http://harveyorgan.blogspot.com/2011/01/silver-in-backwardation-in-london.htmlSilver in Backwardation in London, silver OI refuses to fall/margin levels rise in silver/gold
Good morning Ladies and Gentlemen:
Before we start our regular commentary, I would like to inform you that 4 banks entered the banking morgue last night:
1. Community South Bank of Easley South Carolina
2.United Western Bank of Denver Colorado
3. Bank of Asherville, Asherville, North Carolina
4.Enterprise Banking Company, McDonough Georgia,
I wrote to the CFTC voicing my concerns over many matters. I am open to your comments You will notice that I sent it to only 4 commissioners. I left out Bart Chilton. From: harveyorgan@rogers.com
To: GGensler@cftc.gov, somalia@cftc.gov, MDunn@cftc.gov, JSommers@cftc.gov
Subject: Position limits and elimination of exemptions. Date: 1/20/2011 9:40:56 P.M.
I am rather disappointed that you have allowed the major banking short interests to continue with their fraudulent and manipulative practices in the precious metals. You have allowed another 60 days of massive shorting by the bankers to allow for yet another public input. The public for the past 2 1/2 years have bombarded you with millions of emails with the hope that you will see the light and put position limits on silver and eliminate the phony exemptions. Mr O'Malia was the lone dissenter on your latest vote voicing his concern that the swap books on JPMorgan once opened would be a shock and that the CFTC would not know how to handle the situation. It has been my contention all along that the major short, is in reality the Chinese government who lent their hoard of silver in support of the suppression of gold. It would be difficult to suppress gold while allowing silver to advance in price. The gold was supplied by central authorities. The USA ran out of silver in 2003 and in order to receive most favoured nation status, the Chinese have done a swap with the USA with a date certain to re-swap. It is quite conceivable that the Chinese have asked for their silver back but were refused as global supplies for silver are vanishing.
Yesterday, the USA Mint announced a record 4.6 million oz of silver eagles sold in the first 3 week period of January which is a record. The USA produces 40 million oz from their mines so for the first time, the USA must import silver from the rest of the world to satisfy the mint's requirements.
The comex is witnessing massive movements of silver into and out of registered vaults signifying turmoil as this silver is putting out fires in other jurisdictions. In gold we are witnessing the opposite. How on earth is gold being settled?
What is even more troubling to me is this:
How could you even discuss position limits and the elimination of exemptions without first telling us what happened in July 2008 which caused you to bring in the enforcement division of the CFTC? Mr Chilton has decided to act unilaterally in proclaiming one trader, JPMorgan, with fraud, and from his statement to the press, major class action law suits have been initiated and filed.
It is frustrating to many of us who witness time and time again massive un-backed paper driving the commodity price of silver and gold down like today. I guess the CFTC's motto that the futures market is a price discovery mechanism is out the window. Mr Dunn has stated that he needs more manpower to try and catch manipulation. Yet when a whistle blower is presented to you and this person describes in detail the accounting of how the crime has been committed in the past and how it will happen in the future and yet you refuse to listen to this gentleman.
Mr Sprott of Sprott Asset Management is having a tough time trying to find any physical silver for his silver fund and yet the bankers massive sell huge amounts of paper silver. The SLV also has liquidated massive amounts of "paper silver". The real stuff is difficult to find in quantity.
Sooner or later, this fraud will end and I guess there is going to be a lot of explaining to do.
I urge you to do the right thing and order JPMorgan and friends to stop this massive fraud and manipulation immediately.
Harvey Organ.
Late Thursday night the CME ordered margin requirements to rise in gold and silver with a sprinkling of other commodities thrown in. The target in this matter was to a lesser extent gold but most assuredly silver.
First the announcement and commentary courtesy of Zero Hedge:
Inflationary Guerilla Tactics Resume As Comex, Nymex Hike Margins On Gold, Silver, Cracks, Spreads And Other Products
Submitted by Tyler Durden on 01/20/2011 20:11 -0500
Wonder why the smart money was rushing headlong out of gold and silver over the past few days, and especially today in the AM session? Here is your answer: in tried and true fashion the Comex just hiked margins in gold, and silver by about 6%, and threw in a few other commodities to mask things up. And unlike the last time it did it, when it could at least pretend to justify its actions with the surge in gold price, this time with the PM complex dropping, we wonder what excuse the CME will use this time. Initial and Maintenance margins were just increased in everything from 10 Tr Oz Gold Futs, Comex 100 Gold Futures, Comex Miny Gold and Silver, E-mini Gold and Silver, Comex 5000 silver futures to Silver trade at settle. Also added were Copper, Iron Ore, propane, butane, and other nat gas. Most notably, and confirming that the administration and the money printing authorities are terrified by the surge in crude, the CME also hiked margins in various refined products and coal. The official scramble to "contain" the aftermath of Bernanke's lunacy is accelerating. We wonder when REDI, Prime Brokers and E-trade will comparable collapse purchasing margin for stock trading accounts. Of course, as with all other such superficial market interventions, the impact is shallow and is overrun in a matter of days.
And no...there was absolutely no leak this time. We promise.
-END-
Please note that the raising of margin requirements came after huge raids and the price of these precious metals had been hit pretty hard. You generally raise margins when prices are reaching their pinnacle not when they have fallen off. The higher margins would have hurt our bankers in the pocket book as the total short position was getting quite high. The object of the exercise was to get a huge downdraft in the price as the bankers were getting quite desperate especially in silver. Wait until you see the open interest and you can judge for yourself..the exercise failed miserably.
Gold closed on Friday, down $5.50 to $1341.00 Silver closed down only 4 cents to $2745 much to the chagrin of our bankers. The attempted downdraft failed due to the heavy purchase of physical metals around the world. Many are starting to see the total disconnect between the paper silver and gold world from the real physical world
Let us see how things fared over at the comex yesterday.
The total gold comex open interest fell marginally by 3229 contracts to 578,484. The open interest has fallen from the very low 600 thousands to 578,000 with a drop of over$ 80.00 in gold price. The bankers needed a much larger cleansing of open interest in the gold complex.
The front options delivery month of January saw its open interest fall from 27 to 14 for a drop of 13 contracts. The deliveries on Thursday was 5 so we somehow lost 8 longs for no apparent reason. The all important front delivery month of February saw its open interest fall marginally from 244,371 to 225,141. First day notice is a week away and I will be watching this closely for you. The estimated volume for Friday was a rather robust 191,067. The confirmed volume on Thursday, the day of the monstrous raid was a huge 301,125. The banking heroes certainly had their fun supplying this massive un-backed paper.
In silver, the total open interest fell ever so slightly from 136,552 to 135,841 for a drop of only 711 contracts. The bankers knew this already by 4 pm Thursday. They called on the CME to raise margin requirements in the hope that they could be bailed out. They failed miserably as the fall in price of silver was tiny. The front options delivery month of January saw its open interest rise from 25 to 65 for a gain of 40 contracts. On Thursday, we saw only 17 deliveries so mysteriously we gained some options that were exercised for physical metal. The front delivery month of March saw its open interest remain resolute at 71,722 dropping only 241 contracts. The estimated volume yesterday was quite small at 68,916. The confirmed volume on Thursday was extremely high at 102,818.
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