An incredible amount of fraudulent, virtual
silver is being created in order to cap price and paint the chart. Will
JPM and the rest of The Evil Empire be successful once again in capping
price and routing the Specs? The reaction to today's FOMC minutes may
help to determine the outcome.
Again, I can't stress enough the devious and
fraudulent nature of this latest attempt to contain and cap price. The
past four days have seen the price of Comex Digital Silver pressing up
against the key resistance of $18 and the 200-day moving average near
$17.93. See below:
Over this same time period, the Comex Silver
Banks led by JPM have increased the total supply of Comex silver
contracts by 12,809 contracts. So, while price has been flat, total
supply of Comex silver contracts has been increased by 6.5%. THIS is how
you cap price and paint the chart!
Imagine for a moment where price would be this
morning if total open interest was held flat for the past week. How much
higher would price be if sellers of existing contracts needed to be
found for the 12,809 contracts of buying pressure? On a larger scale,
yes the price of Comex Digital Silver is up $2 year-to-date or about
13%, but how much higher would price be if The Banks hadn't fraudulently
added 44,000 new contracts since December 30?
Why do we always describe this as "fraud"? Two primary reasons:
- The Banks are selling something that they don't have. Can you
enter into a contract to sell a house or a car if you don't actually own
the house or car you are attempting to sell?
- The Banks create this new "silver" from whole cloth without depositing as collateral any additional silver into their Vaults.
Regarding point #2, see below. Note that at the
beginning of 2017, total silver within the Comex vaulting structure was
181,903,037 ounces. Total Comex open interest that day was 163,812
contracts. With each contract representing 5,000 ounces of silver, this
equates to a virtual exposure of 819,060,000 ounces.
As of last Friday, total open interest had grown
to 205,602 contracts or 1,028,010,000 ounces or virtual silver yet the
total amount of silver in the Comex vaults was stagnant at 184,088,021
ounces.
So, The Comex Silver Banks have increased the
supply of virtual silver by 25% while only increasing the supply of
physical silver in the vaults by 2%. This is fraud, this is a scam and
this has absolutely ZERO connection to the supply/demand fundamentals of
actual physical silver.
And what are The Banks attempting to accomplish
in their aggressive efforts to cap price? Two things. First, maintaining
price below the 200-day moving average is important in managing future
Spec demand for additional Comex paper.
Second and perhaps more important is the chart-painting aspect of
keeping price below $18. As you can see on this weekly chart, by capping
price here, JPM et al are effectively attempting to paint a massive
head-and-shoulder top onto the weekly chart.
So, once again, you must be alert and cautious here. The forces aligned
against you in the Comex silver "market" are powerful and these
criminals are doing everything in their collective power to rig price in
their favor. Will they be successful (again)? That will depend upon a
number of factors going forward. For today, at least, you'd be wise to
not underestimate the collusive power of The Banks and the fraudulent
nature of their paper derivative pricing scheme.
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Our Ask The Expert interviewer Craig Hemke began his career in financial services in 1990 but retired in 2008 to focus on family and entrepreneurial opportunities. Since 2010, he has been the editor and publisher of the TF Metals Report found at TFMetalsReport.com, an online community for precious metal investors.
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The views and opinions expressed in this material are those of the author as of the publication date, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.
