Jump to content

SILVER


Recommended Posts

  • Replies 6.5k
  • Created
  • Last Reply

Top Posters In This Topic

It's not too dramatic yet, but last time this happened was the latter part of 2008. :o

 

EDIT: Anyway, I rode it then, I will ride it this time. :)

 

Heh, it's got a long way to fall before I make a loss.

 

To be honest I wouldn't mind massive price falls, back down to fifteen dollars or so. One last opportunity to buy in at bargin basement prices. I suppose huge increases in price would be OK too. Volitility like we see at the moment is more interesting to traders than holders of metal.

 

Link to comment
Share on other sites

I understand the margin increase, I understand investors being cautious about China raising rates, but for gold and silver to sell off like this is extremely counter-intuitive and we're not even at option expiry yet and this is during unprecedented demand.... (26/01/11). Are other people hearing about settlement for metals being made in $$$'s? This stinks of a take down to me.

 

Are we seeing a divergence between paper and physical yet?

 

I'd check if I wasn't so busy, but is this effecting all commodities or just G&S?

Link to comment
Share on other sites

Heh, it's got a long way to fall before I make a loss.

 

To be honest I wouldn't mind massive price falls, back down to fifteen dollars or so. One last opportunity to buy in at bargin basement prices. I suppose huge increases in price would be OK too. Volitility like we see at the moment is more interesting to traders than holders of metal.

I agree with you. My own nagging fear is that Prechter is right and we will grind to a bottom in 2016: 'the buying opportunity of a lifetime'' for those with any cash at that point.

Prechter 'if everything goes my way we will be moving from (dollar) cash to gold at the bottom''.

 

The counter balance to this idea is; ''will there be any physical available at that point?'' Perhaps not. So....

 

...the solution is to buy regularly and without hesitation, hopefully on dips, and steadily accumulate. The big picture hasn't changed one iota and that is Ian Gordon's message that the global monetary fiat system is beginning to implode. What would one want in such a catastrophe? A place to live, preferably owned freehold, a bit of land, gold and silver, selection of barterable goods, good health, stored food and water, a wood burning stove, fishing gear, a bicycle or two, maybe a bit of a community or family, thermal underwear and a big coat. :lol: Anything I missed from the list please add...

Link to comment
Share on other sites

Kitco's silver lease rate plot would tend to confirm something has happened:

 

silvlease.jpg

On the 20th Jan (thurs), COMEX reported inventories have lost 399,000 ounces from 'registered' (available for settlement of contracts) to 'eligible' (not available for settling contracts) and 200,000 ounces have been completely withdrawn from 'eligible'.

 

http://www.cmegroup.com/trading/energy/fil...lver_Stocks.xls

 

We should keep an eye on this. Registered down to 44.4m Oz, Eligible: 59.7m Oz

comexsilv.jpg

Link to comment
Share on other sites

I understand the margin increase, I understand investors being cautious about China raising rates, but for gold and silver to sell off like this is extremely counter-intuitive and we're not even at option expiry yet and this is during unprecedented demand.... (26/01/11). Are other people hearing about settlement for metals being made in $$$'s? This stinks of a take down to me.

 

Are we seeing a divergence between paper and physical yet?

 

I'd check if I wasn't so busy, but is this effecting all commodities or just G&S?

 

Warpig,

 

This is a normal seasonal correction. The price of silver had risen too far, too quickly and from a short term perspective the price was too over bought and in need of a correction to burn off some of the complacency in the market. From my earlier posts from a multiple of the 200dma, silver climbed to a point that it has rarely breached in the bull to date, ie 1.5x 200dma. This was a key sell signal.

 

But look at the SPX. My fear is that the SPX is also heading for a correction, which will have a big affect on silver stocks, ie when there is a sell off in the spx, the sell off in pm stocks is usually 2 to 3 times greater. Currently, all contrarian sell indicators are at their extremes, ie VXO not been this low since Apr 2010 (16%SPX correction), simililarly with SPX bullish percent indicator (BPI) is 87.4 which is the same peak it was in Apr 2010. The put call ratio is also at correction highs. There is just far too much complacency in the market and this needs to burn off. A healthy dose of fear needs to be injected in to the market.

