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Silver Shorts Bloodbath
In what can be only described as a total gutting of all silver shorts everywhere, including those with infinite Fed funded balance sheets (wink wink Blythe), all one can do is commiserate. With silver hitting $35.55 intraday, not even a last ditch attempt to spread the ridiculous Chavez rumor once more (this time the two dictators will really get peace ironed out, we promise) will prevent a battery of margin calls from forcing all the silver market timers to liquidate assets to keep their primer brokers happy. That's ok: all those market timer will sooner, or much, much later, get the top right.
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5,
Sure China can convert.
After all they have the entire world as a market.
Look, they can just BUY the futures BACK. 50-80 premium GOES A LONG WAY. Then THEY WILL BE FLAT and out of the line of fire. IT SOUNDS LIKE BS TO ME. I have no problem buying March or April ALL DAY LONG. Sure, 50k contracts is alot - BUT THEN THEY WOULD BE FLAT INSTEAD OF EXPOSED NEXT MONTH. The only counter argument is some kind of derivative triggered by a higher strike cross. I agree with a previous poster, if the march longs were shaking them down, a few would have "accidents" throughout negotiations. No crying in baseball. That being said I'm long like a motherfucker and the daily bumps in net liq are UNREAL.
test
What I told everyone before the recent move...
1. Silver mining production is 8:1 against gold, the natural ratio of silver to gold in the earth's crust is 8:1 and the monetary ratio is 16:1 or 15:1 long used and based on Sir Issac Newton's 15.5:1 edict. We are currently seeing a GSR (gold to silver ratio) of 46.90 trending down from the low 80s and the last time we had a major bull market in the precious metals the GSR dipped below 20:1. A GSR of 22:1 to 18:1 would indicate time to sell, in a general sense.
2. Most all easily accessible (economic) silver has been mined, 70% of silver comes from mining other metals (copper 25% Lead 30% Zinc 30% Gold 15% as rough estimates of those base metals in the 70%).
3. Excess "money printing" across the globe and steadily increasing appetite for commodities in emerging and advanced economies. For example China's silver imports increased last year by nearly 400%. I could go with this #3 for 10 pages, but fucks sake man this is zerohedge. For the sake of brevity, we will continue.
4. Comex has no way of ever making good on their contracts with physical silver, just as of the last (Jan 28th) COT report silver shorts would need over 300,000,000oz to cover and roughly the annual mining production is traded (but this does not including the London Metals Exchange or the Shanghai Futures Exchange). Investment demand is causing the supply side shortage.
5. Silver vs LCNS (Large Commercial Net Short positions) have completely diverged and as the price broke $24. The last time this happened was the start of a very bullish move nearly doubling in 2 years. It is quite possible that this move will be greater as the environment is less sound today.
6. Backwardation in silver, bullish. Meaning that the spot price of silver is higher than futures contracts. (we all know but you have to explain that shit to your Mom sometimes)
No contango or to put it in terms of the layman, there are zero futures contracts above the spot price. This is rare.
Too few sellers and not enough physical silver to deliver. COMEX has in depositories, enough silver to cover less than 7% (though they have another 8% "available") of the open interest (amount of OTC contracts outstanding) as it stands right now.
When both of these situations (backwardation and no contango) coincide it is an inverse carry.
And now we are at $35... I'll see the shorts, for the most part broke @$50
http://nationaleconomist.blogspot.com/
Excellent summary, Doc. Thank you.
Just listened to this Adrian Douglas interview. Fantastic stuff.
http://www.futuremoneytrends.com/Trend_Videos.html
Gold is near backwardation also.
All week, every time spot AG soared, HL stock dipped. Playing games methinks.
Where's is Blythes' shoeshine boy Spaulding?
laying low for a while until silver drops $2 and he can yell the sky is falling
its nice to have the green boxes that were purchased for 3-4K laying around, knowing that silver is a very valuable substance
I'm sure the Morque and GoldShort have tons of physical deposited all over the world
the bible says that the Beast will control the physical treasuries of gold and silver
only one thing better than silver, and that is rice/grain long term storage in size with AK's as babysitters
Fine thread. Thanks to all posters; excepting the jackass hijack near the top, natch.
Good reading for a Saturday aft.
Regards
I,ve heard of 30%+ plus premiums to settle in cash and not take physical delivery. Once some hedge funds figure that they can skim 30 or more % by not taking delivery, the end of the supressed market will be very near!
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