In Ted Butler's Archive


After see-sawing the past few weeks, the all-important financial status of the 7 big COMEX gold and silver shorts is back to a $4 billion loss.  The sole unresolved issue that matters to price is whether the big shorts can rig prices lower and get out of harm’s way. Opposite these big shorts (banks) are the managed-money traders (technical hedge funds). Over the last few months, they bought nearly 250,000 net gold contracts (25 million ounces) and an even more astounding 100,000 net silver contracts (500 million ounces). We’re talking about the purchase of gold with a notional value of $35 billion. In silver, the 500 million ounces bought by the managed-money traders equates to a notional value of $8.5 billion. That’s 60% of world annual mine production and more than 100 million ounces greater than the amount of silver in SLV, the world’s largest silver ETF. The true wonder is why such gargantuan amounts of gold and silver buying in a few months’ time didn’t propel prices much higher.

It’s solely because there was counterparty selling of roughly those same amounts by a small number of commercial banks that blunted what would have been a much greater price rally. In addition, the lion’s share of the bank short selling was by 8 or fewer traders, pushing to the forefront the critical matter of concentration, the cornerstone of manipulation.  I would estimate that the 8 largest traders on the short side accounted for roughly 70% of the net gold and silver short selling over the life of the rally.

In the latest Commitments of Traders (COT) report released last week, the total commercial net short position in COMEX gold futures reached an all-time high and the concentrated short position of the 8 largest shorts came within a whisker of establishing a similar record. It would be foolish to deny that COMEX futures positioning is what sets the price. Watching the Justice Department and the CFTC keep issuing traffic citations (for spoofing) while the serial murderer (JPMorgan) continues to kill is infuriating.

JPMorgan took delivery of 8 million silver ounces this month in September COMEX deliveries in its own name. It would be quite easy for the Justice Department or the CFTC to either confirm or deny my allegations of what JPMorgan holds in physical silver. That failure on the part of the DOJ and CFTC is troublesome. I don’t know what JPMorgan’s next moves will be, but it is still accumulating physical gold and silver – all while being a very large (if not the largest) COMEX gold and silver short seller. They continue to suppress the price to accumulate gold and silver at bargain levels. Moreover, one would think the DOJ might have an added interest in how the largest COMEX short seller, JPMorgan, has never suffered a loss in more than 11 years of trading COMEX silver futures.

JPMorgan has the silver and gold markets locked up tight and has put itself in a no-lose, must-win position and the DOJ and CFTC are content to chase after a few short-term spoofers. As far as where we go from here, I’m convinced that silver and gold prices will soar in the not too distant future and if the commercials succeed in flushing out the managed-money traders one last time that will mark the bottom for a long time to come.

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