 

This is just how markets work. Last week I bought some Feb 19 puts on SSRI silver miner which so far have done outstandingly well. A short term put is normally very risky, but at these over bought levels it is definately worth a punt as the probability of success is high.

Link to comment
Share on other sites

Warpig,

 

This is a normal seasonal correction. The price of silver had risen too far, too quickly and from a short term perspective the price was too over bought and in need of a correction to burn off some of the complacency in the market. From my earlier posts from a multiple of the 200dma, silver climbed to a point that it has rarely breached in the bull to date, ie 1.5x 200dma. This was a key sell signal.

 

But look at the SPX. My fear is that the SPX is also heading for a correction, which will have a big affect on silver stocks, ie when there is a sell off in the spx, the sell off in pm stocks is usually 2 to 3 times greater. Currently, all contrarian sell indicators are at their extremes, ie VXO not been this low since Apr 2010 (16%SPX correction), simililarly with SPX bullish percent indicator (BPI) is 87.4 which is the same peak it was in Apr 2010. The put call ratio is also at correction highs. There is just far too much complacency in the market and this needs to burn off. A healthy dose of fear needs to be injected in to the market.

 

This is just how markets work. Last week I bought some Feb 19 puts on SSRI silver miner which so far have done outstandingly well. A short term put is normally very risky, but at these over bought levels it is definately worth a punt as the probability of success is high.

 

Or is the Comex now trying to lease silver to avoid default?.... hence the rise?

 

Is what we've been waiting for staring us

in the face but we don't recognise it?

 

Shortages..Comex empty..Record purchases from US mint..BV waiting for silver..lease rate exploding..

 

Nick

(All in)

Link to comment
Share on other sites

Or is the Comex now trying to lease silver to avoid default?.... hence the rise?

 

Is what we've been waiting for staring us

in the face but we don't recognise it?

 

Shortages..Comex empty..Record purchases from US mint..BV waiting for silver..lease rate exploding..

 

Nick

(All in)

Oh, and backwardation....

Link to comment
Share on other sites

I appreciate the reply, but I completely disagree. Silver is in backwardation extending 12 months in to the future, has this ever happened before...? The CME group have increased margins which I think is a massive contributory factor in this sell off, if not the only reason.

 

With the greatest respect, if you continue to look at the silver market as a normal S/D market, you're going to miss the largest bull run this commodity has ever seen. Supply is extremely tight with the COMEX offering significant over spot compensation for accepting $$$'s instead of physical delivery... Your 1.5 x 200dma does not apply here IMO.

 

Warpig,

 

This is a normal seasonal correction. The price of silver had risen too far, too quickly and from a short term perspective the price was too over bought and in need of a correction to burn off some of the complacency in the market. From my earlier posts from a multiple of the 200dma, silver climbed to a point that it has rarely breached in the bull to date, ie 1.5x 200dma. This was a key sell signal.

 

But look at the SPX. My fear is that the SPX is also heading for a correction, which will have a big affect on silver stocks, ie when there is a sell off in the spx, the sell off in pm stocks is usually 2 to 3 times greater. Currently, all contrarian sell indicators are at their extremes, ie VXO not been this low since Apr 2010 (16%SPX correction), simililarly with SPX bullish percent indicator (BPI) is 87.4 which is the same peak it was in Apr 2010. The put call ratio is also at correction highs. There is just far too much complacency in the market and this needs to burn off. A healthy dose of fear needs to be injected in to the market.

 

This is just how markets work. Last week I bought some Feb 19 puts on SSRI silver miner which so far have done outstandingly well. A short term put is normally very risky, but at these over bought levels it is definately worth a punt as the probability of success is high.

