Who Killed Silver? The Smoking Gun

The biggest question in recent weeks has been “Who killed silver?” Who was responsible for the 38% price drop in silver? Our hero, Ted Butler, looked at the COT report just out and has revealed the answer in his latest column.

Excerpt:

For years, the data contained in the weekly Commitment of Traders Report (COT), issued by the CFTC, have indicated that several large COMEX traders have manipulated the price of silver and gold. For an equal number of years, the CFTC has reluctantly responded to public pressure over this issue with blanket denials of any wrongdoing.

The recent widespread shortage of silver for retail purchase coupled with a price collapse appears to have shaken these analysts’ confidence that the COMEX silver market is operating ‘fair and square.’

For any remaining doubters that COMEX silver and gold pricing is manipulated, the following CFTC data should be considered. This data is taken from a monthly report issued by the CFTC, called the Bank Participation Report.

Here are the facts.
As of July 1, 2008, two U.S. banks were short 30,995,000 ounces.
As of August 5, 2008, two U.S. banks were short 169,025,000 ounces, an increase of more than five-fold.

This is the largest such position by U.S. banks I can find in the data, ever.

Between July 14 and August 15th, the price of COMEX silver declined from a peak high of $19.55 (basis September) to a low of $12.22 for a decline of 38%.

Is there a connectionbetween 2 U.S. banks selling an additional 138 million ounces in a month, followed shortly thereafter by a severe decline in the price of silver? That’s equal to 20% of annual world mine production or the entire COMEX warehouse stockpile, the second largest inventory in the world. How could the concentrated sale of such quantities in such a short time not influence the price?

What real legitimate business do 2 U.S. banks suddenly have for selling short such quantities of speculative instruments over a brief time period? Do we want banks to be engaging in this type of activity? If the manipulation was not successful, would U.S. taxpayers be called on to bail out yet another bank speculation gone bad?

Do the traders who lost money in the recent price collapse of silver have a reason to believe that their money is now in the pockets of these two or three U.S. banks? If so, do they have recourse?

The data in the Bank Participation report is so clear and compelling that it is hard to conclude anything but manipulation. It is beyond credulity to conclude other than two or three banks caused one of the most severe price collapses in precious metals history. The CFTC has a lot to answer for as the regulatory agency responsible for preventing this type of blatant manipulation.

No, the CFTC will NOT name the two banks in question.

◊◊◊◊ Now: Gold @ $827.40, Silver @ $13.48, USDX @ 76.75 ◊◊◊◊
◊◊◊◊ Now: DJIA 11,598.10

Is the Silver Bottom In?

One of our heroes, David Morgan, A.K.A. “The Silver Investor” was asked this question earlier today. His response:

I will put my neck out and state that as of today, it seems the $12.50 low achieved in Hong Kong a few days ago is THE BOTTOM. As stated in earlier Morgan Reports you should have the ability to buy through the end of September. I am currently in this position myself, meaning I have bought some top tier and a few juniors the past several days, but still have some cash available.

He was also asked if this would be a “V” bottom and move back up quickly, or if it’ll take time to form a bottom. He said:

Frankly, it is too early to know but the odds favor it will not be a V bottom, although this would certainly be my wish. Normally, when this much damage has been done to the price it takes TIME to repair the damage and rebuild. However, it is very difficult to predict since the physical demand for both gold and silver is so strong at these low prices, the market may bounce back strongly.

At the risk of looking trite, the adage of “No pain–No gain” certainly applies to us. The pain in this market has been prolonged and significant yet as stated in the last update to you, what other sector provides the protection and potential for large capital gains over the next 3-5 years?

◊◊◊◊ Now: Gold @ $829.10, Silver @ $13.58, USDX @ 76.68 ◊◊◊◊
◊◊◊◊ Now: DJIA 11,605.92

Found Some Silver Eagles

I know some of you have been looking for Silver American Eagles and can’t find them. Here’s a place that still has some at a competetive price. I have not ordered from them yet, but they do come recommended by Jason Hommel, one of our heroes.

Wexford Coin
Wexford Coin Price Quotes

The link takes you to their live quote page. There is a $10,000 minimum order EXCEPT for the 500-count mint green box of Silver Eagles. Their quotes (unlike Colorado Gold, APMEX and most others) are said to include shipping.

Wexford is currently asking +2.52 over spot for eagles, shipped.
This is more than Don Stott at Colorado Gold (he’s +2.23 over spot but can’t get eagles right now).

So, even though it’s a bit more over spot you at least can get them at these low silver prices. Or, you could wait a while to see if others get them back in stock and hope the price doesn’t rise the +29 cents more Wexford charges over spot.

Here’s a screenshot of Wexford Coin’s quote page (IT DOES NOT UPDATE):

To order, contact David at Wexford Coin David@wexfordcoin.com or 877-855-9760.