• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Houston, This Is Blythe, I Have A Problem

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Fri, 02/18/2011 - 11:24 | 974068 Turd Ferguson
Turd Ferguson's picture

Yes, read that!

Also, if you are trading PMs, I strongly suggest you take time to read this, too:


Fri, 02/18/2011 - 11:28 | 974092 doomandbloom
doomandbloom's picture

what is the problem....master! :-)

Fri, 02/18/2011 - 12:01 | 974257 IQ 145
IQ 145's picture

 There isn't any problem; it's my birthday, it's a full moon, and God loves me. Since I'm 200% invested in Silver Bullion, this is merely God's way of giving me a birthday present; quite simple, really. Oh, and by the way, Thanks God.

Fri, 02/18/2011 - 11:32 | 974107 Cognitive Dissonance
Cognitive Dissonance's picture

I think you have hit the nail on the head Turd. We shall see, we shall see.

   Recall for a moment how the EE caps price. They do so by flooding the Comex with an almost endless amount of unbacked, paper silver. Think about that trade, though. To sell short, you need a buyer on the other side of the trade. And now, at this late hour, how can you reduce the open interest in the March contract if you're only selling new paper shorts to resolute longs who intend to stand for delivery in eight days? By raiding and selling, you're only compounding your problem because you are creating more open interest! If you're Blythe, you're left with only being able to freely sell the forward contracts in an attempt to influence the spot and nearby price. Does this explain the current backwardation? Probably.

   To the point, however, what's a girl to do? You can see by looking at the chart above that Blythe tried to raid today but she didn't seem to do it with the usual bluster and gusto. How could she? Every new March contract she sells only adds to her problem. She is truly caught in a catch-22. Again, what's a girl to do?

   If the March longs stay resolute, she's screwed. Even if only 20,000 stand for delivery, thats 100,000,000 ounces that the Comex has to deliver. By most estimates, that's their entire inventory. She and The Evil Empire must, somehow, convince/force March contract holders to close their positions but if they can't scare them by crushing price, how do they do it? They could get the CME to raise margin requirements but if you're ready to stand for delivery by putting up 100% of the cost in eight days, a margin increase today is of zero consequence.

Fri, 02/18/2011 - 11:48 | 974192 alien-IQ
alien-IQ's picture

I realize I may be jumping the shark here...but when it comes to JPM...well...they simply seem to operate by a different set of "rules"...so here goes: What are the odds of JPM being simply "pardoned" for their short position? As in forgotten and never need to cover? I realize this is an outrageous proposition...but then again...isn't this market outrageous? Isn't this system outrageous?

Any thoughts on this?

Fri, 02/18/2011 - 11:50 | 974204 EscapeKey
EscapeKey's picture

What are the odds of JPM being simply "pardoned" for their short position?

100%. They will, without a doubt, be pardoned.

Fri, 02/18/2011 - 11:57 | 974237 Cognitive Dissonance
Cognitive Dissonance's picture

Agreed. The rules will be changed when the rules are no longer convenient for the Ponzi and the Ponzi players/manipulators/teat suckers.

Fri, 02/18/2011 - 12:20 | 974359 SWRichmond
SWRichmond's picture

Silver is on a train today again...up $0.75 as I write this.

Fri, 02/18/2011 - 13:33 | 974815 Hephasteus
Hephasteus's picture

He has it right but here's the monkey wrench in the machine.

Comex has to paint a 30 dollar tape. If they can't paint a 30 dollar tape then the scheme is busted. It's got something to do with the dollar being simply a derivative of the silver and gold price. If silver is high but gold is low the dollar falls. If gold is high and silver is low the dollar falls fast, if gold and silver is high the dollar falls mega fast. Something tells me gold is 1500 for it's tape. If both silver and gold go above those set points then everyone dumps dollar, dollar goes way up then boom falls on the floor.

Wynter's plan is to push comex for settlement in cash. But since they are already blowing out the tape even if they get offered 50 percent over spot to roll and play it another month it will only drop the price down to 30.50 ish. May be worth another months play may not.

The really horrible news is the gold bugs are coming next also. And they aren't going to dick around. They won't have the people stripping bars and coins out of shops like silver does but they are going to empty comex.

Then you got double dollar fall. Government printing like mad with world dumping it. Time for a really good look at a 5 dollar can of soup. People are going to go hungry this year and being in america or europe won't help you at all. It will actually hurt you as everybody will be dumping dollar reserves competing with your dollars.


Fri, 02/18/2011 - 13:59 | 974929 malusDiaz
malusDiaz's picture

it has to do with the Weight of Money:


50$ Gold Coin = 1 avoirdupois oz 

avoirdupois oz of 50$ bills = 1 400$...


1$ Silver Coin = 1 troy oz

1 troy oz of 1$ bills = 31.1$


Those are break points... 

