"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput

Trader Dan's free work will soon be available at www.traderdan.biz

Thursday, February 24, 2011

Silver dropping sharply in the low volume aftermarket

Some big entity has come into the silver pit this afternoon and taken advantage of the low volume trading conditions to lever the fall in crude oil prices to go after the downside stops in silver. Based on what is now occuring, they have succeeded.

One other notable thing is now occuring - the backwardation structure in the front three silver month contracts is easing and while it is not yet at the usual contango, it is moving towards that direction. This is significant and bears watching.

Silver has now fallen towards the last level of chart support before $31. If it does not hold near $31.50, it is going to retrace down towards $31. Below that we are back to $30.50


  1. What hours are considered low volume trading hours?

  2. nice attack ..... you have to respect the power..... game still on....I guess IF someone is wanting to take delivery of their contracts then they now have a nice discount.....hehehe

  3. Dan, trying to find you on twitter - loved the entry.

  4. Stairs going up, the shaft coming down

  5. @killguy--I don't have to have any respect for those kleptocrats. In fact I loathe them like nothing else on this planet. Line them up and ....

  6. How in God's holy name is this legal?

  7. Hi Dan,

    I'm a long time reader of jsmineset and I like your new blog.

    I have a question on Contango and exchange pooled holdings.

    I get that contango occurs because a futures contract 3 months out needs to capture the storage costs today's physical holdings will incur between now and the 3 months future date.

    But aren't comdex and LME physical holdings in fractional pooled accounts?

    If they are storing metal for me, do I pay storage fees on the theoretical amount I hold on paper, or on the percentage of my holdings that are actually in the vault?

    As I see it, the exchanges can only charge fees based on the actual physical metal in storage. (Is this the case?)

    And the numbers I've seen imply that they only have about 10% on hand.

    As such, the backwardation/contango relationship isn't just about immediate physical shortages. You also have to consider how leveraged the exchange is and will be in the futures period in question, no?

    Let's use an extreme hypothetical example to make the point clear. Assume the exchange is 100% leveraged, and has no physical metal on hand. Thus, no storage fees can be charged, and there is no cost in holding metal in the pool account. In this case the contango will be zero won't it?

    Could you please share your thoughts? Thanks.

  8. great, i am buying the physical, can get in cheaper.

  9. Great commentary, Dan. I have used your Chart in my Blog to explain, was happened today. Thanks

  10. glen5000 - I am a futures guy and not that familiar with pooled accounts so perhaps one of the gang can better answer your question than I can.


  11. Ajit - the low volume trading hours I am referring to are what some of us called "kangaroo trade". The reason is because it is late in the day in New York and the pit session is already closed. That leaves the electronic trade only going without a lot of participation from the bigger players who are done with their heavy lifting for the day. By the time they drift away and go home to eat dinner or what have you, Australia begins getting ready to come on line. There simply is not that much volume being done at that time of day and oftentimes, that is when the games will be played by the usual conscienceless creeps who infest this business.

  12. Turd - see how diplomatic I can be when necessary! That is why you need me on the ticket when you run for President.

  13. tradingeh - Trader Dan does not do the Twitter thing. I have a lot of birds around here that do that pretty well and decided after serious thought that they were doing very well without me joining in to help!


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