. - Example: in 1995 a miner has silver due above
ground in 1997. He hedges it in Z-1997 contract. Z 1997 comes and if he
doesn’t have that silver available for some other reason; he covers the
short and rolls it back. How much he needs to do this is a function of
his obligations, cash flows, and his greed for carry. If leases are
cheap, he will seek to capture all the contango and lease it until he
gets the silver available. - If lease rates go up, it is not
unlike a miner strike. Silver is needed for delivery now, and term risk
becomes the issue. Contango collapses and market goes backwardated. He
will be forced to sell the contango to get that prompt silver short back
if he cannot make delivery. He has to defer delivery. - These guys were dependent on the specs NOT taking delivery for years. Specs didn’t have balance sheets to take and store physical metal. Specs usually were the weak hands at futures expiry.
- But then…..Entities
that stored silver in bank vaults (like the Republic vault) begin to
remove silver from the available pool for leasing. This made the “easy
money” portion of production financing no longer easy. Think: smart
money getting the word that a squeeze was on and playing along with it. - Phibro
(and others) start selling the contango in the futures market to
prepare to take delivery of even more contracts. Or at least put
pressure on the producers who had front month shorts they would have to
make a decision on delivering. Phibro KNEW that the producers had to
sell the spreads to get their shorts back. But they couldn’t lift their
shorts altogether as part of their financing deals with their bankers.
Their own positions were now breaking down in every way except flat
price. The market really didn’t move much. This let them stay in denial. - Buffet announces he is long and intends to take delivery of silver. Contango collapses. Market spikes to 7.40.
- Rumor
is gov’t intercedes and asks Buffet to not do this, it would break the
industry. (Kind of like how the exchange begged the gov’t to help it
shut down the Hunt Bros.) He says ok, and agrees to lend then their
silver back to them. Essentially charging them 40% interest to delay
delivery for a year.
What to look for:
- Find the overleveraged/ extended party- and you will find the weak hand at the table. (Producers in 1997)
- Tail
wags dog: if the pricing venue trades smaller volume than the OTC, then
manipulate price with small volumes to execute trades with big volumes
favorably. (OTC vs Comex floor) - Divide and conquer- if
counterparties are undercapitalized and/ or fragmented, then it will be
easier to get them to move like a herd. (happens in options ALL THE
TIME at expiration) - Manipulate data- take delivery of metal, take risk off books, manipulate MTM data.
- Create
an exit strategy- a good catalyst like Easter weekend, an announcement
by an investor etc. or develop a market and grow your own bigger fool.
ie – retail.
Comments - So many points to make here:
- How
derivative markets can create a problem thru too much liquidity that
cannot easily be reconciled by bringing physical production on line fast
enough. - How this works both ways, and that dealing banks have
been playing the gold/silver carry game for easy funding of other trades
for years. - How, even though I personally think that what the
OTC does is their own business, but the increasing securitization of
commodities leaves regulatory arbitrage and OTC games to affect a new
generation of ETF buyers, either thru incremental banking or thru
contango cancer. That Wall Street salesmen and players with
access to both markets retail and professional can exploit the captive
audience created with ETFs and other fund type instruments to shear and
in some cases skin the sheep. - That much of this happens
because the gov’t is too stupid to see the inherent conflict of
interest in what a broker-dealer does. Regulation will not stop gaming
the law. Ethics do, and not everybody has ethics. So best you
can do is prevent situations of conflict of interest, like the existence
of Broker-dealer type entities. Either you trade for yourself, or you
trade for others. Period. - Fact is, if there were retail
public in this game back then, the IB firms would have somehow sold
them on the idea to BUY contango, or short silver. But the
financialization of commodities wasn’t there yet. And the “bigger fool”
game stopped at the producers. If it happened again, with ETFs, cross
regulatory semi fungible products, asymmetric access to venues and other
factors in a global market, the public would be killed, short squeeze
or long puke (like in UNG now) take your pick. - You can never
know intentions, and no one is bigger than the market, but the
consequences of a lack of transparency and the free reign in which banks
can tell half-truths to investors is a big factor in enabling strong
hands to fleece weak hands with little market risk. It’s all a con game.
