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Guest Post: Anatomy Of Silver Manipulation - How Low Can It Go?
From Avery Goodman, first posted on Seeking Alpha
Anatomy Of Silver Manipulation - How Low Can It Go?
As we warned
our readers on May 1, 2011, when silver had clawed its way back to
about $48 per ounce: “We expect another massive price attack in the next
few days.”
We came to this conclusion based upon a
number of factors, including the impending opening of the Hong Kong
Merchantile Exchange, which will be controlled by many of the same
international players who control NYMEX. Like clockwork, a vicious
attack, perhaps the most ferocious one ever mounted in the history of
precious metals, began on Monday, May 2, 2011. We knew it was coming, but to be honest, we didn’t expect the level of ferocity. Following
our own suggestions, when silver had tanked by about 18%, we entered
into a small speculative long position, using the SIVR silver trust. The price punched right through the minor support level we had chosen, and continued down.
Had
we realized the depth of the silver short seller despair, we would have
played the game a bit differently. We would have waited longer, bought
a lot more later on, and created a much longer term position. As it is,
we have lost nearly nothing, and will do it anyway. Nevertheless, as
irrational as this kind of thinking is, and as much as we warn people
against it, human beings are human beings and we are not happy about
putting on a little bet, no matter how small, that fails to catch the
bottom of a dip.
The level of despair among short sellers, which
is motivating this attack, is growing. Anything could happen at this
point. They could give up entirely, or the attack could become more
ferocious. We don't know. What we do know is that the short sellers'
predicament has just grown worse. They will eventually become even more
desperate than they are now as weeks and months pass by. We will
explain why shortly.
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Been planning to put Some of those with my wolves. And do they look good?
.
Just a little economic inductance, it will go on for as long as necessary.
BTFD....money printing will continue
This just makes me want to puke.
Highest bid on Bullionvault as of now is 39.72. Looks like actual silver holders ain't sweatin' it too much...
While I wait for the great ponzi crash I often wonder whats the best way to polish my old physical...
I tried this the other day, put a stack of old rounds and some bars about ten feet from the TV, in a microwave proof dish, tuned in to one of the Feds Chairmans speeches and let my physical wash over with those sound waves. Funny how it looked so much more shiny after 10 minutes.
Hahaha. If only that worked!
This is what I do: take a glass tray and cut a piece of aluminum foil big enough to cover the bottom. Add some vinegar. Drop in your coins. Let them sit overnight and they will be gleaming. Rinse afterwards with water. Depending upon how tarnished they are, you may not need to wait so long.
This article lacks so much. It only talks about 1 little part.
But on THE other hand, THE entire story would be 500 page book.
Gold and silver are the perfect money and a huge threat to them so naturally they would do this. It's a completely logical move for them to flagrantly manipulate and then claim ignorance and have their goons spew false propaganda. If you you had a licence to print paper money and make the entire world your slaves you'd do the same too.
The central bankers have to dilute; this has many moons past the just nikin your coin. The easing will continue even after an accord to tighten or eliminate social programs. This empire of the states united in order to control trade routes needs to (grow = energy consumption). Most of the citizenry did not want this empirical position yet it was up on us like an 0-2 heater. My point be; that if the precious does stow wealth with efficiency and sustainability void of the rule of law kneeing in the nuts then one should help their posterity' chance for prosperity with physical silver.
The scientists say, it will all wash away, but we don't believe anymore.
Question. In review of the events over the past two weeks with Silver are we seeing the Chinese back the CME into a corner? I'm not in the Futures trading industry so I do not understand all of the complexities but from what I see...
We had 5 margin hikes and open interest actually increased. Which in a sense increased the temperature of a boiling pot that is killing the Comex and CME as someone stated so eloquently a few days ago. Since this full out assault on Silver didn't accomplish desired affect of getting market participants to stop wanting delivery of the metal haven't they actually made things that much worse for themselves as the big players are now able to buy on clearance? Couple that with the fact the Hong Kong exchange is going to launch Gold trading next week is there any option but to let the price drastically increase? If they don't they run the risk of default. If they go to cash settlement only to avoid default won't this just push market participants to use the new listing of the Hong Kong exchange thus killing their cash cow? Is it naive to assume that they'd rather see JPM die a horrible death than to let their Silver business get destroyed and moved overseas? Can someone please provide some thoughts on what options they have left?
This may be a moot point because gold, silver, and crude oil are already rebounding strongly. Crude rebounding from a low of $95 up to $106 today.
"Grossly Underpriced Asset"?? You're kidding. Silver is not gold. Silver is not money, gold is not money. Only MONEY is money. Some old silver coins are both money and silver. That is the ONLY thing worth paying up for. Go sell crazy somewhere else, you just got whacked and you're lying if you say it didn't hurt. More to follow.