 

Link to comment
Share on other sites

I appreciate the reply, but I completely disagree. Silver is in backwardation extending 12 months in to the future, has this ever happened before...? The CME group have increased margins which I think is a massive contributory factor in this sell off, if not the only reason.

 

With the greatest respect, if you continue to look at the silver market as a normal S/D market, you're going to miss the largest bull run this commodity has ever seen. Supply is extremely tight with the COMEX offering significant over spot compensation for accepting $ s instead of physical delivery... Your 1.5 x 200dma does not apply here IMO.

 

Agreed.

Link to comment
Share on other sites

I agree with you. My own nagging fear is that Prechter is right and we will grind to a bottom in 2016: 'the buying opportunity of a lifetime'' for those with any cash at that point.

Prechter 'if everything goes my way we will be moving from (dollar) cash to gold at the bottom''.

Not a hope in hell, Prechter is a fool who measures USD as though they were still backed by gold its a nonsense.

 

The USD is a shadow of its former self its a devalued worth less scrap of paper that has been debased for decades but apparently a limitless amount of toilet paper is going to be worth more than gold which is hoarded getting harder to find and has only been growing at around 2% p.a. for a hundred years.

 

Link to comment
Share on other sites

I appreciate the reply, but I completely disagree. Silver is in backwardation extending 12 months in to the future, has this ever happened before...?

 

It appears to have happened last year.

 

Silver in backardation only means that if i want to do some silver soldiering today i will have to pay higher prices for silver than the market says i will have to pay in one years time. So who today is buying silver because they require it even though prices are expected to be lower? Industrials? Speculators who cannot believe silver will be lower in a years time?

 

The market might for example be expecting that China will slow down in the future while demand today remains strong and the higher export quotas for silver that china has set will actually mean more silver on the market rather than less as it was for 2010.

 

if you continue to look at the silver market as a normal S/D market

 

I would guess that industrial demand for silver swamps whatever demand there would be from what appears to be a small investor community viewing silver as money.

 

All the information that i can find suggests to me that food inflation is being caused by rapidly expanding developing economies rather than by greater money supply. If that is correct then silver could easily be showing that it has come too far too fast and now buyers in the future are less enthusiastic for it.

Link to comment
Share on other sites

It appears to have happened last year.

 

Silver in backardation only means that if i want to do some silver soldiering today i will have to pay higher prices for silver than the market says i will have to pay in one years time. So who today is buying silver because they require it even though prices are expected to be lower? Industrials? Speculators who cannot believe silver will be lower in a years time?

 

The market might for example be expecting that China will slow down in the future while demand today remains strong and the higher export quotas for silver that china has set will actually mean more silver on the market rather than less as it was for 2010.

 

 

 

I would guess that industrial demand for silver swamps whatever demand there would be from what appears to be a small investor community viewing silver as money.

 

All the information that i can find suggests to me that food inflation is being caused by rapidly expanding developing economies rather than by greater money supply. If that is correct then silver could easily be showing that it has come too far too fast and now buyers in the future are less enthusiastic for it.

 

 

Now that the price is falling the COMEX the will surely decrease margin requirements . I mean, they increased them twice per month as the price rose. Part of their 'normal market operations' so I'm told. So undoubtably they will now reverse those margin increases. Don't you think?

 

Link to comment
Share on other sites

Now that the price is falling the COMEX the will surely decrease margin requirements . I mean, they increased them twice per month as the price rose. Part of their 'normal market operations' so I'm told. So undoubtably they will now reverse those margin increases. Don't you think?

:lol:

Link to comment
Share on other sites

Silver in backwardation is surely some kind of measure of the risk of default/cash settlement being imposed.

It has nothing to to with "wanting to do some soldering today", and little even to do with industrial supply/demand: it is a CreditDefaultSwap on CMEGroup Inc.

 

Edit: A bank run makes no sense until there is a queue of people waiting for their money. When that happens, you have to join the queue or risk being defaulted on.

