The Silver Bears Are Back

Tyler Durden's picture

...And that would be bears as in cartoon bears, who are now back for the 6th installment of their periodic, and very much unique and extemely politically incorrect and PG-18 recap of key developments in the silver market. Love them or hate them, they do provide an interesting thought experiment on what happens if silver does finally experience the long-expected technical drop.

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Hugh G Rection's picture

paper games, chase out the lames

a low spot price, is quite nice

for a silver hoarder like me

Sudden Debt's picture

This is a enormously fact for everybody to read:

 

Silver Demand: The "Missing" 225 Million Ounces

The Future of Silver Futures
The U.S. Commodity Futures Trading Commission (CFTC) is about to help spur the "Second-Greatest Trade Ever".

The implications of recent events in the silver-futures market are so explosive that we could see massive gains in silver in the next 12 months alone.

Back on Oct. 26, CFTC Commissioner Bart Chilton publicly stated that "there have been fraudulent efforts to persuade and deviously control that [silver] price." Chilton even said that that he believed there had been violations to the Commodity Exchange Act (CEA) in the silver market, and that these ought to be prosecuted.

The targeted perpetrators are no less than JPMorgan Chase & Co. (NYSE: JPM) and HSBC Securities Inc. (NYSE ADR: HBC), currently facing four lawsuits that are vying for class-action status. They're accused of collusion in order to manipulate silver-futures pricing going back to early 2008, and of building immense short positions with an ultimate goal of forcing prices down for their profit.

According to the lawsuits, there were two "collapses" orchestrated by these two banks - the first in early 2008, and another in early 2010 - from which they gained massive profits.

This has attracted lots of attention and contributed to a volume surge in the trading of silver contracts - with the COMEX market on Nov. 10 reporting a new all-time record that was a full 57% above the previous one set way back in 1976. This rise in silver trading volumes - as well as in actual silver prices - has prompted futures-market operator CME Group Inc. (Nasdaq: CME) to raise silver-futures margins twice in the same week to help preserve order.

Conspiracy theories notwithstanding, it's likely that these allegations fueled the thesis that the price of silver was being suppressed, and that such downward price pressure could well ease up going forward.

Since November, massive levels of money have flowed into silver-focused exchange-traded funds (ETFs). And meanwhile, new all-time-record coin sales are being reported by the U.S. Mint, with near-record sales being reported by the Austrian Mint, Royal Canadian Mint, and Perth Mint.

So as silver-coin and ETF purchases set new records, the next question may well be: "Will there be enough silver to meet ongoing demand?"

That question leads us directly to my second silver-price catalyst - silver demand.

Silver Demand: The "Missing" 225 Million Ounces
When analysts needed to assess the global demand for silver, they have traditionally turned to GFMS Ltd., and The Silver Institute, the two organizations that are generally regarded as the most-relied-upon sources for that type of information. Together, GFMS and

The Institute make use of a category they have labeled as "implied net investment" - a catch-all grouping that's supposed to indicate institutional and retail demand for physical silver.

But noted natural-resources investor Eric Sprott (of Sprott Asset Management LP, with $8.5 billion under management) made an interesting discovery: There's very likely more - actually, a lot more - to silver demand than market observers have been led to believe.

Yet by their own admission, GFMS and The Silver Institute acknowledge that their reported data for "implied net investment" is not an observed figure, and doesn't include some of the demand coming from hedge funds or "physically backed" exchange-traded funds - a portion of the fast-growing ETF sector that's enjoying even more explosive growth. As a result, Sprott found that more than 225 million ounces of silver demand was "missing" from figures for the decade-long stretch that ended in December 2009.

And that figure doesn't include the demand from 2010, an explosive year for silver (and a year in which silver - the "other precious metal" - rallied 138% during the last eight months).

http://www.marketoracle.co.uk/images/2011/Apr/TheTruthAboutSilver.gif

 

ZeroPower's picture

That trade in silver is over. A few of us were here were early to short last week, but believe me, its paying off. And im pointing at those who blasted the silver traders for doing so. 

Still looking for consolidation in high 30s/low 40s as we see today.

Hugh G Rection's picture

You going to buy some calls and ride it back up? 

 

Get some July 50s before QE3 gets announced.

mogul rider's picture

QE3 won't be announced. Thus your idea has some problems.

