Something VERY Interesting is Brewing in Comex Silver
Stackers Fight On
Stackers have endured a long, hot summer of attacks upon silver. Yet, despite that fact, they’ve doubled down on their retail silver buying as of late, and have absolutely refused to quit. The numbers bear it out.
Earlier this month, I covered how India has already imported perhaps as much as 100 million ounces(or 1,000 lakhs) of silver, in just the first 4 months of the year, and the same strong demand continues apace in the retail market. Throughout the globe(with the exception of Perth), most of the world’s mints are showing near record demand.
The most impressive part about it though, are silver’s sales compared to its golden cousin. In fact, check out this powerful chart, from a buddy of mine, which shows another undeniably powerful trend:
Unreal, right? Ever since the Financial Crisis, it is not simply the raw mintage of silver coins that has soared, but, even more impressively, the silver to gold sales ratio has soared too. This trend is now 6 years old, and shows no signs of stopping.
Nothing close to this ratio has ever occurred before. Despite the fact that we know the metal is only supplied at a 9 to 1 ratio, the US Mint has sold over 112 times as much silver as gold. Furthermore, this ratio doesn’t even count the America the Beautiful series, or the numismatic sales.
“Watchman, give it a rest! Price continues to languish, this just isn’t a big deal!”
Wrong, it’s a very big deal. You see, while governments have hoarded gold by the tens of thousands of tonnes for centuries, they no longer have silver stockpiles left to speak of.
Governments can(and do) dump their gold holdings in “leases” on the market every day, yet they are doing literally zero dumping of silver onto the market. As I’ve covered before, the recently released data from the Silver Institute bears this out:
See that 2nd line under “Supply” near the top, marked “Net Government Sales”? Last year was the first time since these records began, that world government silver sales were zero.
What this means is that while governments may or may not have more gold to dump onto the market, from this point on, they are out of state-owned, physical silver for all rigging intents and purposes.
This further demonstrates that the only means by which this silver suppression has continued, has been to meet this demand with the record, frenzied pace that silver miners are bringing it out of the ground. That’s it! Mine supply is the only card they have left, as silver’s monstrous flow, worldwide, is literally “hand to mouth”.
With a week left to go in the month of June, the silver eagle number is already bumping against 3.3 million for the month. This will undoubtedly be the strongest sales month since January at roughly 4 million, and bring 2015’s halfway total to roughly 21 million ounces(or on par with last year’s record figure).
As blistering as worldwide sales paces continue to be though, I’m not chiefly focused on that, as something even more interesting is happening right now at the Comex…
Very Interesting COT Numbers
For the past several weeks, the open interest at the Comex has continued to climb…yet all the while, silver’s price has not truly broken down with gusto…
Why is that?
Please understand me here: I’m not calling that level “strong price support”, there is no line that is strong enough to withstand the attacks of our banking enemies. They can take price wherever they wish, whenever they like. So, why hasn’t silver caved in at this point yet, despite relentless attacks?
Ahhh, that’s the interesting thing…
The banks are not currently the big sellers in silver! Quite the opposite, brothers. In fact, for the last several weeks the banks have been quietly(but furiously) covering their shorts, and have been going long.
Just several weeks ago, the “commercials”(big banks), bought back 20,000 short contracts in one week! That’s 100 million ounces of paper silver shorts, transferred off the banks’ position in one fell swoop! Last week that trend continued, with the banks going further net long by another 7,100 contracts…or over 35 million ounces.
“Wait, Watchman, if the banks aren’t doing the shorting here, then why is silver near the lows of the past month?”
It’s because others are shorting silver in record numbers right now, just not the banks. The “speculator” money, the hedge funds, managed money, etc are all currently taking record short positions in silver. They’re loading the boat with all the silver shorts they can get their hands on.
“Wait, that’s crazy! If JP Morgan and the other banks are covering, why on earth would they do this?”
Hey, I never said these folks were smart! After all, “betting the farm” on lower silver prices(despite the fact that the cost of production is much higher than current price levels) almost deserves the “Darwin Award” at this point!
Nevertheless, they are doing precisely that, and the preliminary open interest in silver has now reached truly unheard of levels. In fact, Craig Hemke recently tweeted:
“This is insanity! Prelim Comex numbers show a new ATH in silver OI. Up 7000 today to 202,415. At 5,000 oz/contract, that’s over 1B paper oz.”
