I read an interview with an un-named “London
Trader” on Eric King’s King World News site this evening that had
me scratching my head as the interview raises more doubt about the constant permabull theme and story. Who knows…maybe he does
have an inside source on the trading floor in London. However, contradictions
are often purely visible in the silver story if you take the time to study
First let me fill you in on what this un-named “London Trader” had to say.
The Chinese are divesting out of paper right now. So
we are seeing a huge uptick in euro physical silver purchases, as well as
dollar silver purchases. When
silver took out $33, a huge amount of physical orders were filled.”
The Chinese are doing the exact same thing in the
silver market that they are doing in the gold market, massive accumulation on
dips. It is also important to note that the local traders in silver are short
and nervous. Everyone is short silver and so that market can move violently
higher when it turns.
When silver reverses, it will be the one that leads
the market higher. Also, the commercials have been covering in silver the
same way they have been in gold....
The physical silver orders that were just filled
have been waiting since February 16th. Those orders near the $33 level were
filled in huge size
on Tuesday. These long-term accumulators are buying every dip. There were some fills at $34, but some
very large orders were filled near $33.
As long as we stay under $34, there is going to be constant
does it matter if you buy silver at $32 or $38, when it is going to go
multiples higher from these levels? The Chinese know this and that is why
they are accumulating in size. (My own note: Exactly! If silver is going
much higher, what does it matter? Why were the orders waiting from February
16th waiting for $33.00?)
What is happening here is essentially criminal, but
the smart money is capitalizing on it by accumulating. They take advantage of
the manipulation. Remember, a lot of this is spot indexing that will be
converted to physical over the next few days.
These guys (bullion banks) are so naked short and
the last thing they need is to have physical disappear at this time. This is
the ammunition they have to drive the market lower and they don’t have
very much ammunition.
Even in the virtual market they are running out of
sellers they can cover into. There simply aren’t enough weak hands for
them to cover in size and as I said, the last thing they need is for physical
to be disappearing at these levels.
The real (physical) market is taking over now and the
virtual (paper) market will not be as important going forward as the price of
silver begins to rise again.”
I wonder how the Chinese were able to accumulate
such “huge” amounts of physical silver. It was just this past
December that this same “London
Trader” told Eric King
There isn’t enough silver for investors to buy
(in large amounts) The silver isn’t there. You can just imagine how
long the wait times will be going forward.” (Apparently less than two
weeks according to the story above)
Sprott’s fund as of February this year held 32,878,296 silver ounces in
bullion bar form. That’s a lot of silver. In fact he was able to purchase 11
million ounces for his Trust this past January alone on
relatively short notice and with an extremely low premium.
Dr. Jeffrey Lewis said in September of 2011:
In less than one week, the
price of silver gave up some 9 months of gains in a move from $40 per ounce
to $28. The current price for silver, which is the lowest price in 9 months,
is sure to create shortages for physical silver.
It should be recommended to anyone who is currently
accumulating metals that purchasing silver immediately after a correction is
a poor investment decision, especially in physical metals.
One of the current themes permeating the market has
been whether or not a physical silver shortage will lead to an imminent price
spike. Zero Hedge certainly pumped this theme in early December. So how is this London Trader able to tell us that there was
plenty of physical to be had with less than a two week wait? But wait, wasn’t last week’s smash a “paper take-down”?
Then there was Sprott
himself saying that he can basically buy silver “at spot”. (3:19 of this video) in May of 2011. Buying silver at spot doesn’t imply shortage
does it? He also says that he will be a net buyer going forward, “every
day” … hmmm, but I thought there was a supply issue.
… I think you are all smart enough to think for yourselves. This piece isn’t a bash on silver .. this
piece is meant to open your eyes to keep you from “blindly”
believing everything you read about silver, especially when the information
comes from “un-named” sources and no proof to back up such claims
other than the un-named person’s word. Question everything!
Names, proof and confirmation … that’s
all I look for when I read these stories. Ask yourselves, if silver shortage
issues have been been the main driver of silver
prices since the euphoria around physical silver buying started then how are
all of you able to accumulate, how can every bullion shop I call have ample
supply and how can these major purchases happen with relatively no wait time
for such large orders? Heck, the purchaser in the above piece had to wait
less than two weeks. That doesn’t imply shortage.
It’s the same story all the time. The same
stories come out of the woodwork after every major correction in the price of
silver. Are you buying it for fundamental reasons (shortage, industrial
output less than industrial usage) or are you buying it as a form of
Don’t flood my inbox with hate please …
this is not a bash on silver (of which I am long term bullish) but just
another piece pointing out some of the irregularities in the silver stories.
These are things that anyone wanting to purchase silver should be aware of.
There are two sides to every coin .. I’m just
trying to show you the other one.