I won't even look at silver till July. It's a bloodbath till then. I have my core position and sold my tradeable inventory of physical and the profits into gold as we always do. I will back up ther train again, just not right now till the Qe question is understood. Speculating ohere is very dangerous game.

 

earnyermoney's picture

You telling me Obama, Timmy and Ben are going to let the market set the rates on Treasuries? I'm looking at the dollar for clues on that question. I think the plan from these criminals is a 50ish handle on the DXY.

Sudden Debt's picture

HA!

QE3 will come!

Exact date : Between 9 and 19 july!

Or kiss you ass goodbuy when the entire house of cards falls apart.

They just don't have any options left. All bullets have been fired.

Soon you'll see China saying: Sure we'll lend you more money! IN YUAN AND NOT IN DOLLARS! And than they revalue their currency and the US becomes China's lapdog.

No way the US, JP Morgan, Goldman and the FED would allow this! They would go bankrupt as the dollar would fall to 48 overnight!

 

 

rufusbird's picture

Rather astute comments...

tmosley's picture

Funny how the apparent insanity of Sudden Debt and the insanity of the markets seem to be inversely correlated.  The crazier the markets get, the higher quality his comments become.

ZeroPower's picture

Yes, however Mr. Mosley, i believe you should also confirm bashing the silver bears (or, better, silver skeptics) after that basically nonstop run to $49 wasn't of the highest quality either.

Everything can be in a short term bubble based on ridiculous and unsupport price action, PMs too.

tmosley's picture

I bashed those who were telling everyone to sell physical silver, and who claimed they were selling their physical silver, and those whom I caught lying.  RobotTrader only gets hit because he fails in a consistent manner to outperform a lump of metal.  When you can't beat a lump of metal, it's time to hang up the hat, as I have.  If you can't beat em, join em.

Those who did not do any of those things did not feel more than a couple of light stings from my lash.  Take topcallingtroll, for instance.  I called him an idiot a few times, but I have come to appreciate his opinions.  He is a REAL trader, though a bit too eager to use contrarian indicators.

These people have an agenda, make no mistake.  Maybe it is a personal one, but with the literally dozens of people who registered in the last 7 weeks who started speaking only in the last month to do literally nothing but bash silver, no-one can realistically rule out a coordinated effort of some sort.

gmrpeabody's picture

And IF that were true, ZH is a perfect platform from which to operate!

Then again.., maybe one should just "sell in May and go away..."

JW n FL's picture
by Sudden Debt
on Tue, 05/03/2011 - 14:50
#1235255

 

HA!

QE3 will come!

Exact date : Between 9 and 19 july!

Or kiss you ass goodbuy when the entire house of cards falls apart.

They just don't have any options left. All bullets have been fired.

Soon you'll see China saying: Sure we'll lend you more money! IN YUAN AND NOT IN DOLLARS! And than they revalue their currency and the US becomes China's lapdog.

No way the US, JP Morgan, Goldman and the FED would allow this! They would go bankrupt as the dollar would fall to 48 overnight!

**************************************************************

 

China: The Rich Are Fleeing http://goo.gl/FSTw4

 

Everyone should buy the dip, everyone should be getting tangible and everyone should be prepared for a monetary shift... I like the executive order 11110 myself.. as it takes us back to a PM based dollar and as well blows out all that 6% carry and debt owed the FED.

 

But people like to play with fire.. I hope none of you get bured here, I would hope all here do well.

 

Whatever your choosen path, please have a plan "B" that is easily executable.

 

For the record I am buying silver today. $41.+

Smiddywesson's picture

We are going to go bankrupt.  That won't happen until the banks have wrested the last bit of who-hash from the Treasury.

 

The Chinese can beat their chests, but nobody trusts them, nobody.  After getting screwed by the US, China is not going to get reserve status.  When everybody starts closing their markets to free trade, the Century of China is going to be frozen in carbonite.

Sudden Debt's picture

The EU is a 15 trillion market. Do you think we'll stop living when the dollar vaporises?

Will the US stop buying products and stop consuming because the dollar vaporises?

NOP

 

zhandax's picture

SD, I appreciate you, but do you really think the Euro will emerge unscathed when the dollar vaporizes?  You won't stop living; just like European crises in the past and the US of the future, you will be trading '52 quarters for a tank of gas.  -Fortunately, you probably have some-

Sudden Debt's picture

Totally not. I wonder why they keep believing the Euro can carry on.