Link to comment
Share on other sites

Silver's never been in backwardation for 12 months before. Incidentally, backwardation occurs because the convenience yield is greater than the prevailing risk free rate.

 

It appears to have happened last year.

 

Silver in backardation only means that if i want to do some silver soldiering today i will have to pay higher prices for silver than the market says i will have to pay in one years time. So who today is buying silver because they require it even though prices are expected to be lower? Industrials? Speculators who cannot believe silver will be lower in a years time?

 

The market might for example be expecting that China will slow down in the future while demand today remains strong and the higher export quotas for silver that china has set will actually mean more silver on the market rather than less as it was for 2010.

 

 

 

I would guess that industrial demand for silver swamps whatever demand there would be from what appears to be a small investor community viewing silver as money.

 

All the information that i can find suggests to me that food inflation is being caused by rapidly expanding developing economies rather than by greater money supply. If that is correct then silver could easily be showing that it has come too far too fast and now buyers in the future are less enthusiastic for it.

Link to comment
Share on other sites

Volatility huge.

 

Big buying in the East followed by alarm calls in the States to got the JP Morgue guys at their smackdown desks?

 

I mean come on..

 

 

The selling is because of the COMEX's proposed position limits. The limit for spot months is proposed to be 25% more silver than the deliverable supply per trader. Basically they are designed to allow JPM to short as much as they like.

 

'Spot-Month Limits

 

The proposed rules set spot-month position limits at 25% of deliverable supply or five times that amount in exclusively cash-settled contracts for entities holding a physical position less than 25% of the deliverable supply. A trader with positions in both the cash-settled and physically delivered contracts could hold up to the spot-month limit in each contract. In the first phase of implementation, the CFTC proposed to adopt DCM estimates of deliverable supply. In the second phase, the CFTC proposed to determine deliverable supply itself, although it may still rely on DCM estimates.'

 

http://www.lexology.com/library/detail.asp...98-eac76246bbbd

 

Non spot months may, of course, be shorted without limit.

 

I expect the selling to continue until all the silver has given away for rock bottom prices. When there is no silver available for delivery the COMEX will default. Physical silver prices will rocket. Confidence in the COMEX will evaporate. The value of silver derivatives will also collapse. This could domino into the rest of the derivatives market causing the entire financial system to collapse.

 

The comex is running out of silver quickly.

 

'We witnessed a massive withdrawal of silver unprecedented in the history of the comex. First there was a smallish 6507 oz of silver deposited to two customers, one being 497 oz and the other 6010 oz). But just look at the huge withdrawals:

 

Four customers (not dealers) withdrew a total of 1,019,310 oz from the comex vaults. This is real silver leaving from 4 registered vaults. The individual withdrawals are: 579,081, 30,380, 399,994 and 9855 oz.

 

The dealer (our bankers) also were involved in the withdrawal of silver to the tune of 769,941 oz (there were 2 dealers involved removing 102,866 and 667,875 ozs). When you see this massive drain of silver, the fire is raging. The total silver withdrawal

 

by both dealer and customer totalled an astronomical 1,789,251. The Brink's trucks must have been very busy yesterday.

 

The comex folk notified us that an amazing 85 notices were sent down for servicing for a total of 425,000 oz of silver. The total number of silver notices sent down so far total 323 or 1,615,000 oz. To obtain what is left to be served, I take the open interest for January at 153 and subtract 85 deliveries leaving a total of 68 notices or 340,000 oz left to be serviced.

 

Thus the total number of silver ounces standing in this non delivery month of January is as follows:

 

1,615,000 oz + 340,000 = 1,955,000 oz (Thursday total = 1,625,000). As promised to you, this number is rising and will continue to rise until the end of the month as our banker cartel scrambles to get any morsel of silver to satisfy the massive demand for this metal.

 

Our bankers are stunned to see such a huge amount of silver options in a traditionally slow month.'