And when the IBs figured out how to change the rules, then they
were free to use their killer techniques to exploit a million little
fish instead of the 10 big fish they usually competed with. - Phibro
was a ballsy cowboy trading firm. The banks at the employee level are
as well, but corporately, they first seek to make money and secondly
provide a service. When they should be providing a service that makes
money. - Everything that was done I’ve seen done the other
way, keeping prices low, shaking out weaker players. Rarely does it
happen in such a dramatic way. It is usually a series of “short cons” as
opposed to Phibro’s home run. It’s all Darwinism. But when civilians
are involved as they are now, then it is no longer caveat emptor. - Instead of taking a million dollars from a hedge fund, these guys take a dollar from a million people now.
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Talk about a waste?
moseleo has over 5,500 posts ronpaulforum.com.
about 481 a day.
You've read all those?
If so you and he have a wasted life you kuckin clowns!
Wow, I've only been there for 12 days? Damn, coulda sworn I registered there back in 2008. Or maybe earlier. So long ago.
Math FAIL.
Hey Ferrari man, do you have a fine wine collection at the beach house, or did you have to sell it because of the overpowering taste of sour grapes?
The rain the other day took it's toll:
http://www.flickr.com/photos/pj/217197152/
That is just outrageously over the top Meth Head. Now you're a prophet and a financial planner as well?
LMAO.
I'm foolish for buying Silver because:
1) Inflation. Benocide will NOT stop printing.
2) Backwardation. Physical supply is wanted NOW.
3) COMEX manipulation. Shorts will be squeezed and Blythe will eat her own derivative puke.
4) Bank fraud. Fiat is headed to ZERO.
5) Large demand from China and India. Above ground supply is in shortage.
6) Leo's solar panels need silver..... ?
Yes.
Some of those things could wind up being true, but you're paying 70% more than where it was trading six months ago.
The price you pay is very important.
the trolls won't stop
Jon,
You've been so consistently wrong for so long, I have no idea why your protege's are so far off the mark right now. You've been dead panning gold and silver for close to ten years, without any success whatsoever. What's up with these assclown disciples of yours? They have gone astray...
They could never equal my record of being so wrong for so long of course , but my protege Spaulding is coming close to matching it, he's a pretty precocious. He thinks he can cut and paste an "argument" and refute the milion tonnes of evidence of gold having to go to the moon.
wonder which gubmint agency pays him to try to scare pm holders into selling their metals?
"...you're paying 70% more than where it was 6 mos ago..." . . . . . . uh , so ? doesn't mean it can't still be undervalued .
I think it's gone up again...
Is that you, Blythe?
If you really believe that the retail customers are the bigger fool right now, why are you here everyday trying to warn them. You're said you're short SLV..right...so what do you care what the ZH crowd does. You should be happy that they are buying, take the other side of their trade and shut the fuck up.
I don't like to see the little guy get hurt.
And they will get hurt.
This shit is not staying up here for long.
That's what you and a hundred thousand others have said. You sit trying to catch falling knives, and prove yourself wrong over and over.
Give it up. You have no track record. Stop calling people stupid. Lurk more. Maybe you'll learn something.
Look dude, you've had a 70% run in six months. Consider yourself lucky and take some profits. You can buy your silver back later at a lower price.
No no no and no, that "take profit" routine is too old now, nobody's falling form it anymore
what's next? gold was 850 in 1980 so if you bought then you lost your money? Give me a break
You ain't smart enough to know when you look like a fool, boy.
tell him William the Busted, tell Methman he's being a fool
and there he goes using the argument that silver is the same price as 25 years ago (scroll down)
Sorry, dollar pimp. I'm not giving you my silver.
How many other things have run 70% in six months and not collapsed? Plenty. If you had sold in 1978 after a 70% run, not only would you have missed the run up, but you would have missed the sustained period thereafter where prices were higher than where you sold.
You don't read enough. You think you know everything, but you don't. Lurk more. Read more. Maybe you'll learn something.
If you want credibility, post some calls and time frames, then SHUT UP until we reach your time frame. Then we will see if you were right, and you can start speaking with some authority.
