Silver futures

Ed Steer's comments on manipulation of silver futures at the COMEX, as shown in September's Bank Participation Report:

In silver, as of Tuesday, two U.S. bullion banks were long 13 contracts and short a whopping 29,888 contracts... 28.0% of the entire silver open interest of 106,761 contracts! This sort of concentration is a prima facie case of manipulation. Any judge could see it... but obviously not anyone at the CFTC.

COMEX gold contracts are equally lopsided: three US bullion banks were long 509 contracts and short 75,550 contracts.

http://www.cftc.gov/dea/bank/deasep09f.htm

Despite the huge number of short contracts relative to long contracts, this represents a net decrease of 30,350 short contracts from August's 105,900 contracts. This explains gold's huge run up in price this past week. It may also be an attempt by the bullion banks to balance out their positions for the following week's Commitment of Traders (COT) report, which has a 10-day lag.

Or it could simply mean these bullion banks can no longer support these increasingly losing short positions. If this scenario is the case, expect another run up in gold prices in the near-term future. On the other hand, if JP Morgan and HSBC are able to slap on more naked short positions, they will again be successful in temporarily knocking back down gold and silver prices. But they may be running out of dry powder.

Things are getting interesting: foreign sovereign funds--including China's central bank--are accumulating gold and silver to shield themselves from a deteriorating dollar, as they hold vast sums of dollar-denominated US securities, including long-term US Treasury bonds. This puts upward buying pressure on gold and silver prices. With a handful of commercial bullion banks taking the opposite side of that trade, something has to give. With declining supplies of physical gold and silver above ground, it will be very apparent who the winners will be.