silver - last nights action

  1. 678 Posts.
    The big news of the day was that silver went into backwardization in London. This is a BIG DEAL and a VERY RARE event. Spot London silver is trading higher than silver two years out. Once again we have confirmation of extraordinary tightness in the European silver market and of the information sent your Café way for many months. This new development signifies a significant structural change in the silver market and also confirms what Mike Bolser has been telling us about the London silver market.

    Another buying group showed up today according to my STALKER source and they are loading up on silver and palladium. Their thinking is that $8 silver will look awfully cheap in the near future.

    The silver open interest fell 6598 contracts to 120,372. This makes no sense based on the market action yesterday and makes the previous day’s reported large jump to be very suspect. The March fell 15 contracts to 275. There were no deliveries and I obviously I am still waiting for my delivery.

    Silver opened lower in New York, quietly went down to fill its gap left yesterday and then stared at unchanged for hours. When gold took out yesterday’s highs of $418.50, silver took off and closed on its highs of the session. This means we still have our breakaway gap ahead of us.

    Silver gave us an outside day to the upside, going below yesterday's low, above yesterday's high and closing above that high!!

    May silver

    Silver volume reports from the LBMA are conspicuously late for the February
    data: the Russian red mercury scam, the LBMA silver reporting situation raises a real and conspicuous RED flag because it coincides with other, credible reports to GATA of a large delivery deficit (10s of millions of ounces) for silver at the LBMA. If true, silver could deliver explosive returns unlike the mythical red mercury. Combined with a rapidly rising silver price and a painfully obvious divergence from gold, the above facts are rapidly converging to a market climax.

    Why are they late?

    The LBMA may be late because they are reformulating their reporting methodology (emulating the BLS and PPI fiasco) but they haven't suggested this in prior communications as the BLS did. Indeed, the LBMA normally reports on the 12th to 15th of each month. Perhaps the delay is because there has been a massive upward spike in silver volume from last month's spike to 143.3 Million ounces per day from 101.1 in December 2003. If so, there would be no possible doubt left that Professor Obstfelt's T* date had arrived for silver.

    "The date T* the date on which the price-fixing scheme collapses; it does so after a speculative attack in which private market participants acquire all of the remaining official gold (in today's case, silver) at price p (the prevailing market price)." The Logic of Currency Crises 1994 page 192, Banque de France cashiers economiques et monitaires.

    The markedly rising volume in silver after a long period of reduction is a classical example of the end of a price-fixing scheme and we may be there at this moment. A big jump in February LBMA volume (when and if it is released) will be a telling blow to silver bears and catch them off guard. I can only wonder, this morning, if the cartel has made sufficient LBMA default plans to avoid the likely market chaos...or if that is even possible

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