1978? The price of silver was the same 25 years later. That would have been the best sale you ever could have made - unless you were smart enough to dump it at the top 1980. If you held out and sold it below the top in the early 80s you would have made a profit, but you probably wouldn't have exceed the rate of inflation over that period.
You're holding out now for high prices when it was at $5 less than 10 years ago... and below $20 six months ago. Now is the time to take some profits... you will get a chance to buy it back lower.
As for my calls - I have one.
Silver below $20 this summer. Maybe sooner.
You keep calling me wrong on it - but it's not even spring yet.
He's got nothing but a limp noodle Meth. He's joke. No argument but tens of thousands of posts that say nothing.
Bet right now he's calling his poodle Co lCrapmouth to come noise up the board
My modest pile is not to beat the S&P it is to eat if /when the time comes losses ha, who cares if I lose, its called insurance.
I keep calling you wrong because you explicitly said last week that we would never see $34 again.
WRONG.
Give us a date. I don't want to see your stupid face for one more day than I have to.
But unfortunately for you; summer will arrive. Then you will need a new screen name, as you will be used only for something to laugh at. This is a problem all the metals kindergarten price predictors have; once you make a specific statement the market will make a fool of you. Apparently, you don't understand what a strong Bull Market is. You will learn, however.
5500 posts on ronpaulforum.com or 481 per day not including thousands on seeking alpha and thousands here and you can't explaina or argie dollar denominated debt.
You're a fuckin joke.
That, again, assumes I registered 12 days ago, rather than back in 2008.
You are really a moron, you know that?
William, do you realize how pathetically weak and puerile you sound, blathering on in utter irrelevance about how many comments in ANOTHER forum some other poster here may or may not have made? What possible relevance does that have to anything here?
I have yet to see you make a single cogent or logical argument, indeed, ANY argument, in this forum. All you seem to want to do is mindlessly attack and run down others, to what end one can only speculate.
I've retained a percetage of my wealth while Fed Resv. notes have become worth-less.
My Ag stack, dollar cost averaged, is around $13.60/oz. Why the fuck would I want to trade money for devaluing fiat crap?
You can advise the Kool-aide drinkers to kneel down and suck the Keynesian dick as you apparently do, but buying and holding real money is sound policy no matter what the economic environment, if only as insurance against the systemic risk present in any society [IMHO this is especially important in a "just in time" system like ours].
Remember:
You can't print PMs.
You can't print food.
You can't print water.
You do it first; then we can check back with each other in six months and compare results; I'm 200% in Silver Bulliion; physical plus margined physical.
Tell us more about the future of coal power plants.
god you're a twat
No no no, can't you come up with something original. I don't want to see the little guy get hurt is so old, please that's Marketwatch troll old.
COME UP WITH SOMETHING NEW
Something new like robotrader's avatar upside down?
That's origional. Think of it by youself or did your mom help?
talking about my mom, oh that's new I guess.
I don't see what the big deal is. Its like metal predictions are now a religious view for many. I would personally like to see silver shoot up $2-3 so that I can short it. Right now I'm not quite sure how to enter the market with an option. I'd like to see the price do something wild either direction.
So how long is long then....
Do you have a time frame when you think it will come down, because if it only comes down from $100 to say $95 I'm going to be pretty pissed...
Unless of course you think silver might evapourate, or go into 'reprint'...
"Meanwhile, silver will fall to $20 by the summer... because it only costs producers $5 bucks to dig it out of the ground, and the producers are now selling as much of it as they can forward, causing backwardation."
Ha! If Ag did drop to $20/oz, I'd back up my truck at my local dealer.
BTW, It's not about cost to produce [and I dispute your numbers with the POO at this level] - it's about the rate of extraction limiting supply.
In case you hadn't noticed, the entire global fiat system is in the process of unwinding coincident with the topping of our energy production capability. This is what "overshoot" looks like.
Why don't you tell us about how much physical is in the COMEX file cabinets... er, I mean vaults, while you're at it.
"Ha! If Ag did drop to $20/oz, I'd back up my truck at my local dealer."
Of course you will, because you're a retail customer and you believe your own lies.
It was trading there six months ago. It's up 70% in a short period of time. Not much has changed in the last six months, except for the number of rumors.
