Silver Shocker

http://news.silverseek.com/SilverSeek/1299509764.php

Concentration of short positions at the COMEX

Click on chart to enlarge.

The concentration of short positions in COMEX gold and silver among a few bullion banks suggests price suppression and manipulation.

Concentration of traders in the COMEX

Click on chart to enlarge.

I wasn't aware that investment banks were in the gold and silver mining business. If not, then why are they selling so many futures contracts? Do they even have any physical inventory? Farmers hedge their crops, selling forward contracts. Miners hedge against falling metals prices. Why are the eight largest bullion banks selling 160 and 120 days of worldwide production for silver and gold, respectively? Most contracts are settled with cash. What if buyers demanded physical delivery?

See disclaimers in the side bar.

Disclosure: long gold and silver, long precious metals mining shares, and thankful the bullion banks keep pushing prices down.

GATA's written testimony on price suppression

http://www.capitolconnection.net/capcon/cftc/032510/Presentations/Panel%203/March%2018%20%20FINAL%20CFTCLetterCP-03-18-2010.pdf

Initially we thought that the manipulation of the gold market was undertaken as a coordinated profit scheme by certain bullion banks, like JPMorgan, Chase Bank, and Goldman Sachs, and that it violated federal and state anti-trust laws. But we soon discerned that the bullion banks were working closely with the U.S. Treasury Department and Federal Reserve in a gold cartel, part of a broad scheme of manipulation of the currency, precious metals, and bond markets.

It has been possible to extrapolate that the two banks that hold these large manipulative short positions on the Comex are JPMorgan Chase and HSBC because of their huge positions in the OTC derivatives market, whose regulator, the U.S. Office of the Comptroller of the Currency, does not provide anonymity when it publishes market data. 6 In the first quarter 2009 OCC derivatives report, JPMorgan Chase and HSBC held more than 95 percent of the gold and precious metals derivatives of all U.S. banks, with a combined notional value of $120 billion. This concentration dwarfs the concentration in the gold and silver futures markets and should raise great concern about the lack of position limits on the Comex.

GATA has evidence that there are huge physical short positions in the gold market that cannot be covered. Growing stress caused by burgeoning physical bullion demand is threatening to lead to a price explosion, which will restore to the market the balance that regulation has failed to maintain. In our view, the Comex paper market will become dysfunctional, with “force majeure” having to be declared as the concentrated shorts are unable to deliver on their obligations.

Testimony of a precious metals COMEX trader

http://www.capitolconnection.net/capcon/cftc/032510/Presentations/Panel%202/CFTC_Metal_Testimony_Epstein_2010-03-25_final.pdf

The size of the open interest in COMEX silver is irresponsibly large, given the reality of world inventories and production. Additionally, there is a significant imbalance between the largest long positions and the largest short positions, with the shorts being heavily concentrated. In a physically delivered futures contract for a commodity of finite-supply, this also exposes the marketplace to an unnecessary risk of failure-to-deliver. Such an event could destroy the COMEX silver market.

CFTC and position limits this Thursday

Thursday, March 25 could be a historic date for precious metals investors, as the CFTC will hold a hearing on position limits and exemptions.

http://agoracom.com/ir/Crystallex/forums/discussion/topics/409676-is-pog-s-manipulated/messages/1350508#message

Let's hope CFTC Chairman Gary Gensler takes the proper path. I have my doubts, because the bullion banks have had free reign to manipulate the precious metals pits forever, and Gensler's history at Goldman Sachs leads me to believe it will be business as usual at the CRIMEX-er, COMEX.

CFTC to holding hearing on position limits

The CFTC will be holding a hearing on March 25 to examine position limits in the gold, silver and copper futures markets. I've blogged a few entries on the need to limit and enforce concentrated positions in commodities markets in order to prevent price manipulation, including this entry yesterday: http://gregnguyen.blogspot.com/2010/02/gold-and-silver-suppression-confirmed.html (the original link was incorrect--click on it again).

http://www.gata.org/node/8364

Let's see if anything positive comes out of this meeting. I'll post the results when available.

Barclays says gold prices will decline

Brian Nick of Barclays Bank believes gold prices are headed lower. Question: how many short contracts does Barclays have on gold in the COMEX or LBMA? In other words, is he "talking his book"?

In any case, I just wanted to present both sides of the coin.

http://www.hardassetsinvestor.com/features-and-interviews/1/1984-brian-nick-time-to-short-gold.html

Ted Butler on manipulation in the silver market

Never, in my 35 years of market observation, have I witnessed a more blatant manipulation. Make no mistake, this deliberate sell-off [in silver] is the handiwork of JPMorgan. This sell-off would not be possible were it not for their large concentrated short position. More upsetting is the apparent complicity of the CFTC in allowing the illegal manipulation of the silver market. The CFTC's probable involvement undermines the very concept of market integrity.

- Ted Butler, 26 January 2010