Fri, 02/18/2011 - 16:18 | 975398 Hephasteus
Hephasteus's picture

I've never been persuaded by the weight of an arguement until now. LOL

Fri, 02/18/2011 - 13:59 | 974930 malusDiaz
malusDiaz's picture

it has to do with the Weight of Money:


50$ Gold Coin = 1 avoirdupois oz 

avoirdupois oz of 50$ bills = 1 400$...


1$ Silver Coin = 1 troy oz

1 troy oz of 1$ bills = 31.1$


Those are break points... 

Fri, 02/18/2011 - 12:34 | 974440 Math Man
Math Man's picture

Seriously, why does the rumor persist?

JP Morgan closed their prop commodities desk last summer, and has had a trading profit EVERY SINGLE day since last June.

Both of which, make the probability of having a massive silver short approximatley ZERO.

This JP Morgan rumor is the biggest lie out there. 

Silver may be moving up, but it is not because JP Morgan is short.

I just bought some July 25 puts. 

Fri, 02/18/2011 - 12:39 | 974470 tmosley
tmosley's picture

No-one has EVER cooked the books before.


Fri, 02/18/2011 - 12:44 | 974508 alien-IQ
alien-IQ's picture

Your faith in JPM's honesty is...interesting.

Fri, 02/18/2011 - 13:13 | 974709 Pegasus Muse
Pegasus Muse's picture

That will push us ever closer to a new justice/political system.  Like what's going on in the ME right now.  The difference being, since we have a Second Amendment, government thugs will not be pulling a Bahrain on us.  Could be just the opposite.

Fri, 02/18/2011 - 11:56 | 974229 whatsinaname
whatsinaname's picture

After all they dont need to mark to market any losses to eternity ?

Fri, 02/18/2011 - 12:05 | 974272 yellowbr
yellowbr's picture

Then JPM will have defaulted and lost more than some credibility. Oh, and by the way the COMEX also.

That would be the beginning of the end.

Fri, 02/18/2011 - 12:10 | 974285 alien-IQ
alien-IQ's picture

What credibility do they have now? In fact, ever since the adoption of mark-to-unicorn accounting standards...what credibility do ANY of the TBTF banks have?

Fri, 02/18/2011 - 12:11 | 974294 Oh regional Indian
Oh regional Indian's picture

Alien, I think we are in (and more and more obviously now, with ME tensions rising) the war that will make such pardon's Unnecessary.
Looking at the ME dominoes tripping, oil rising, PM's rising, inflation inflating, jobs dis-appearing...clearly this situation is not going to go to bed nicely. It will be warred on.

And unless something is done NOW, by most of us, the next cycle will look just like this one. And therein lies the tragedy.

Did not think I'd see 32 today. But the big boyz are not out of ammo by a long shot yet. It must be suiting them for allowing this. The ARE the government after all. Moneylenders always have been.

Exciting times though, for sure.


Fri, 02/18/2011 - 13:03 | 974651 gwar5
gwar5's picture

James Turk suggested it's possible JPM could call for the government to grant them a force majeure because their position so untenable. And since they are part of the cartel that really runs this country that may well happen.

But in practical terms, considering their criminal behavior in mortgages, and other activites, so much confidence would be destroyed in the banks and the dollar there will be a big shake out, not head scratching this time.  

Ron Paul has got to love this. I am so glad he's sitting in the chairperson seat right now.  Short JPM. Buy gold.


Fri, 02/18/2011 - 21:15 | 976295 StychoKiller
StychoKiller's picture

Sounds like the price whipsaw that JPM is holding onto is starting to glow cherry-red from all the movement(s) -- and poor Blythe with no asbestos gloves on!

Fri, 02/18/2011 - 11:43 | 974174 Thomas
Thomas's picture

If you wish to listen to a podcast by one of the douche bags who posts occasional comments at ZH, try the following...


(OK. So I'm jumping a thread with self promo: shoot me.)

Fri, 02/18/2011 - 11:48 | 974193 Nine Pies
Nine Pies's picture

Great write-up, TF.  Thank you.

Fri, 02/18/2011 - 12:09 | 974282 Snidley Whipsnae
Snidley Whipsnae's picture

Great summary turd... thanks

Fri, 02/18/2011 - 12:10 | 974286 philgramm
philgramm's picture

Long live the Turd.  Happy B'day brotha!!!

Fri, 02/18/2011 - 12:12 | 974300 IQ 145
IQ 145's picture

 It's just rubbish. You don't know anything at all about the Comex. They've been rolling over contracts since you were in grade school. You're just going to make a fool out of yourself with these kind of breathless anouncements that will, and I'm telling you right now, they will; turn out to be nothing. non-events. The Comex problem is the global warming of the financial blog world; enthusiasm and belief on the part of people who don't have the basic science under their belt. What you're looking at is a bull market in Silver; this is suprising? Why ? You want to know how to make a lot of money on this; ask me politely and I'll tell you. I don't do theories or make up stories; but the Comex is waiting patiently to give you lots and lots of free money.