"Only MONEY is money"?
Who are you working for, Tautology Industries?
Pleonasm Inc. LLC
Jesus Christ, how dumb they come.
Posts like yours add absolutely zero insight into this topic and insult the intelligence of anyone who followed this much of the thread for considered thoughts. Go home.
Astounding, the irony of your comment appearing under that avatar.
This should be entertaining.
Jesus, people. Bart "Controlled Opposition" Chilton will not do a damn thing. He is captured like the rest of 'em.
If you like silver, take a position in physical. Don't speculate based on what you think a [large] market manipulator may or may not do, on what their motivation may or may not be.
It does not matter who does what, and for what reason in this market. Nothing has changed except the day of the month, everything is still on the road to FUBAR.......I will keep my oz's, and continue to stack.
This is a thrill ride very few have tickets for, NOTHING has changed.
Latest analysis from Clive Maund on silver echo's the same perspective on the QE3 issue and how it might play out.
http://goldandsilverlinings.com/?p=933
What the hell. The guy is making shit up. 4 black crows? Very rare. LOL
We are in a 12 unicorn pattern right now looking at a 8 doves a diving.
Thanks, that's the funiest comment I've read for a long time!
Clive called at top on Silver At $16, seriously.
i agree w/ Sudden Debt, above: i'm not wild abt this "analysis" because it seems to assume that all the sellers are short-sellers and crimex members and it also fails to take into account any meaningful view of the tremendous volume of options activity in the crimex contracts.
no, i don't approve of the margin-raising/manipulation stuff, and i did appreciate his analysis of those who had simply been rolling forward having no more risk than when they'd opened, long, at much lower prices.
i've been posting the delivery intentions, here, from time to time, and many if not most of the contracts on the notices i've posted have been between customers, it seems to me.
here is the stuff from today---a lot of contracts, and a heavy month, so far, at lease compared to april. now, i think this means that bank of nova scotia bought over 1/2 million oz of silver today.
May 09, 2011 (Dow Jones Commodities News via Comtex) --
DELIVERY DATE: May 10FIRM NAME ORG ISSUED
Barclays Capital, Inc. CUSTOMER 241
Adm Investor Services, Inc. CUSTOMER 2
TOTAL 243
FIRM NAME ORG STOPPED
Prudential Bache Commodities, LLC CUSTOMER 20
Mf Global Inc. CUSTOMER 6
Merrill Lynch Futures Inc. CUSTOMER 95
The Bank of Nova Scotia HOUSE 114
R.J. O'brien & Assoc, Inc CUSTOMER 1
Ubs Securities, LLC CUSTOMER 7
TOTAL 243
SO FAR FOR MAY 397
And the hits keep on coming.
http://lonerangersilver.wordpress.com/2011/04/24/pyramid-of-capital-syst...
I normally agree with just about every post on ZH, but have to humbly disagree with the following comment from this post:
"If this were so, however, such changes would apply only to short sellers and new long buyers who purchased up in the higher price ranges. Most of the older long buyers were sitting on huge profits from the upward movement of silver, when the new bond requirements were imposed in the $49 range. They posed no greater risk at all than they did back when they made their purchases at $18, $20, $25 per ounce, etc."
Futures speculators are allowed to purchase new contracts with open-trade-equity. Which means there are a lot of greedy pigs who keep adding to their position and their average-price is fairly close to the current price such that any minor drop wipes out all the gains they've accumulated. This is the fear of the clearing firms and regulators.
As the price of a commodity goes up and a 1% move on the day translates into a higher dollar move, the margin needs to follow. If price remained the same but volatility went up, causing daily dollar moves to increase, margin would have to follow. It's that simple.
Even though I agree with the general premise on ZH that Bernanke/U.S. are on the wrong path and the dollar will inevitably be worthless - I made a decent stack of (worthless)dollar bills last week shorting Eur/$, Gold and Oil.
My trading strategy is a function of technical price action and internals I observe within specific markets and this is often contrary to my overall, long-term macro perspective (which I try to disengage when trading).
To use ZH's parlance, chairsatan has been doing his thing since he announced he would since late last summer -- did the 'facts' change so much that even on a semi-log scale a parabolic rise in prices since mid-March could be justified?
It was obvious to me that prices had gotten frothy and probably could not sustain themselves. My general opinion in these sorts of markets is that without leverage, prices tend not to move in this fashion.
