In Ted Butler's Archive


I don’t accept that any outside factors or even the election have much to do with gold and silver price performance. Instead, the evidence points to the big positioning changes in COMEX gold and silver futures as being solely responsible for price ups and downs. Those doing the most buying and selling don’t pay attention to the news in deciding when to buy and sell COMEX futures contracts. The undisputed initiators of buying and selling in COMEX futures contracts are the managed-money traders I identify as technical funds. By definition, all buys and sells made by the technical funds are purely mechanical and exclusively dependent on price movement and nothing else. I know it sometimes seems like world events dictate price movement – until you factor in COMEX positioning and price movement.

In silver, managed-money buying has been extreme, as nearly 60,000 net contracts (300 million ounces) were bought, including 35,000 net contacts over the past three reporting weeks. Silver prices have rallied because of this buying, but not to an extent that would appear reasonable.

The wonder here is why would the commercials, led by JPMorgan take the other side of this buying and sell short so aggressively to the managed-money buyers at such low silver prices? Much higher prices could be achieved by not selling as aggressively. The regulators at the CFTC and the CME Group have managed to avoid asking this most obvious question for decades. It’s because JPMorgan is scooping up all the physical silver they can get their hands on. Frankly, so should you dear reader because JPMorgan has now accumulated 600 million ounces and the way they are aggressively hoarding silver means the supply is tightening and you need to get it while it’s still cheap and available.

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