Remember, in this space, for every short, there is a long. If the banks aren’t going short here, yet open interest is at an all-time high(over 1 BILLION paper ounces, in positions)…what do you think is about to happen?
Here’s what seems highly likely to me, in the very near future…
1) The specs and hedge funds continue to pile on shorts at levels that banks are heavily buying at. Remember, those specs are like the Pavlovian dog. They’ve been trained by the banks to think that heading into Comex Options Expiry, the banks always cash in on short positions, so it seems “the thing to do”.
2) This time, however, while heading into Options Expiry the specs are going short, while the banks are going long. Even as we speak, those banks are pouncing on every new long being pitched, or going long against every new short.
3) When(not if) that shorting exhausts itself(at a price perhaps above the 15.50’s)…you will see speculators(holding hundreds of millions of ounces of paper silver shorts) being crushed by an immense short squeeze trap, which the banks have spent the last month laying in silver.
“Interesting, Watchman, so you’re saying this is ‘the big one’?”
Now, hold on! I didn’t say that, because it all depends on what the banks do next. If the banksters’ plan to cap silver is still in effect, then I’d expect a quick(but short) rally of roughly $1 to $1.50. Since the last, stifled break-out stopped at $17.80, I’d guess that they’ll stop the advance shy of that mark, if the capping plan is still a go.
However, something else could happen…
Is it Time?
Three months ago, I laid out my thesis. I said that silver is so crucial to the system, and that the worldwide supply/demand equation has become so critical, that it’s necessary for the banks to cap silver’s rise until the very last moments this international monetary system has….or else too many sheep will be alerted that something is wrong.
For that reason, silver and gold must be suppressed until the clock runs out, in order to ensure the maximum amount of capital stays in the banksters’ fraudulent, digital ponzi-extraordinaire! They want as few “winners”, and as many losers as possible. They need to seize as much “bail-in” capital as they can when the teetering house of the cards comes crashing down. As Brotherjohnf says, “they want all the theatre doors locked, and everyone trapped helplessly inside, before the elites yell, “FIRE!“
That’s one reason I’m watching things like the Greek fiasco so carefully. If anything could burn down the theatre right proper, it would be contagion and fallout from the Greek situation. If silver’s rally isn’t capped, and is in fact, allowed to burst with the potential ferocity I believe exists…
Then we could be much closer to the end of Bretton Woods II, than we realize.
Either way, “the House” always wins, and JP Morgan and the banksters are sitting pretty with their lowest net short silver position in months(and with open interest at all time highs, no less).
Things are about to get interesting!
India, which is already buying a third of all silver, has broken its own records for the past 2 years running, and is now looking to do so for a third straight year. The Indian nation will likely take in over 250 million ounces this year, and perhaps as much as 300 million…This will be to feed its insatiable appetite for bargain-hunting bullion deals, but also to build out the nearly $1 trillion in infrastructure that India needs to build within the next few years.
The Canadian, US, and private mints all continue to sell silver coins at record paces, as stackers worldwide have dug in their heels, and refuse to budge.
Meanwhile, with Comex open interest at all-time highs(of over 1 billion paper oz), JP Morgan and the banks, have by now perhaps reduced themselves to nearly net neutral in silver. This would be amazing, as just a few short years ago, their short to long ratio was nearly 3 to 1!
The bankster trap on the specs will soon be sprung, and then we’ll see what “the plan” is for the immediate future: either the largest percentage rally in silver in several years….or just the next “lower high” in the contrived downtrend.
One thing’s for certain: the specs are in for a world of hurt, and very soon…perhaps even within the next week.
Until that time, JP Morgan will be gobbling up every single long contract that it can…
This morning again, I was up at 4 am(long before the “rooster’s crow”) to bring you the very best commentary that I can, in gold and silver, the international monetary fight, and geopolitics. I love doing what I do, but I can’t do it without you. If my work here at thewealthwatchman.com has been important to you this past quarter, then I urge you to donate whatever you can, or consider making your silver purchases through the ads on this site. The good news is that we’re growing stronger every day. The bad news is that this growth has a price(a more expensive web host), and higher monthly email subscription list costs. Every dollar donated helps me not only keep this place running top-notch, but also compensates me for my time, and allows me to stack alongside you. No donation is too small! Thanks for being a part of our community, and thanks in advance, for your generosity.
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