 

http://harveyorgan.blogspot.com/2011/01/ma...-silver-at.html

 

That was December. And hasn't demand for physical silver been unprecidented this month? This could blow up nicely. And soon, too.

 

:)

Link to comment
Share on other sites

The selling is because of the COMEX's proposed position limits. The limit for spot months is proposed to be 25% more silver than the deliverable supply per trader. Basically they are designed to allow JPM to short as much as they like.

 

'Spot-Month Limits

 

The proposed rules set spot-month position limits at 25% of deliverable supply or five times that amount in exclusively cash-settled contracts for entities holding a physical position less than 25% of the deliverable supply. A trader with positions in both the cash-settled and physically delivered contracts could hold up to the spot-month limit in each contract. In the first phase of implementation, the CFTC proposed to adopt DCM estimates of deliverable supply. In the second phase, the CFTC proposed to determine deliverable supply itself, although it may still rely on DCM estimates.'

 

http://www.lexology.com/library/detail.asp...98-eac76246bbbd

 

Non spot months may, of course, be shorted without limit.

 

I expect the selling to continue until all the silver has given away for rock bottom prices. When there is no silver available for delivery the COMEX will default. Physical silver prices will rocket. Confidence in the COMEX will evaporate. The value of silver derivatives will also collapse. This could domino into the rest of the derivatives market causing the entire financial system to collapse.

 

The comex is running out of silver quickly.

 

'We witnessed a massive withdrawal of silver unprecedented in the history of the comex. First there was a smallish 6507 oz of silver deposited to two customers, one being 497 oz and the other 6010 oz). But just look at the huge withdrawals:

 

Four customers (not dealers) withdrew a total of 1,019,310 oz from the comex vaults. This is real silver leaving from 4 registered vaults. The individual withdrawals are: 579,081, 30,380, 399,994 and 9855 oz.

 

The dealer (our bankers) also were involved in the withdrawal of silver to the tune of 769,941 oz (there were 2 dealers involved removing 102,866 and 667,875 ozs). When you see this massive drain of silver, the fire is raging. The total silver withdrawal

 

by both dealer and customer totalled an astronomical 1,789,251. The Brink's trucks must have been very busy yesterday.

 

The comex folk notified us that an amazing 85 notices were sent down for servicing for a total of 425,000 oz of silver. The total number of silver notices sent down so far total 323 or 1,615,000 oz. To obtain what is left to be served, I take the open interest for January at 153 and subtract 85 deliveries leaving a total of 68 notices or 340,000 oz left to be serviced.

 

Thus the total number of silver ounces standing in this non delivery month of January is as follows:

 

1,615,000 oz + 340,000 = 1,955,000 oz (Thursday total = 1,625,000). As promised to you, this number is rising and will continue to rise until the end of the month as our banker cartel scrambles to get any morsel of silver to satisfy the massive demand for this metal.

 

Our bankers are stunned to see such a huge amount of silver options in a traditionally slow month.'

 

http://harveyorgan.blogspot.com/2011/01/ma...-silver-at.html

 

That was December. And hasn't demand for physical silver been unprecidented this month? This could blow up nicely. And soon, too.

 

:)

Thanks. Ithink we both agree that there is enough independent evidence to suggest the physical price is about to explode.

 

I'm a bit nervous about the whole system imploding though....

Link to comment
Share on other sites

The selling is because of the COMEX's proposed position limits. The limit for spot months is proposed to be 25% more silver than the deliverable supply per trader. Basically they are designed to allow JPM to short as much as they like.

 

snip

 

I expect the selling to continue until all the silver has given away for rock bottom prices. When there is no silver available for delivery the COMEX will default. Physical silver prices will rocket. Confidence in the COMEX will evaporate. The value of silver derivatives will also collapse. This could domino into the rest of the derivatives market causing the entire financial system to collapse.