If you think nothing has changed in the last six months, I would invite you to read the ZH archives for that time period.
Silence would increase your wisdom dramatically.
Nothing has changed in 6 months but yor post count.
$481/day X 182 = 87.542 posts by a fool that no one reads, Brawhawhaw
"Nothing has changed in 6 months but yor post count."
Knowing absolutely nothing else, that statement pegs you for what you are to all that think. No fundamental changes in the world that could possibly cause a run into metals as a safe haven and SOV? How about commodities, nothing new with those either I suppose..
You read them. If you leave now, then you will be correct. I would just hate that :(
Meth Whore, I would not expect you to understand the fundamentals.
Now get off your iPhone and go back to flipping burgers, boy. Your McDonalds patrons do not like to wait. It's fast food boy, so get on with those fries. FAST! PRONTO! RAPIDO! SCHNELL!
MCD is taking a dump because of you!
I appreciate your argument and agree with your premise regarding price, however several significant events have occurred in the past six months (including QE2) that would have a fundamental effect on asset values.
Great - so QE increases asset values - but there is still no reason for silver to outperform Gold other commodities over the period. And PS, silver started moving before QE2 was announced.
Precisely. There is always only a single factor driving any price. Any attempt to think about or discuss multiple factors is just crazy conspiracy talk.
So why trolling like that if the only factor driving price isn't you? Got you!
Well, silver started moving just when QE2 annoucment was wide expected! Got the point? People expecting massive fiat money printing. Expecting inflation. Wanting safe heaven for their wealth.
Sorry for your reasoning, but as soon as I learned the intrinstic value of paper money, I started asking myself what would I choose as a long term store for my wealth. Answer is as I don't have enough money to buy property, I started with the poor's man gold (that's my answer). Then I hope I can continue with gold, till I can buy property for a reasonable amount of gold/silver.
Meanwhile I'm sure any bankster would sure love to ride gold/silver down. Question is... can they?
Ladies and Gentlemen, the Man with the Math has a strong point. Fact is no one (with less than several billion in their own bank) really knows.
The question you have to ask yourself is does it matter?
What's your timeframe? What's your exit strategy? Possible outcomes?
If you're bought at 25 and we flirt with 5 again, would you fold or would you double down? What if you're bought at 35?
In markets like this the only thing you can rely on is knowing everything is manipulated for the benefit of someone other than you.
Only you can decide if you care.
If silver goes to $20 this summer a lot of people here will still be in the money and buy more. Something's gotta give Math Man, and I hope you are right that PMs end up being a stupid investment.
+1 modest allocations for insurance make sense, lets hope us insurance buyers are wrong and unicorns and aliens fix the system as it is without a doubt grievously wounded.
While I am of course elated at the run-up in the nominal "value" of silver, I don't really care that much about the price. I never bought it as an investment. I started buying back in '97 and am now standing pat. If it goes to $100.00 I may Exchange some % for FRNs only I don't think that I'll be able to find any as they will probably all have been burned to ward off the cold.
I'd like to see silver go down to $31. Of course that is just a desire at the end of the day.
Well mathman you really dont get it. Some here are buying silver not to pass it on to the bigger fool, but to hold it, or pass it on to the next generation.
And some buy it to bring down the dog-eat-dog system that we are in. A system that should be simple, but isn't. Where you need to trust a slimy investment guy (present company excluded) in order to stay ahead of the constant inflation, or make it a full time job.
Some of us just want things to be simple.
pods
NY Times article about JPM silver manipulation.
http://opinionator.blogs.nytimes.com/2011/03/02/a-conspiracy-with-a-silv...
That they printed it is progress, & evidence they can't hide silver's rise any longer, though they did mention conspiracies several times to taint.
Tried to send to Tyler but can't find a submissions link, or a way to track prior posts, new here & help is appreciated.
Can someone provide some analysis of what these delivery intention indications mean? Is there an intepretation for a lay person like me? How does OI play in? If I were a long and wanted delivery, wouldn't that reduce OI by 1? Is the group on top delivering and the group on the bottom taking delivery?
http://news.tradingcharts.com/futures/2/5/154306252.html
Thanks!
