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Thursday, December 16, 2010

The Great Silver Squeeze

The press is finally catching on that JP Morgan is in deep trouble. gulfnews : Reality of the great silver squeeze

The most interesting point made in the article is this one:

Earlier, the CFTC had plans to provide greater transparency on speculative limits by mid January; but for reasons unspecified they have declared such deadlines can't be met.

Did you catch that? The CFTC, (kind of like the SEC for commodities), was going to institute "position limits" for precious metals. This is a restriction on the amount of contracts a trader can hold, in an attempt to limit the ability of one big player to bully the market. This is usually to prevent one person or group of people to "squeeze" the market by buying up positions solely to force delivery requirements and run up prices. It is a form of market manipulation that has been around forever.

However, this deadline was before the CFTC admitted that one "trader" owns nearly 40 per cent of the market. Their words were "fraudulent efforts" to "deviously control". The cat is out of the bag that this "trader" is none other than JP Morgan. Since it has become obvious that this "one trader" has such a massive position, now they say the deadline for people like this to unwind their positions "can't be met." That means, boys and girls, that there is a huge commitment that THEY CANNOT UNWIND BY JANUARY. This is the classic definition of a short squeeze.

To make matters more complicated, the MUCH MUCH larger OTC market in London has no position limits at all. It is fairly common knowledge in the markets that massive purchases of silver have been made by cash flush Asian banks who have scared the living pooh out of the markets by demanding physical delivery of the silver they bought. This is the major reason silver has gone from 15 to 30 dollars an ounce in the past two months.

Given the fact that there has been a long tradition of fraud, lies, double-dealing (literally having metals "in trust" for people, but having the same kilo of gold or silver pledged to 2,3 or 10 people!!!... admitted in a lawsuit against Morgan Stanley) and all kinds of shenanigans, AND the fact that the world banking system HATES gold and silver because it threatens their financial monopoly........ I would not be surprised AT ALL to find that JP Morgan is actually just a bagman for the interests behind the Central Banks, used to illegally suppress any precious metals claims to be "money."

Buy silver. Get it in your hand, not in SLV or some fund you may or may not be able to trust.

PS. if you want a great online debate about whether this state is as bad as I claim, there is a good online discussion between "Kid Dynamite" and Jason Hommel on seeking alpha here Seeking Alpha NOTE: there is a lot of extraneous noise in here. One commentator is an obvious ass and makes reading the whole thing unpleasant, but if you just skip to the interchange between the original poster and Jason, you will get a great display of the differences between a person who has basic trust in the integrity of the markets and a person who does not.

gulfnews : Reality of the great silver squeeze

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