There were only 2 deliveries posted against the March Silver contract today bringing the total deliveries for the month to 980. I should note however this is the first day since the delivery process began that the March Silver contract did not see a reduction in open interest. Interestingly enough, it witnessed an increase of 5 contracts on Friday of last week. Apparently some guys are planning on taking some silver and decided that the market was going to move higher with the return of the risk trades. A total of 898 contracts remain open in the March.
The spread between the March, May and July contracts for all practical purposes is zero with the March and May trading even. I would watch out if March goes to a premium to the May contract as that would portend that there are issues related to the delivery process which are bullish for the market. Such a development would indicate that the longs are getting ready to squeeze the shorts.
This is getting interesting as the battle to contain the metal below $36 is heating up. The shorts had better hope that they can push the market away from $36 convincingly or they are in trouble.
Our thoughts exactly Dan! If silver can close convincingly above $36 two days in a row- the shorts are in trouble.
ReplyDeleteSometimes, we can't see the forest for the trees. We are participating in a slow motion train wreck of economies hitting peak oil, peak population, peak debt. What is meant by the Deepwater Horizon, the Japanese Tsunami and the Fukushima nuclear meltdowns? What is meant by the middle east unrest beginning with Tunisia, and spreading to Egypt, Libya, Bahrain and others? Why is my food so expensive? Is the government really suppressing the price of gold and silver, and why? Well we QE to infinity or adopt the religion of austerity? I'd recommend taking the time to think about these questions and their answers. It will help you shape your investment and personal strategies.
ReplyDelete898 x 5000 = 4490000oz still waiting for delivery. We have 9 days left in the month, something tells me that these holdouts probably have been offered a cash settlement and politely declined in favor of physical.
ReplyDeletewhat is so hard about coming up with a measly 4.5 million ounces?
ReplyDelete@Brian: It's not infeasible.
ReplyDeleteIf they have the stuff around, then there is nothing hard in delivering 4.5 mn ounces.
And even if not, difficulty is just indirectly proportional to the price they have to pay.
However, price action since January 28 tells me that there is something weird going on in the Comex vaults.
Correct me if i'm wrong, but doesn't the Comex claim to have more than 40 million ounces just sitting their ready for delivery?
ReplyDeleteThere may be something weird about the price action, but it can't be the failure to deliver a 4.5 million ounces.
ReplyDeletemy detailed response to the Comex failure talk:
http://northeastbullion.tumblr.com/post/4007063331/is-the-great-comex-failure-upon-us
It's obvious with this much metal still outstanding this late in the money, there is a supply problem. Whether it's solvable or not I don't know.
ReplyDeleteBut the end is near for the fraudsters. If not this month, then soon.
@ Bruce
ReplyDeleteIf there is no supply problem why are they waiting til the last minute to deliver? If the COMEX can get the metal so easily, then why did it take Eric Sprott's fund so long to acquire their silver?
@ lord koos
ReplyDeleteChina had no problem finding 245 tonnes. Perhaps Sprott wasn't really looking for it?
I am wondering if they will wait until the last minute to settle for cash. The longer they wait, the more scared Comex will get and up goes the bribe.
ReplyDeleteBrian, it's not just the 898 outstanding deliveries, it's also the PSLV premium, the sudden price rises, the typical -x% beatdowns, the unusual behavior of the silver miner stocks that underperform silver, the record number of ASE orders at the mint, the shortages reported by Sprott and various other dealers, the constant decrease of the COMEX inventories, the obvious attempts by the CFTC to delay position limits as much as possible and the strangely volatile lease rates.
ReplyDeleteBesides there are rumors such as the Wynter Benton story, some more general +x% premium stories and the alleged SLV scam.
I think there is evidence to support the comex default opinion.
Actually there is a way you can always tell how serious somebody is about his opinion. Ask him to bet on his opinion. Do you short silver?
sassballsgrandpa, I agree with you. But it is unquestionable that gold and silver are being suppressed. Go to Adrian Douglas's site marketforceanalysis.com and peruse the last year or so of his technical analyses.
ReplyDeleteI agree with you that we should not be adopting austerity. The end was a mathematical uncertainy decades ago, austerity could not even work. We should recognize that the base of the economy is not dollars, it is human labour and the environment, the things that this whole ponzi scheme is based on. Why hurt the base of the economy simply to protect the ponzi scheme. We should spend now to protect the environment and people as long as possible, let the ponzi scheme crash, then start over.
Daniel -
ReplyDeleteplease read Brian's article on why a COMEX default makes no sense:
http://northeastbullion.tumblr.com/post/4007063331/is-the-great-comex-failure-upon-us
and let me know why you disagree. His arguments are clear, simple, and factual. Any rationale person looking at the situation seems to have a hard time concluding that 4.5mm ounces would cause a problem for the COMEX. DO you really believe that the entire silver market is a lie? That there is no silver available anywhere? that SLV has none? that even PSLV has none (after all, who pays a 70% premium to settle in cash instead of physical when they could buy PSLV at a 20% premium instead?)