Your question will be answered quicker/better here:
http://tfmetalsreport.blogspot.com/
wynter benton recently said we gonna break the crimex and basically told the little guy to get out of the way. the big hedge fund buyers gonna take 20% of total amount to NOT take delivery or they will take delivery
that is pure BS. I'm gonna be the MythBusters for the metals industry.
http://northeastbullion.tumblr.com/post/3602558422/metals-misinformation-watch-1
so where is your proof you spout crap with nuthin to back it. Ive followed this wynter benton for a while and he is pretty accurate
the proof is in the pudding as they say. If Comex was giving people 20% to withdraw a demand for physical and accept cash to settle, every hedge fund and their mothers would be loading up on silver futures to get that free payday and Comex would immediately collapse. Once you feed a stray cat, it stays.
And they are doing just that. Look at the OI numbers at the tail end of every delivery month. They are obviously not normal.
Plus, I have a few contacts that tell me it IS happening.
data on physical delivery, i did not verify for accuracy
http://www.freerepublic.com/focus/f-news/2680237/posts
That post was made too early. The OI dropped by the end of the month to a level that was lower than the amount they supposedly have in the dealer inventory. If both numbers are true and correct, then a COMEX default is averted. If either number has been exaggerated beyond a certain level, then the COMEX will still default, whether it happens openly, or technically.
I tend to believe the numbers, but the low number of deliveries on the first few delivery days bothers the shit out of me. It makes it look like they are having a lot of trouble sourcing silver.
Contrary to the trolls opinions, there IS a LOT of precedent for this. Numerous if not ALL bullion banks have adopted the practice of fractional reserve banking with "their" bullion (ie depositor's bullion). They have been caught red handed charging storage on bullion they didn't have. There were lawsuits, and all of this was entered into official records.
This is all just another Enron accounting scheme, just with silver (and probably gold).
Another Enron accounting scheme?
You don't know what Enron's scheme was. If you did you wouldn't connect it to PMs.
Tell me what the Enron accounting scheme entailed, quickly you gold pimp.
Books were cooked. Same as is happening now at JPM. Same as what happened at the banks.
But no, clearly there has never been a case of corporate fraud in human history, and anyone who thinks there ever was is just plain nuts.
While not judging your claim (which I find reasonable), I'll point out that you are leaving out a material element in the storyline, which is that the hedgies can't just own a contract, but have to have a cash deposit to cover the contract cost (able to stand for delivery).
Now, while I'd think that it would be pretty easy to get a loan to cover this free money, the cartel that makes the loans also has their hands fairly deep into Comex, so it might not be so easy after all. If they stopped Buffet from playing in '97 surely they can stop the leveraged hedgies.
yes your right but they paid big buffet a hefty price supposedly. also that was when silver was $5. this guy wynter benton said this was going to happen about a week ago.
It's already been documented that if you corner the Silver market the comex pays out. It is not unreasonable to think that people will do it again and again. Whether it's Wynter Benton or some other group.
Perhaps take a look through what Wynter Benton has said on what dates and then make up your mind.
http://screwtapefiles.blogspot.com/2011/02/wynterbenton-diaries-or-wynte...
They made a statement today BTW
http://screwtapefiles.blogspot.com/2011/03/wynterbenton-update-on-their-...
thx, really really wish there was some tranparency at the comex and with wynter.
I haven't seen any actual documentation on this claim. That has always been a rumor as far as I knew.
It certainly sounded reasonable and par for the course, but that is how all hoaxes are performed. There are plenty of other reasons to hold physical silver, however.
Reading your post from WB there, again, sounds perfectly logical, and is the way I would have played it if I were so inclined. It seems too convenient, and at least somewhat contrary to what they said earlier (ie they said they were going to stand with 4500 contracts "no matter what"--dunno if that means they were going to stand, then take the bribe, or if they were going to stand, then force a default).
If I were in their shoes, I would take the premium at that level twice, then stand and force a default, after having cleaned out retailers nationwide with the proceeds from the two earlier settlements. Indeed, I had thought of doing this very thing myself. I would have needed to get investors, however, and the scheme is too outlandish for most people. I have explained the scheme to several acquaintances, some of which do have the funds to do this by themselves. I doubt if any of them will try, though.