All the good people on ZH buying physical silver (or gold) would not push the price up so rapidly (although i'm sure it was fun while it lasted). See the current issue of Grant's for an interesting observation on the price of farm land and commentary on a recent auction where the local farmers (non-leveraged buyers) finally just stepped aside and let the hedgies (levered buyers) take the price sky high. Certainly in the short run the farmers must enjoy the value of their land going up - but it prices them out of buying additional land and sets up for an eventual bust that could make their land worth less than where they started.
It's always the same thing - it's what got us here in the first place and now it has even happened in the area that was the obvious play in response to the previous bubble's aftermath.
The question is for everyone complaining about regulators attempts at reducing speculation in the PM and energy markets - aren't you in those markets b/c the world is messed up b/c they didn't stop over-leveraged speculation in the housing market? And wouldn't you agree that over-leveraged speculation has probably ruined real estate for at least half of a generation (as it did the Nasdaq)?
Silver was around $20 a year ago - did it take a 150% move in 1 year to be happy? Or, would it have been better to have had a nice rise that could have lasted forever? I'm not sure how soon we'll see $50 silver again - maybe this week - maybe never. But I think every market is stronger when the leveraged speculators are contained - and if you are a physical owner of PMs I would think unless your thesis of the world has changed, you'd prefer a nice steady rise for the next decade than up 100% down 25% every 6 months.
Dennis Gartman one time explained how he's been able to surive the commodities markets for so long and hopefully i'm recalling at least this part of his explanation properly: if he raised $1MM for a fund - he didn't buy the number of contracts that the margin would allow, he bought the notional amount and simply did so in futures because it was a more efficient market to do so in. So, if oil is $100/barrel, he'd buy 10 contacts not the 125 contracts -- thus a margin increase would not affect him whatsoever.
Sorry for the long post, but all the railing against the regulators (who are not geniuses by any stretch) is a bit mis-placed.
The very large bullion dealer I buy from follows the spot price pretty closely so as of right now I can get 100oz. bars for $3,897 :) Looks like I should start buying from them and reselling on ebay :)
This story is about how perception influences people's lives.
Reading article and posts, I started remembering my Grandma. She/(or my long dead Grandpa) used to have many silver pesos (many I mean bank sacks, kilos and kilos of them, just like the old west movies), most of them dated 1940's. My Father found the stash and Grandma didn't remember those were stored there. She didn't cared. She told stories about how she used to play with her father's gold coins before revolution kicked them hard. They lost almost everything to looters, except the land.
My Grandpa died and she had to sell most of the land to settle his (their) business debt. She had never worked, but now had to, and she started selling catalog stuff at the neighborhood doorsteps.
To save her earnings, she opened a bank account (at the new neighborhood bank, and she was surprised to be the very first customer there and was called the bank's GodMother) and deposited her hard earned money there.
Everybody knew her around, she never drove. She was very frugal. When she got too old to sell at doorsteps, people would still visit her to purchase and have a chat. She was always surrounded by nice people in a neighborhood that was fast changing into a business strip.
She made it through many devaluations, extreme inflations and monetary catastrophes.
Eventually people stopped living in her neighborhood. She was the last one to sell. She was paid well and went to purchase a nice little house near her family at a modest and peaceful residential area.
Her savings account went from few thousands to millions in a few years, mostly due to high inflation and interest rates.
Ironically, as she pondered when to retire, all the economic insecurity faded away when she felt she was a millionaire, thus she thought that now could spare not to work.
Sometime later, our fiat was soo bloated (too many zeroes, not like Zimbabwe, but, getting there soon), that our smartass PhD in economics president decided to restore some confidence and halt inflation. Our currency was divided by 1000 (removed three zeroes) and inflation was tamed in a few years, from triple digits to single digits.
My hard earned Grandma's millions turned into thousands in a single day at the stroke of a pen.
My Grandma never enjoyed her retirement after this. She was resentful. She thought the president had stolen her millions. She was clever, I think she must have seen everything cost virtually the same, but her wealth perception changed. She went from frugal to extremely frugal and insecure again. This time, she had only her bank account, that was only dropping and when turned into thousands, she must have felt near bankrupt. She could not work anymore. She went literally mad and eventually slipped into dementia or Alz or both.
I can only tell you that I remember her smiling and happy whenever she had a visitors and enjoyed remembering her youth days. But she never missed to bitch the president.
She passed away to rest. She deserved peace. I'm glad she had not to see the uglyness we are surrounded now. Too many people killing and getting killed in such evil ways.
Well, now I notice I may have left you wondering about the silver pesos. I don't know what happened to those, probably were converted into fiat and put into the bank.
Enjoy while you can, buying, selling, chatting, shitting, but most of all, remember we are social beings.
Peace.