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I have been writing for some time that I
could not get my hands around the silver trade. I had a feeling when the
market went up 202 points on Tuesday that gold and silver would sell off into
a healthy pullback and they both did. Today I was very surprised to see gold
and silver put in very strong showings and was totally confused by this. As I
wrote yesterday I expected them to continue to sell off to about $35.00 in
SLV and $141.50 in GLD. They did not act as scripted. What was I missing?
Well yesterday I spoke to Christian
from GoldSilver.com and he pointed me to a link on YouTube by someone using
the nom de plume Brother John F. I watched this video in
stunned disbelief. This man had a live streaming video from the Commercial
Mercantile Exchange (COMEX) for the minute by minute trades. Silver contracts
were selling higher and at about 1:40PM they started to sell off for no
reason. Then at 2:03PM there was a trade for 50,000 contracts of silver sold.
(This would lead anyone to conclude that the sale was known 23 minutes before
it occurred.) This is not a typo. That is 50,000 contracts in one minute! If
you are not aware each contract is for 5,000 ounces of silver. So if we
do the math 50,000 contacts X 5,000 ounces per contract equals 250,000,000
ounces of paper silver contracts. If you’re getting dizzy reading all
of those zeros I will spell it out for you. That is Two Hundred Fifty Million
ounces of paper silver traded in one minute. If we do some further math and
we multiply two hundred fifty million ounces of paper silver by the proxy
price of silver yesterday which was $40.00 per ounce. That trade was for 10
billion dollars in one minute.
I just want to take this one step
further. According to Jason Hommel writing on behalf of the US Mint, the amount
of silver produced per year in the entire world is roughly around 680 million
ounces of silver and the amount mined in the united state last year was 50
million ounces. The amount that was traded on the CME yesterday was
approximately one third of all of the silver mined in the world. It was 5
times the amount mined in America. So how can this be?
So you may ask why this is so troubling. The
reason is that I have been writing for some time now that there are rumors
that the silver ETF (SLV) is rumored to not have the silver that the paper
purports to represent. There are reports that if SLV was ever called upon to
produce the underlying asset it represents it would be unable to do so. Is
there any wonder why this commodity is so volatile?
The fact is that the silver market
is being incredibly manipulated. Well that is about to change. On Friday July
22nd the Hong Kong
Mercantile Exchange will start trading dollar denominated silver futures
contacts with the hopes of tapping into the growing demand for the metal in
China and India. The new contact will enable buyers and sellers in China to
trade effectively with their counterparts across the world, while at the same
time allow investors to gain exposure to silver price movements and broaden
their investment portfolio. The exchange also plans to roll out a Yuan-priced
gold and silver futures to capitalize on growing investor demand for
China’s strengthening currency. They also have ambitions for products
in base metals, energy and agriculture.
This was the missing piece of the
puzzle I could not find. Starting tomorrow Friday July 22nd the Anglo American monopoly on
silver is over. This will be the first time that Asians can buy and take
future delivery of silver in Asia. No longer can the CME raise margins close
to 100% in eight days. The silver shorts are and should be afraid of the
hundreds of millions of Asians that will be entering this small market. China
alone has trillions of dollars and they could drop 0.01% of that money into
silver and explode silver beyond the control of the American elite.
The one that has the most to fear is
the Comex. Yesterday’s manipulation twenty three minutes before the
trade of 50,000 contracts was consummated only proves that the COMEX has been
manipulating the market. There has never been true price discovery as this
manipulation of the COMEX has kept the true price of silver hidden. Well, I
see dark days ahead for the COMEX. There will be investigations, there will
be discoveries, there will be trials and there will be jail sentences handed
out. Market manipulation is not something the Feds take lightly.
The real reason for this post is to
tell all of my readers to buy as much physical as they can. Until I am
convinced that the markets have established a transparent state where true
price discovery is possible I will stay away from these vehicles. I do
exclude the ETF's PSLV (silver) and PHYS (gold) from this list as their paper
is really backed up by the physical it purports to represent.
“Physical Silver is the bullet that
slays the financial vampires. Physical Silver is the stake in the hearts of
the Wall Street werewolves”
Current Recommendations
1. U.S Gold
(UXG) Buy under $7.00 Target price: $30.00 by 2015 (July 21,
2011)
2. General
Moly (GMO) Buy under $5.00 Target price: $10.00 by end of 2012. (July 21,
2011)
3. Quest
Rare Minerals (QRM) Buy under $6.00 Target price: $15.00 by 2015 (July 21,
2011)
4. Tasman
Metals (TASXF) Buy under $5.00 Target price: $16.00 by 2015 (July 21, 2001)
5. Avalon
Metals (AVL) Buy under $6.50 Target price: $13.00 by 2015 (July 21, 2011)
6. Sprott
Silver ETF (PSLV) Buy under $18.00 Target $25.00 (July 21, 2011)
7. Sprott
Gold ETF (PHYS) Buy under $14.00 Target $20.00 (July 21, 2011)
8. Cameco
Uranium (CCJ) Buy under $26.00 Target $48.00 (July 21, 2011)
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