by Bill Murphy via Zero Hedge
Time to do a brief general review of the gold/silver manipulation mess. To have some fun with this one please listen to a great, 55 year old tune by The Castaways titled Liar Liar. It will put you in an upbeat mood to reflect on what we are up against. What is most important to appreciate is that the flavor of this song is what we have been dealing with for over 20 years.
While listening to this fun music, it led my thoughts to two Liars, as is beyond obvious…
*JPM, who has been called a criminal enterprise by the Justice Department.
*The CFTC who said they could find no wrongdoing by JPM during a five year period in which the Justice Department called JPM a criminal enterprise. The CFTC is making Chief Inspector Cloueau of Pink Panther fame note look like a genius.
For the CFTC to come up with zip on JPM does not say it all in front of the investing public, what does?
Detailing the JPM crud and the CFTC nonsense, could fill a zillion pages. No point in doing all of that again. You veterans know most of it. The reason for this commentary is to emphasize where we are at the moment, thanks to those bums and the rest of The Gold Cartel.
The fundamentals:
They are what you want to make of them in terms of the establishment. PRICE ACTION MAKES MARKET COMMENTARY. Right now they are increasingly bearish according to many commentators, as they rationalize the negative price action. But from this perspective, they could not be more bullish…
*Pitifully low interest rates around the world
*Growing forecasts of future economic stress
*Thus, more emphasis on pedal to the medal
*Soaring government deficits and debt
*Signs of real Fed panic via the bonkers repo activity
Which takes us to the real gold/silver supply/demand situation. Who really knows what the real deal is? If there was ever a perfect synopsis of this lead song Liar Liar it is what the establishment has fed us forever re what they are doing in the gold market.
So the best way to relate Liar, Liar is that THEY are just that. With no way to know the real deal, the bet here is that the bad guys are gradually running out of physical supply to suppress the prices of gold and silver and keeping the truth hush hush.
Many of us see what they are doing now as a final act of desperation to prevent the inevitable. THEY are doomed!
Now to the technicals:
Que Sera Sera
*The bums use the technicals to their advantage.
*A week ago Monday the technicals were very friendly. Gold and silver were turning back up and looking to break out.
*But it meant nothing as The Gold Cartel/JPM gang decided to go on all out attack mode on Tuesday.
*THEY then registered a chart top in both gold and silver, with the open interest in gold going to an all- time high, with the same being the case with volume.
*From bullish to bearish in a week as THEY continued on the attack.
So what does it mean?
This is a massive Gold Cartel assault on gold and silver and a major effort to flush out spec longs in each market. For it to be aborted something has to occur to really tighten up their respective physical markets. THEY are not going to go quietly into the night.
This is a dialogue which could be extrapolated at length. No point doing that either.
What is so important is to spread the word about the financial establishment’s LYING about what is really transpiring in the financial market world. Gold and silver are in trouble for the time being, but it shouldn’t last too long. Something is brewing behind the scenes which is going to make their prices explode, to THEIR horror!
Back at the ranch it was bombs away again on the Comex. The precious metals attempted a rally overnight, which was thwarted in London again, which led to a bashing on the Comex. Gold was punished down to $1444 and silver to $16.54. Both then managed to recover somewhat, but as usual, no reversals would be allowed.
The gold open interest rose 1,880 contracts to 704,741, and refuses to contract. The silver open interest fell 2,416 contracts to 221,526.
In fitting with the theme of the day, James Mc, who is all over the goings on at the Comex, discovered, while not a lie, a new tell about the CME not publicly alerting investors to silver margin requirement changes…
Of course
Bill,
I hadn’t been paying attention to margin requirements for gold and silver lately, but just noticed that apparently the CME recently raised margin requirements on silver by another 6%, while leaving gold alone. By raising margin requirements on silver 3 or 4 times now since late summer the CME has once more brought silver leverage WAY back down. With their new margin per contract at $5,720, and the price of silver at $16.70, the leverage is now down to a paltry 14.5-1. By comparison gold leverage per contract is TWICE that of silver at 29.3-1. This could explain the recent stratospheric daily volume in gold versus the rather low trading volume in silver. It could also explain silver’s pronounced weakness versus gold.
As I have said whenever the CME changes margins for metals it ALWAYS favors the shorts. Silver has been de- leveraged right at the moment it was looking to break MUCH higher. To my knowledge NO other commodity is given this punitive margin treatment on relatively feeble rallies. The summer silver rally in fact occurred with low volatility. Hell, lumber prices nearly doubled a year ago and its margin requirement per contract remained unchanged the entire time. I’m sure if you checked the leverage for all commodities silver would now be the hands-down #1 lowest leverage in the CME.
Silver is the cartel’s kryptonite, it’s that simple. It still invokes terror to those massively short players. Their last resort has ALWAYS been to raise margins, and bring leverage down as low as possible. The seasonals, fundamentals, and technicals are all being negated courtesy of the sociopaths running a rigged casino.
James Mc…
One more thing
I can’t prove it but I suspect this $1.50 plunge in silver since Nov. 4 is due to the cartel attacking the spec longs who were dealing with new margin hike notices. The CME used to give notices of margin hikes, which were published by Kitco and others, but they have stopped doing it. I have no idea when it occurred however…
Update today: gold trading volume already at a humongous 400k as of 11:30 am. Silver trading volume only 76k. I guess gold is the preferred leverage now thanks to the CME’s de-leveraging of silver. No doubt the tiny silver market will always be a huge problem for the cartel so they’ll do whatever it takes, even if they have to resort to full margin per contract.
James Mc
On topic for the day Dave from Denver has some comments on the position limit issue…
Heh heh heh…since when has CFTC focused on cracking down on manipulation OR getting the COT report correct? We know MS was busted about 5 years ago for stuffing silver trades that belonged in its house account into the “other reportables” bucket – a whopping $650k fine. This article doesn’t go into the fine details but I recall reading one back then that mentioned the “other reportables,” which is a “large trader” category: www.wsj.com/articles/cftc-fines-j-p-morgan- securities-650-000-for-inaccurate-reporting-1406644977
I have been suspicious over the last couple of weeks that the “big 4” banks are stuffing some of their shorts in the short bucket of the managed money category. This would then give the illusion of a spread trade when it fact it would enable the banks to get around the position limits.
There’s no way to verify this unless the CFTC were to have an independent audit conducted of the banks’ gold trading books but that will never happen. Never. Anyone who wants to believe the CFTC cares about enforcing the rules is naive. Moreover, IF the banks are reporting their Comex trades and positions accurately, it would be the ONLY segment of their business that they are reporting honestly. What would be the odds of that?