Butler: “Shocking Liquidation in Silver”

From the latest Ted Butler commentary. Very bullish and possible silver turnaround imminent:

I am shocked with the extent to which the big shorts have gone to liquidate every possible long silver and gold position held by traders in the non-commercials and non-reportable categories.

In fact, the big shorts have even managed to recently liquidate some big long silver positions by other commercials (the raptors), held in the form of long silver/short gold spread positions. About a month ago, I noticed an unusual liquidation of raptor long silver positions over a two week period, in the amount of around 8,000 contracts (40 million ounces). What made it unusual was that I had never seen the raptors (the smaller traders in the commercial category, other than the 8 largest) liquidate long positions on a decline in price.

For a while, I couldn’t figure out why many different traders would liquidate positions held for a long time so suddenly. Then it dawned on me (in a conversation with Izzy) that it had to be silver/gold spread liquidation brought about by changes in margin and/or margin collateral requirements.

These changes were dictated by the big shorts themselves, who undoubtedly cleared the accounts for the raptors. For the first time, the raptors were forced by the big shorts (read JP Morgan) to liquidate long silver/short gold spread positions.

Talk about a clean-out of silver long positions.

The most recent COT report, as of the close of business November 25, indicated another shocking liquidation of long silver/short gold spreads, this time by those held in the non-commercial category. Roughly 15 different non-commercial traders suddenly liquidated at least 5,000 additional long silver/short gold spreads.

I would submit that the only way you could get 15 separate accounts to act in unison would be if you forced them to act. And just like the earlier forced liquidation of raptor spread positions, the only way you could force them was by radically altering margin collateral requirements. Who decides to radically alter margin collateral requirements is the prime broker who holds and clears (guarantees) the accounts (read JP Morgan).

What this means is that new and unprecedented efforts have been made to forcibly liquidate the long silver holdings of any account not held by the big shorts.

Those shorts are resorting to tricks never employed before.

The COTs were already wildly bullish before this blatant silver/gold spread forced liquidation. What comes after wildly bullish? All this should make you think.

Why is the big short so intent on liquidating every long position he does not hold?

The answer should be clear. Because he knows the real story in silver, and that the price will soon reflect that reality. He is determined to buy as much silver as possible, through any means available. So should you. The fact that the big short is forcing as much silver liquidation as possible, should harden your resolve to own silver.

[link to article]

◊◊◊◊ Now: Gold @ $772.50, Silver @ $9.53, USDX @ 86.24 ◊◊◊◊
◊◊◊◊ Now: DJIA 8,523.59


One Response

  1. As promised they whacked the pms again
    Even a weak dollar now is reason to sell
    Stocks up sell gold
    Stocks down sell gold

    What a total joke

    They will destroy the pms all the way to Dow 3000 as the dollar will launch to at least 100 and long bonds will be under 1%

    Why does anyone bother taking on the creatures number one enemy?

    One would have a better chance of survival covered in blood in shark invested waters.

    The bastards will NEVER stop selling.

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