The game just doesn't work.

The Euro can only work if you use it with a latin currency based system. And that's with a gold and silver standard.

1. All euro's need to be silver and gold.

2. Every country can make as many euro's as they want! As long as they are made out of silver or gold.

3. So if a EU country is broke, but has plenty of gold and silver mines (HA!) they shouldn't have a problem. Otherwise: Sell assets untill you have the gold and silver.

 

How otherwise can you allow countries to print money without any backing?

How fair is the system if on gets to print some and the other... can't?

For example: Portugal gets 100 billion, fine by me! Sure! BUT!! Belgium should also get 100 billion. Greece gets 100 billion, fine by me too! BUT!!! Belgium should also get 100 billion.

It's like your kids. I can't give one of my kids 100euro and say to the other one: Nothing for you, go find a part time job! I don't think he'd love me for that.

 

arizona11912's picture

The Chinese have had explosive growth in their M1 from 2009 to present. China is not much better shape than the US in the short term.

Jendrzejczyk's picture

+ at least 20 for "who hash".

akak's picture

My sister and I still always refer to roast beef as "roast beast", lol.

Jendrzejczyk's picture

Almost 50 years old and still do the same. Roasted beast is the best.

tmosley's picture

Roasted troll is best.

Like in the end credits of this video: http://www.youtube.com/watch?v=2K3yoqZhpC0

MCHedgeHammer's picture

its a breath of fresh internet to see some unbiased commentary on silver

ZeroPower's picture

Indeed, it is hard not to be biased when financially involved in something, but as with all aspects in life, rationality trumps plain stupidity.

ZeroPower's picture

Have closed out my silver puts close to end of day trading today, and am now considering some calls BUT rather wait for conviction and miss a few bucks to the upside than long early and hate myself for it and potentially have a stoploss hit.

Will keep the board posted if i do go back long again.

hamurobby's picture

Got my butt kicked this week and deserved it. Bought more calls at the close. Being the contrarian indicator that I am, silver will probably hit $30 by Friday.

laughing_swordfish's picture

Got into SLV and SLV calls at 36 closed out at 46.91 Friday.

Bought the June 47 puts yesterday ...took the profits from the runup down to my favorite coin dealer and bought some 1 oz Ag and anothe 1 oz. bar of Au.

PHYSICAL BITCHEZ

mogul rider's picture

Yeah I notice the pumpers have left the house. People always be careful with these PM's. They  have a magic like no other investment or trade or......

Just keep your heads next time the top comes in these cycles.We will have many more of these IMHO before the ride is over.

Silver always hurts people who get too passionate about it. Take your emotions away, have a target and hit the button or put in the stops.

 

But DON"T GET GREEDY!!!

As I said that day when I sold in low 49's, I hit my target and I sold. Did I want to? Absolutely not!!!!

Look at Turd trading paper, that is what happens here.

But the insurance trade of silver disappeared after 24 bucks. It became a trade as it always has when the specs roll in.

 

 

tmosley's picture

My physical silver is just fine.

Will be buying more next week if this dip holds up long enough.

The end will come suddenly, and without warning, just in time to catch the maximum number of people with their pants around their ankles.  If you, like Dangertime, have divested yourself of physical silver, you will be strung up like a Christmas turkey.

Sorry if you don't want to hear that.

long juan silver's picture

 

But why next week?

You said silver would be $49 Friday.

Do you to need a paycheck first? Hehe

tmosley's picture

Right, implying you sent an email to my "boss" to try to get me fired.

You are contemptable filth.

Think about what would actually happen if you succeeded in getting me fired.  Think about what I would do with all my free time, chemical knowledge, and hatred for the individual who had done that to me.  You really want to make a real life enemy who wants blood?

gmrpeabody's picture

You're not letting a bottom-feeder affect your blood pressure, again, are you?

tmosley's picture

Nope.  My job will literally be the last to go if something were to happen to my company.

The salty Mexican food I had for lunch had more effect than this clown.