"I have explained the scheme to several acquaintances, some of which do have the funds to do this by themselves."
Bullshit. You have no acquaintances outside you computer.
I take it you do this act to amuse yourself, which is fine. Is there another purpose or are you a samaritan of some stripe?
You really need to get over this weird problem you have of not being able to tell your own characteristics from those of others.
Seriously, the only way Tard can produce so much bile is by looking in the mirror. You can be certain that he has no job, no income, no assets, and no friends. So he sure as shit has no investments. I'm pretty certain even his family hates him.
some info worth investigating about buffet and silver awile back
http://www.goldseiten-forum.de/index.php?page=Thread&threadID=1153
nope he's a douchey - andrew maguire hasnt got a clue what all thats about and seeing as he's the man i wouldn't pay any attention to mr benton.....
Wynter Benton was full of shit. Check out silvergoldsilver blog on the subject.
http://silvergoldsilver.blogspot.com/2011/02/dissecting-last-wynter-benton-message.html
aka reflexivity
Dave
tradewithdave.com
tungsten bitchz
***********************************************************************************
I would have to say that the people.. "We the People" being long physical is far from dollars being stolen from us.. those that sell or weaker hands that fold, those people will surely be Raped. But that is natural selection, the weaker always go by the way side.
trinity, or JWinFL, you know alot about taking peoples money
you dataminig shit stirring infogathering scumbag.
YOU SUCK. and so does your taste in gangsta rap. you are exposed, you scumbag.
who's money did I take? did I take your money? did James Edward Workman take your money? becuase I dont know who you are and I dont take money for a living, I spend money for a living... so please explain how I took your money. Thanks!
That's not how Darwinism works. It's often mistaken that Darwinism suggests that "the strongest survive." That is incorrect. What Darwinism suggests, is that those most adaptable to changing circumstances, survive.
FYI.
Cream always rises to the top... survival of the fittest... sure.. you say tomato I say toe-mato.
Awesome post, Tyler!
Is the recent backwardization in Silver a precursor to the events described above?
Nope. It is caused by producer hedging after a 70% run in six months.
http://www.ft.com/cms/s/0/af6a0ca8-386c-11e0-959c-00144feabdc0,s01=1.html
They are banging the back end of the curve as hard as they can to lock in profits after the run.
Yup, $5 to dig it up. BTF-GEN-Dip?
You can't get it through your thick head that backwardation means free money for traders. Like setting down their silver to pick up a dollar off the ground (perhaps dropped by a hedger, perhaps not). If they refuse to do it, then there MUST be a reason. In fact, carrying that silver is hard work, and most would rather set it down anyways. But they aren't. You refuse to think about why they won't. Your refusal to use your head is what makes you a loser.
lets not waste our breath on douche man
I find it vindication that the PM posts seem to draw the largest relative volume of (pseudo-professional) trolls. It seems their services are required more here than on other financial topics, and that this issue is of significant importance to their employers. "Sell now, take profits, you can always buy it back later for a lower price." CLASSIC!
The reason is lease rates are in excess of the amount of inversion of the curve.
Where did I mention lease rates? We are talking about the difference between spot and forward prices, you ninny. You can try to change the subject all you want, but it isn't going to work.
Dumb ass. Let's say you have silver and you want to make a return - you can do one of two things when silver is backwardated:
1) lease it, and collect the lease fees and not pay your storage costs and have it returned to you
2) sell it at spot and invest the proceeds at the risk free rate (not pay storage fees), and buy it back in the futures market at a lower price.
If the lease rate is greater than the backwardation, it doesn't make sense to arb the futures market, and the holders lease their silver instead, and the backwardation stays.
You prove my point. There is not enough silver to smash lease rates and eliminate backwardation. Physical is getting scarce.
QED.
Not true. SLV has 10k tons, and lease rates are still well below long term averages.
SLV is not supposed to lease out silver. They don't own it.
Or are you some kind of fucking conspiracy theorist?
SLV does not lease out silver. That wasn't the point.
The point is SLV is a huge stockpile of silver that can be tapped if need be, so your claims of physical shortages are bull shit. With 10k tons sitting in London, there can't be a physical shortage. Any one who wants to can buy shares of SLV and exchange them for physical (in 50k baskets).
