Silver - Are We There Yet?

For an individual to fix Libor is a crime. For a central bank to suppress European
bond yields is an act of financial statesmanship. - Jim Grant
capitulation
kpiCHlSH()n/
noun
1. the action of surrendering or ceasing to resist an opponent or
demand."the victor sees it as a sign of capitulation
Financially speaking
When investors give up any previous gains in stock price by selling equities in
an effort to get out of the market and into less risky investments. True
capitulation involves extremely high volume and sharp declines. It usually is
indicated by panic selling.
Based upon reports of physical retail shortages of silver, there is no retail
capitulation to speak of
Paper price may indicate that things couldnt be worse. And yet that which
gives rise to the price derivatives - suggest that things could not be better.
Paper prices are an illusion. Unfortunately they are illusion that we all must
obey when buying and selling the physical asset.
The surge in retail silver premiums may be a slight echo of the underlying
potential for the next move up - but a tiny one.
The reality lies just below the surface.
The trade reporting data says it all. Where the managed money collective has
piled on short to a lever never before seen.
Indeed paper price is a COMEX - trade position - paper-managed affair.
COMEX is the most important derivative exchange for silver volume by far. It
remains the primary price determining mechanism. Tokyo and Shanghai are tiny

in comparison. London is a dark , non-standard over-the-market, priced in US

dollars, that keys from COMEX while being fully managed by the big banks.
The COMEX silver speculative short or the sized of the managed money
category has once again, moved right back to all time highs joined now by gold
for the first time in reporting history.
In silver, thats 55,000 contracts, or a staggering 275 million ounces. More
than one third of the metal produced by the world in one year, against a paltry
178 million physical ounces held in the warehouse system - registered and
eligible combined.
This, in a market with 190,000 open contracts or nearly one billion ounces
in derivative form.
All while the commercial net short positions in both metals are at extreme
cyclical and multi-year lows.
The big banks - with JPM as the leader - have essentially cleared the
runways for higher prices.
For the metals it simply doesnt get anymore bullish than this. And yet,
almost no one sees it. In fact, the majority paying attention are celebrating the
end of precious metals.
Given JP Morgans colossal hoarding of physical silver over the last four
years beginning in May of 2011, it feels scripted.
As soon as we cross over the next few levels of ever-lower moving averages
we will be off to the races. A race that will stop only when and only if they
decide to stop its advance.
Price suppression remains vexing for even the most diehard investors.
Its natural to want to find justification for any price.
And yet, there is very little issue and basically no mainstream opposition
with regard to interest rates.

This all anyone should need to know.

Where is the visible hand in that scenario?
The LIBOR fix was one thing. How soon we forget that the fix - which
determines the cost of money and credit across trillions of dollars - was totally
fixed by a small club? And federal funds rates should be so different?
No wonder regulators turn a blind eye so easily when it comes to the silver
disconnect.
There are no markets - just interventions.

For more articles and commentary like this - to explore and find some piece
of mind in the space between actual price discovery and the reality of the
macro-financial state of things - visit us at
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