Also, you need to read my article on the meaninglessness of PSLV's premium:
http://kiddynamitesworld.com/on-misinterpreting-pslvs-premium/
additionally, here's the link for China buying 245 tonnes of silver in February - I guess silver is available, despite what Sprott says, eh?
http://www.zerohedge.com/article/china-imports-245-tonnes-silver-february-and-qatar-swf-%E2%80%9Cinterested%E2%80%9D-buying-silver
I think it's pretty clear from reading Brian's blog that he is LONG silver, as am I.
the difference is, I like to base my trading theses on facts, not rumor and hype which is almost certainly incorrect. Every piece of evidence, thought, logic, and common sense points to the facts that Comex will NOT default this month.
@ Brian
ReplyDelete240 tons is a little under 8 million oz. If supplies are not tight, why has silver gone from $17 to $34 in the last 12 months? I'm not saying the COMEX will default, but it could very well be that they do not have the amount on hand that they claim, & will have to search for it.
@Lord Koos - price is a result of the matching of supply and demand. that's why, as you noted, silver prices have been rising. That's also why I'm bullish on silver - because I think that the demand/supply dynamic is positive.
ReplyDeleteBut that's very different from saying "silver is almost impossible to get" and "COMEX will be unable to deliver their required silver and will default"
see what I mean?
Would it be possible to have a short squeeze without a Comex default? Does anyone here really beleive that silver should not be closer to $40 than $36 right now?
ReplyDeleteMany of you have forgotten that CDE is sending ore to China for refining. How many other silver miners are doing the same? IMO that this is how China is getting its silver; they are not relying on the after refined market because the lack of blanks for the US Mint already proves that the market is extremely tight.
ReplyDeleteKid/Brian or whoever you are, you are about to find out what the truth is in very short order.
ReplyDeleteHey Kid Dynamite, I answer on your blog in the comments of your PSLV post
ReplyDeleteMy dealer, who is not small and hedges his inventory in the futures market, insists that crimex does not have to deliver most of the physical if it chooses not to. He didn't have time to explain it, but said something like they can only be forced to delivery a small amount of the actual inventory and can instead pay in SLV certs. If this is true, wouldn't a "default" be a public exposure of the certificate replacement rather than the actual metal default in the technical sense? E.G. crimex can claim they have the metal, but don't want to deplete their inventory to dangerous levels, while the entity that stands for delivery will publicly cry foul, causing a short term spike in prices.
ReplyDeleteAll comments welcome.
@blister - I think it's pretty simple:
ReplyDeleteif the longs don't get what they expect from the contract specifications, then they won't want to trade those contracts anymore.
So yes, it's true that the COMEX doesn't "need" to give you physical silver - in the sense that they are not actually liable for failures to deliver by the shorts beyond the market value, but if they said "sorry guys, no actual silver, here's cash instead" then no one would trade there anymore. So that's certainly not an appealing option for them.
dynamite ...... YOU ARE EVERYWHERE IS THIS YOUR JOB? DO YOU WORK FOR A LIVING TELLING PEOPLE THE COMEX WILL NOT DEFAULT???
ReplyDeleteyour credentials as educational, professional, etc. greatly appreciated
@ IamPhoenix - I try to be everywhere where there is a forum where intelligent people want to have an intelligent discussion about the topic and have the facts wrong. You can figure out my credentials if you spend 5 minutes on your own. my work speaks for itself.
ReplyDeleteI don't think i've ever encountered an investment area in my entire life where people are as misinformed as they are with silver. It's really quite remarkable.
Yes - the COMEX pays me $1BILLION a year - no physical silver, obviously, just those imperialist Fiat dollars - to try to get people to use common sense and think about the data and the facts. And yes, Brian o'flanagan is my alter ego - I'm a masochistic schizophrenic who uses two personalities to argue with people who have absolutely zero interest in truth or logic. Does that sound reasonable? (/.sarcasm)
@brian .. watch the bears video from silvergoldsilver.blogspot.com
ReplyDeleteand you may have a better understanding why the chinese are taking their time slowly taking the silver and i believe they themselves also shorting the price until....
@kid weeell yur at least hypomanic with slightly altered dellusioned thought processes ... if u want to prove your point u need to get all the arguements everyone has given you and make a giant book of your answers then their overwhelming objections then repeat until u have a clear map (should look like a trees roots if u grasp the concept)
ReplyDeleteall else my issue with you has been voiced
Kid Dynamite, thanks for the informative posts and please keep active. What do you think if the March contract does move to a premium over the May contract and what are your thoughts on the backwardation we have seen recently in silver ?