Lease rates are also very low and below historical averages, which also means the physical supply is not tight.
It is painfully obvious meth man you do not trade in the silver market.
Lease rates are a function of prevailing currrent interest rates - which happen to be at record lows - hence low lease rates. Tightness in the physical market has no bearing on lease rates - those things are not connected.
Yes, but if the market was tight - the lease rate would sky rocket and eventually you wouldn't be able to lease it at any price.
It's like a hard to borrow stock. You can borrow IBM at 50 bps, but tightly held popular shorts can be 500 bps.
The fact that lease rates are still low means there are no physical shortages.
Bull shit that wasn't your fucking point you liar. You brought it up in the same breath as lease rates. Why would you say that for any other reason than you were trying to claim they had a shitload of silver leased out?
"It can be tapped if need be"? What the fuck are you talking about? They can't "tap" it. They don't own it! And that silver had damn well better not be in London! COMEX warehouses are supposed to be in the US and Canada.
You have proven YET AGAIN that you don't know shit, so why don't you give it up?
Not true. SLV has 10k tons, and lease rates are still well below long term averages.
These are two seperate but related concepts. There is a bunch of silver available, and if you need it you can go buy it from SLV.
AND lease rates are below long term averages. Low lease rates mean there are no shortages. If there were shortages, the lease rates would go through the roof and eventually you wouldn't be able to lease it at all.
Similar to what happened to some bank stocks during the bust... 50bps to borrow at first, and then it moves up to 500bps when you can't find any more shares to short.
Sprott said physical silver was damn hard to come by. But obviously, your statements are more believable.
Sometimes if someone is quiet you may wonder if they are stupid. But, then sometimes they open their mouths and remove all doubts.
Yet their self-evident stupidity does nothing to inhibit these malicious individuals from inundating this forum with their specious lies and misinformation. One has to wonder just what motivates such relentlessly gold- and silver-antagonistic trolling.
How many times must you be told sir? Producer hedging CANNOT cause backwardation. Those two things are not connected.
Not necessarily of shenanigans, but certainly of a tightness in physical supply, real or imagined.
A great 'peek behind the curtain'. Thanks.
I seem to remember this being posted. Thanks for putting it back up.
May I offer to meet Blythe at fight club?
It's going to take some work on my part to decipher this, it's a new language for me. But this is the type of insight that I am looking for.
Thanks for the continuing education.
So the govt. will go to any of these longs and tell them to drop their orders for their own good?
Anyone that starts getting too much into silver in orders will get a call from those who manipulate? Am I reading that correctly? Pressure is applied to anyone who dares expect physical silver out of the Comex?
It jives with what is evident elsewhere; you can play if you play by the rules, but if you use the rules against them and start to win too much, they'll simply change the rules. Or they'll do it las vegas style and just get a couple of goons to throw you out. These people play for keeps.
Redux!, that word seems strangly familiar.
Bernankes always give me (Ag)cid Redux.
You'd have to be mad not to own a ton of silver.
All well and good for posting this Tyler. Keep them coming as usual.
BUT ... Here are some key questions.
Who among the Justice Dept., SEC, CFTC, and the Politico and Banking classes, does not know this is going on?
- Why are they not doing anything to eliminate this fraud?
I do not have the answers, but I do have a conclusion.
It does not matter. The lawful "Rubicon" has been crossed by too many people in power. Instead of a few rotten apples in the barrel, the barrel is full of rotten apples and they are slowly destroying the remaining pristine apples, simply by those apples being in the same barrel. To think otherwise is denial.
Control the price of silver, control the price of gold.
Control the price of gold, control the value of the USD.
At least this is what I've been taught.
The US agencies you refer to work for the Powers, not the people. They are manipulated every bit as much as commodity prices.
Since I had drunk the kool-aid, I thought fundamentals and gamesmanship were useless in the face of the almighty Standard Deviation model. That was a mistake.
There is book learning and there is real world experience.
How is this important when Apple has released a new iPad that comes in TWO colors and has TWO carriers? Isn't that amazing? Nothing else in the world matters.
how much silver in each one?