Fri, 02/18/2011 - 12:43 | 974514 tmosley
tmosley's picture

You don't get it.  These guys are highly leveraged.  If they were planning to roll their contracts this month, they would be doing it NOW after this margin hike announcement.

You have normalcy bias.  It WILL kill you.

Fri, 02/18/2011 - 12:41 | 974487 Overpowered By Funk
Overpowered By Funk's picture

You're my favorite Turd.

Fri, 02/18/2011 - 11:36 | 974132 Azannoth
Azannoth's picture

Congressional Commission: Blythe why did you short 1 years worth of production of silver ?

Blythe: because silver has no real value, and you can't eat it :°|


Fri, 02/18/2011 - 11:38 | 974150 EscapeKey
EscapeKey's picture

Nah, they'll just claim they were "a market maker in precious metals, and worked to stabilise the environment, and provide a service for the financial community."

Plus, of course, some rubbish about this "once in a lifetime event" being "impossible to predict".

Fri, 02/18/2011 - 11:50 | 974202 Amish Hacker
Amish Hacker's picture

And they provided liquidity (Kudlow's favorite word). Don't forget liquidity.

Fri, 02/18/2011 - 21:18 | 976299 StychoKiller
StychoKiller's picture

They used to execute people by pouring molten metal into their mouths -- liquidity is waay overrated!

Fri, 02/18/2011 - 11:48 | 974190 markmotive
markmotive's picture

Here's the reality. If the tin-foil hat wearing folks are wrong about JPM's short position, silver is just another industrial commodity with growing demand. Still a good reason to be bullish.

If the tin-foil hat wearing folks are right about JPM, silver could see a massive short-squeeze sending it to $50 or beyond. http://www.planbeconomics.com/2010/10/29/could-silver-hit-50-in-a-few-months/

Fri, 02/18/2011 - 11:56 | 974228 jus_lite_reading
jus_lite_reading's picture

And the conclusion is- BUY SILVER either way.

Fri, 02/18/2011 - 12:40 | 974480 repete
repete's picture

anyone see the vw short sqeeze? never shorted with common after that.

Fri, 02/18/2011 - 12:08 | 974279 I think I need ...
I think I need to buy a gun's picture

Bernanke a few minutes ago..."the international monetary system must be reformed to benefit all"

Fri, 02/18/2011 - 19:44 | 976037 naughtius maximus
naughtius maximus's picture

The international monitary system must be abolished!

Fri, 02/18/2011 - 11:16 | 974017 slow_roast
slow_roast's picture

Will it hold?  I don't know...but this was expected.  It would be great to see a pullback and then a slingshot higher.

Fri, 02/18/2011 - 11:54 | 974224 jus_lite_reading
jus_lite_reading's picture

I smell $35...

I may have to adjust my $40 in 3 weeks prediction to $400 in 3 weeks! ;)

Fri, 02/18/2011 - 12:02 | 974262 unky
unky's picture

yes my friend, i think so too

Fri, 02/18/2011 - 12:11 | 974298 jus_lite_reading
jus_lite_reading's picture

Someone stated yesterday that if we see silver going up $1 for days in a row, it may be time to panic. What happens when silver goes up $5 in a single day?

I'm tempted to place a sizable order just for the hell of it. Who needs fiat money when you have silver?

Fri, 02/18/2011 - 12:26 | 974388 Kali
Kali's picture

Yup.  While very happy to see it blow past 32.50, this is making me nervous.  Good for silver, but a sign of SHTF?  Yikes!

Fri, 02/18/2011 - 13:55 | 974919 jus_lite_reading
jus_lite_reading's picture

Do you prefer to be slow roasted or beheaded? If you're wearing a silver colar, you'll survive.

Fri, 02/18/2011 - 21:22 | 976305 StychoKiller
StychoKiller's picture

Kali my love!  What is thy bidding, my mistress?

Bet you're looking forward to the upcoming Great Implosion and all the blood it will generate.

Fri, 02/18/2011 - 12:13 | 974308 Snidley Whipsnae
Snidley Whipsnae's picture

Silver up 45 cents in the last hour and fifteen minutes... That is impressive!

Fri, 02/18/2011 - 16:46 | 975464 Treeplanter
Treeplanter's picture

Will take profits at $37.  Turn margin bought silver mining shares into my money so I canbuy the next dip.  QE will fuel shorts and status quo happiness and create more dips.  With one exception.  Not touching SLW.  It will have extra booster rockets when the first moonshot happens.

Fri, 02/18/2011 - 11:59 | 974243 IQ 145
IQ 145's picture

 This is the slingshot following the last pullback. 

Fri, 02/18/2011 - 11:17 | 974025 Top_Kill
Top_Kill's picture

We Have a problem....bitchez

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