ReplyDelete@Dig77 - Victor The Cleaner has written what I think is the best stuff on backwardation:
ReplyDeletehttp://victorthecleaner.wordpress.com/2011/02/27/backwardation-in-the-case-of-a-monetary-metal/
i also saw him comment today on Turd's blog, simply and brilliantly, that given the very slight spot-march backwardation, it makes perfect sense for shorts to hold the metal as long as possible before delivering it.
what's ironic is that, despite this being normal, optimal position management, when the metal all gets delivered at the end of the cycle, the uninformed will be up in arms screaming about a conspiracy all over again... even though the entire point, as was the point of Brian's post, is that it seems impossible for there to be a delivery problem with only 4.5mm ounces left standing.
Thanks very much for the reply. Makes sense for sure. Do the shorts have to make actual delivery by the end of March or is there a grace period after contracts are settled. It would make sense that if you were a short, in this position, that you would prepare ahead of time in the event you have to make delivery. In this case would that not put some upward pressure on prices ?
ReplyDelete@Dig77 - the notices need to be served (by the shorts - they are the ones who decide when to deliver) by the end of march. I don't know how many days they actually have to make delivery.
ReplyDeletesure - if they don't have the silver and need to get it, that could put upward pressure on prices. Victor's point is that if they do have the silver, it makes sense for them to wait until the end to deliver it.
But we're not talking about a lot of silver here - less than 5mm ounces. SLV trades many multiples of that daily. Of course, that requires one to believe that SLV's redemption mechanism works as advertised, which I do believe.
good luck, I'm signing off for the night.
Kid Dynamite = desperate troll. Ignore.
ReplyDeleteI absolutely do not understand why people would immediately jump and call someone a shill just that they have a differing opinions, especially when that are backed by some analysis. You can disagree with the analysis but name calling is just dumb.
ReplyDeleteJack and all;
ReplyDeletePlease make an attempt to keep from personal insults to others who are expressing their opinions. Debate and comments are always welcome but we cannot allow this to degenerate into personal attacks against those whom we might disagree with.
I can tell you all that I have been trading for more than 2 decades and in that time I have seen all manner of rumors and misinformation regarding the silver market. It is just one of those markets that seems to attract that sort of thing.
Remember the name of the game in trading is to make money; not necessarily be right. If the market is moving higher it is a sign that there are more people willing to pay up for the metal no matter what the reason. WE may and probably will never know what is really going on but we do not need to. the market will tell us when the bulls are no longer willing to chase prices higher. For now they seem to be eager.
the longer silver can stay above $36 the better the odds will be from a technical perspective of moving higher. For whatever reason, we had a lot of selling at this level. It seems to me like the level was acting like $30 did a while back when silver could not quite get through it and stay above it. once it did clear $30 and held that level on a subsequent move lower, it shot up higher. Same thing will probably happen above $36.
Quite a few comments Dan :) Thanks for the post & objective analysis.
ReplyDeleteIt will be a interesting few days to say the least.
ReplyDeleteScott Gallup created a lot of interest in a comex silver default in Dec 08. I just tried to check dec 08 silver deliveries on his site but its now closed.
From Harvey Organ's blog -
The final figures for dec08 silver delivery was 31.245 million oz (31/12/08).
Harvey's intial figure for mar11 silver delivery's was 21.25 million oz(28/2/11).
I had a look cause my intial thought would be that the mar11 demand would have been greater than dec08.
I agree with what Brian O'Flanagan writes about COMEX delivery.
ReplyDeleteAlso, if you look at LBMA SIFO (Silver Forward Offered Rate), you see that backwardation is now disappearing. So I suppose the shorts have found all the silver they need to deliver.
Victor
Apologies for splitting this message in two - had some issues with the blogger not accepting the following link:
ReplyDeleteLBMA SIFO
The first 5 columns are the Silver Forward Offered Rate, more or less the same as (base rate) = (future minus spot).
Victor
I have been trading the futures market professionally and personally for over 35 years. I don't know who came up with the term "backwardation", but in any other market, it's called what it has always been called..."BULL SPREADING". That's when the front month goes premium the deferred months. Are traders in the Silver market afraid of this term? When Bull Spreading is occurring... prices are going HIGHER. Bull Spreading works most of the time in Bull Markets.
ReplyDeleteDo we have the squeeze condition now as of march 22?
ReplyDeleteI do agree that the amount of consipiracy speculation around silver is pretty ridiculous. However we do know that some very large interest or entities are keeping prices from moving upward too quickly, I think it's safe to say that. Beyond that, I don't know.
ReplyDeleteFor example, while Harvey Organ does provide some very useful insight on his blog, I find some of his speculation about COMEX activities to be a somewhat naive projection on his part.
I was going in debt while I was waiting for my settlement. Thanks to JG Wentworth, they gave me cash for annuity. Now I get monthly payments to help me out with my bills.
ReplyDelete