Free Silver! Demonetization: Void Ab Initio, Bitchez! Cowboys and Aliens--1873, Silver City. Aliens=Bankers.
Instead of taking a million dollars from a hedge fund, these guys take a dollar from a million people now.
Which is why Cramer and his ilk push gold and now silver.
This was a great piece, TD. thanks.
The silver chart is on my Iphone screen all the time :)
And my Silver Speeders with a hedge 28 are really working it :)
It's all good for physical holders...mainly because they can sleep at night.
I do not see how the PM Bashers see holding physical as any different than their paper investments...boggles the mind.
Personally I am still tripping out that my APMEX wire transfer goes through...wait for it...
JPMorgan Chase???
Look for the adress on google earth :)
SAME FREAKING BUILDING!
I can say I knew a time when silver was 11 bucks and AK-kits were 100 a pop.
If these women were men, I would say they have balls.
http://www.youtube.com/watch?v=0N3ZITHcfr0
The American people won a major victory for the 1st ammendment today in the US Supreme Court.
I don't agree with these women on many issues, but I wish we as Americans would do this, on so many issues.
I disagree with you on this one issue.
Having the right does not justify the type and manner of protest.
This is not a public event but rather the funeral of one who served us faithfully. To protest and bring partisanship on this service members final day of mourning, is not in keeping with our history, nor is it in keeping with the people we wish to be.
I will preserve the 1st. I will never fight to prevent a cost being paid for excercising your right to use it. Fred and his troop of jackasses can be made quite uncomfortable, no one has done that yet to my satisfaction.
There is a difference between having a right and exercising it. The way they have chosen to exercise it is brutal, senseless and the worst possible example for Christianity.
I am neither christian nor in favor of war. If these people want to protest against our policies, they should do it where the policies are created: Their state and federal office buildings.
Interrupting a tragic event in the life of a family, where they are attempting to honor and grieve for their child, friend, parent, etc. is an act of profound evil.
I agree. The police should have known the law better than they did in that video. She's a disgusting nutjob, but has the right of free speech. This is basic First Amendment stuff and the police should certainly have been better prepared. Enough with the bluffing from them.
Great post. I am led to wonder how many different ways the public is getting fleeced in ETFs and whether the 'public' can truly exact revenge on JPM by going long physical. My hope is that going long physical takes the game out of the criminal's hands.
Our feeling is that JPM is long.
Does anyone know the numbers for the MAR expiry? Did more of the specs take delivery?
Check my post above for info
OI and other CME info here:
http://www.pdfdownload.org/pdf2html/pdf2html.php?url=http%3A%2F%2Fwww.cm...
If I'm reading the numbers correctly, it looks like of the 2500 or so contracts left open from the MAR contract 1253 settled under the PNT category = the Comex could have paid premium instead of delivery to specially settle these contracts. It's funny because I noticed the last raid on silver today there were about 10,000-12,000 or so contracts that were traded to initiate the dip. Looks like the adversaries you mentioned have a lot of ammo to fight with, but with an increase in people standing for delivery or PNT it may seem that the game is about to turn.
Thanks for re-posting this! I tried to find this article a few months back, and that failure led me to start a bookmark folder for my favorite ZH articles. This one is classic.
sounds like the delusional rantings of a madman. 25k and a player ... please
So you believe that people can't move up in the world? Once a young, always young?
That was how he STARTED. Notice that this post covers a number of years. 25K is (was) a perfectly reasonable starting stash for a trader back then.
jim willie at gold seek
SLV SUPPLYING COMEX TO MEET DEMAND
- SLV stock shares used to offset naked shorts of futures contracts
- back door to fraud written in their fund prospectus, in careful language
- 129 million oz originally came from Warren Buffett, the great deception
- prepare for a gigantic lawsuit from defrauded investors in late 2011 or 2012
- penalty in negative 2% SLV price premium, which is heading to minus 25%
- in time, the SLV fund will own zero metal
I suggested this to Spalding but he came back some other theory of his as to why silver in in a "huge bubble".
It never ends with the PM trolls I guess. We hit new highs and like clockwork, they come out ranting and raving about all kinds of nonsense.
Yeh like clockwork.....LOL!!!
Has Blythe experienced backwardation in the sack?