The Great Precious Metals Ambush Of 2015

The precious metals Commitment of Traders report (CoT) is in and shows the spec/slinger naked shorts are in deep, very deep. I never would have thought such a position was even possible. Take this report and hang it on your wall, enshrine it. Your grandkids may ask you someday what you were doing during The Great Precious Metals Ambush of Two-Aught-Fifteen.

The lesson here is how rapidly and decisively an ambush of this magnitude can be set up. It transpired over a month, culminating last Tuesday, the report date of the latest CoT. More than 52,000 silver contracts traded within a 2.5-hour window on Tuesday. That’s 25% of all open interest (OI). it is in excess of 260 million ounces, and more than a third of the world’s silver production in a year. How is that even possible? It’s beyond comprehension. What kind of rogue traders do that? I sure didn’t get the memo.

There’s no need to repeat myself about the latest surge in physical demand or the absurdity of “isn’t that special” economics, such as the U.S. Mint running out of silver Tuesday while the precious metal was trading at its 2015 low. I have also noted the decline (12-14% so far) in silver production going on in Mexico and Peru. Unless prices recover nicely, this trend will accelerate. (This would be a good time to review my posts during this last week.)

The focus now is on the ambush. I am using silver in this discussion, but gold is essentially the same story except that it’s a more liquid market. The positioning is nearly as extreme. When in the history of this gold series have swap dealers been net long? Answer: Never.

 

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Source: The Crimex

These speculators have trapped themselves offside in an illiquid silver market. Note that silver’s price crept back Thursday and Friday as liquidity completely evaporated. By Friday one could hear paper rustling in the breeze and the dull ping of a tungsten coin dropping as only 32,660 contracts traded.

We were tipped off starting about June 9 that strong-hands commercials and bullion banks were moving in to exploit the situation. Notice the month-long bullish divergence of the slow Sto indicator below. Then we got the volume spike on Tuesday and the ambush was set.

 

Chart Source: Morris Hubbart (Click to enlarge)

Next up is the latest managed-money or large speculator short position in silver. The chart goes back eight years and illustrates just how overtraded Crimex paper silver is, as well as the extreme position taken. Managed-money gunslingers are naked short 273 million ounces. An interesting mindset indeed when the U.S. Mint can’t even meet demand for Eagle coins.

 

The involvement of U.S. banks (primarily JP Morgan) in the silver trade has diminished. The US bank position, as shown in the Bankers Participation Report, is only 21,776 contracts of only 11% of OI. This compares to at about 18% of OI during 2014. You have to go back to 2012-2013, when silver was being smashed off its peak to see the heavy hand of JPM at 22-27% of OI. There’s more going on with non-U.S. banks and that might be a source of a large patsy or dupe.

JPM found other dupes to drive the price of paper precious metals down so it can accumulate and stack. It’s not even necessary anymore for it to expose itself to the dirty paper market.

 

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JP Morgan’s depository silver holdings are self-explanatory: robust. It is my contention that JPM, despite all the paper-participant accusations, is much more interested in physical silver accumulation and stacking, especially now.

There are also rumors that JPM has been cleaning out silver coin production. Search “JP Morgan Buying Silver Coins” and you will see a debate mostly centered around the premium issue. Some doubt that JPM would pay up for that. But now that the U.S. Mint can’t produce coins and “isn’t that special” economics are in play, the logic of JPM buying coins should resonate. It may know that premiums on silver coins could get even larger.

We can also take clues from the commercial or swap dealer record long silver bets.

 

 

There has been conversation in beaten-up precious metal circles about non-stop banker price suppression through manipulation. I believe this to be true at times and always a factor. But the endgame may not be what they commonly think.

In reality, I’m suggesting we have just seen the culmination of massive proxy buying and the utilization of dupes, marks and patsies (such as paper market speculators) to create an artificial price to rip off and exploit. Various central bank and ETF vaults have also been ransacked.

I do not believe the Fed and JPM are one and the same. JPM, Goldman Sachs and their ilk influence and control the Fed. Rather, I believe the modus operandi of cabal bankers is to loot and defraud entities like the Fed and other central banks. This is accomplished through sleazy leasing schemes. But ultimately, they know possession of physical precious metals is what really counts.

 

 

Source: TF Metals Report (Click to enlarge)

The concept of buying of gold and silver by proxy is nothing new and is hardly a “conspiracy theory.” It’s a time-tested practice. The operations of the Rothschild banker clique in supplying bullion to the English to finish off Napoleon is a good example.

Today, these same bankers (such as JPM) are accumulating precious metals on behalf of themselves and their criminal associates in the Cabal. If you don’t know what the Cabal is, start reading these pages — quickly I might add. It is not just the Chinese vaulting these precious metals.

 

 

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