 

OK, I just don't understand this, so I'm going to have to ask. I feel like the dumb kid at the back of the class but here goes. :(

 

If the levels of physical silver available for delivery is dwindling, why are JPM et alii driving the paper price lower which will obviously encourage more buying of physical?

 

If they can manipulate the market so effectively, why don't they hold a line at say $28 oz or allow a gradual and measured price rise, nothing crazy that will scare or threaten fiat, simply a healthy, rising market?

 

Isn't this just a natural correction after an unhealthily strong run up?

 

In real life, Ebay silver prices are holding or still rising and big dealer prices i.e CID are falling in line with spot price. :huh:

Link to comment
Share on other sites

OK, I just don't understand this, so I'm going to have to ask. I feel like the dumb kid at the back of the class but here goes. :(

 

I am also the dunce at the back of the class.

 

But if you avoid complexity the simplest explanation for a fall in prices is that the countries that matter for the gold and silver trade like china india korea and i suspect Brazil and so forth are raising interest rates because they have inflation problems. If their inflation rises higher than western inflation and they dont deal with it then it is going to impact their competitiveness. The west meanwhile is pretty economically weak overall and likely to remain there for a while to come. You can argue our inflation will moderate if these other countries inflation moderates

 

India today raised the repo rate - not much change. Base rates held steady at 6%. China is 5.81% after two rises in two months with the last christmas day with more to come and with reserve ratios at 19%. Brazil raised by .5% a few days ago to 11.25% Korea is at 2.75% and just raised .5% a few days ago. The Brits will be raising before the end of the year? The USA before mid 2012? One year Euribor is suggesting a .25% raise as far as i can see from the way it is fairly rapidly going up. On top of all of this China is being seen to very publicly support the USA and Europe which sends a big signal the west is going to come thru this one way or another, where the reason for holding gold and silver for many is as a hedge in uncertain times.

 

Meanwhile if you have a big silver position to unwind you need people to buy and spreading stories about default is as good a story as any. What for example would be todays prices of a selection of silver dealers if you phone them up and you say you have 1000 oz to sell and you can deliver today? would you get 24USD per oz?

Link to comment
Share on other sites

I am also the dunce at the back of the class.

 

But if you avoid complexity the simplest explanation for a fall in prices is that the countries that matter for the gold and silver trade like china india korea and i suspect Brazil and so forth are raising interest rates because they have inflation problems. If their inflation rises higher than western inflation and they dont deal with it then it is going to impact their competitiveness. The west meanwhile is pretty economically weak overall and likely to remain there for a while to come. You can argue our inflation will moderate if these other countries inflation moderates

 

India today raised the repo rate - not much change. Base rates held steady at 6%. China is 5.81% after two rises in two months with the last christmas day with more to come and with reserve ratios at 19%. Brazil raised by .5% a few days ago to 11.25% Korea is at 2.75% and just raised .5% a few days ago. The Brits will be raising before the end of the year? The USA before mid 2012? One year Euribor is suggesting a .25% raise as far as i can see from the way it is fairly rapidly going up. On top of all of this China is being seen to very publicly support the USA and Europe which sends a big signal the west is going to come thru this one way or another, where the reason for holding gold and silver for many is as a hedge in uncertain times.

 

Meanwhile if you have a big silver position to unwind you need people to buy and spreading stories about default is as good a story as any. What for example would be todays prices of a selection of silver dealers if you phone them up and you say you have 1000 oz to sell and you can deliver today? would you get 24USD per oz?

 

So, your thinking that inflation fears are being tackled and the flight to PM's as a traditional safe haven is reducing. The latest GDP figures for the UK would surely suggest a likelihood that additional QE may be required to support the economy thereby exacerbating inflationary pressure. I don't think the US really know how to stop QE, it seems to be supporting the whole system.

 

I have read extensively with regards to JPM and silver manipulation, do you think that the weakness in PM's is purely down to changing perspectives by the markets?

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×
×
  • Create New...