Hook Line and Sphincter's picture

Dangertime is no dunce tmosley, in fact, he has a heart of coal like the grinch. He has shown himself to be intelligent enough to understand the paper game, while talking down the weak hands at ZH. He literally, no matter what he says, is in the process of funneling the wealth of ZH'r (and whatever else thread he is on) who do not understand well enough the essence of silver in a collapsing cyclical fiat system directly into his pocket, AND the open hands of whomever might be his employer.

eisley79's picture

yah, some idiot community college kid in his mom's basement lying about fake investments and imaginary cars, while having every single prediction he posts be absolutely wrong, is definitely showing his intelligence.  But hey, dont take my word for it:

------------------------------------
by Dangertime
on Fri, 04/29/2011 - 08:20
#1219786

Silver will break $50 next week and march possibly even to $60.

------------------------------------

Dangertime's picture

Perhaps you should stop cherry picking my posts?

You know I bought a shit-ton of puts at 49 so why don't you go ahead and post that?

And YOU guys complain about manipulation.  You are only lying to yourselves.

eisley79's picture

you should stop dodging my posts, you didnt buy shit.  STILL waiting for you to submit a link to a pic proving any of your baseless claims of inestments, but you wont.

 

You said silver peaked last time it dipped, and it went back up, OWNED, then last week you said it would go up to 60 (conceding your error only 5 days previous), again you got owned cause it dipped again.

 

I am not a trader-- I am an investor, I didnt say anything about manipulation so you dont know where I stand there.  As for investments, I have been buying silver(physical only) since 2005, and holding it myself.  I could care less about day to day movements, and I gave you my words on where silver is going.  Feel free to debate any of my points. 

 

The last time I bought silver was spot 32 in february, and its still way up from that, on top of the fact that I would never sell lol, there is no such thing as a loss for me.  Silver was going up a dollar a day, everyone knew it would slow down and have corrections.

The fact is, every prediction you have made on this site has been wrong, so keep going, what happens next princess

Sovereign-T's picture

With you, T. Gotta a friend that wants to liquidate at spot- I'm taking it all.

tmosley's picture

Before you do, find out if your friend wants a new friend.

Dangertime's picture

I hardly think over a 100% gain on my puts strings me up.

tmosley's picture

I hardly think my 200% gain is anything to sneeze at.

You got lucky and made some bucks.  You were totally unhedged, and you sold your physical silver like a fool, without thought to the tax implications, and encouraged others to do the same, even though you KNEW that they would realize a huge tax liability.  What would you have done if it really was a bubble, and it in fact rose by 500% to $250, and then "popped" and fell to $150?  You would have been totally screwed.

You don't think, and that's your problem.

GoinFawr's picture

100% my ass DT, you just broke even. Today.

Sudden Debt's picture

HA!

Months we didn't hear from morons like you, and a few days down and like mushrooms after the rain you pop up.

Europe is in a mess, the US is sinking through the bottom... you have no fundamental to support the drop besides short term manipulation.

Silver will go to 451 within the next 2 years.

I'm not a daytrader that jumps off on a down move. I have patience. Lots and lots of patience. Years of patience. I don't hold the paper.

And you've got the debt clock running against you brother :)

 

LET'S HOPE THEY BRING IT DOWN TO 1$

I WILL BE WILLING TO BUY IT FOR 5$ FROM EVERY IDIOT THAT SELLS IT!

 

 

Dr. Richard Head's picture

Logic to a troll?  That's like trying to explain quantum physics to a toddler.  Best use smaller words and pictures.  Fundamental analysis, no matter how logical, will get lost without rhyming monosyllabically.

Bay of Pigs's picture

Or like comparing Shakespeare to the Three Stooges...

gmrpeabody's picture

...why you ignoramus!  ;- )

HoofHearted's picture

I do have to say that I jumped ship on my margin accounts just last week. I thought 48 was a little toppy, so I took the stuff I'd been buying on credit cards (the real kicker was the JP Morgan Chase card with 18 months and no interest) and sold it. I now have the cash profits from those purchases (and all the cash, as why pay off the Morgue until I have to?) to put back into silver when the time is right. I simply got lucky, and I'm man enough to admit it. I remembered how bulls and bears make money, and I didn't want to be the pig. 

Don't get me wrong...I still have a couple thousand ounces of silver and a few ounces of gold, but I'm down to like 50% invested rather than 150% invested. I wasn't smart enough to also hold some ZSL to make more paper profits. Oh well. I'll learn eventually. (I was also hoping that the price would go into the 50s this week, but I was just chicken enough to take 48.)