Will the COMEX Manipulation Ever End?

Jim SinclairThe headline above echoes a popular question asked by all who suddenly realize gold and silver prices have been manipulated on the COMEX. No less an authority than Jim Sinclair (of JSMineset.com) answered this query Monday, June 8, 2009:

You always offer me, among the many other lamentations in your communication, the fear that gold and the dollar will always be manipulated to withhold true pricing.

My answer is manipulation only works in the direction anything wants to go in the first place, which gold and the dollar have so far proven correct. Step back and from the day to day ticks and look at the big picture.

The problems out there are so big that no central bank, treasury or group of Banksters anywhere on the planet can afford to handle them. Right now if it were not for the charisma of the new Administration things would have unwound completely.

In time, the problems of today’s financial world to which there is no practical solution will overwhelm the manipulation by simple size of money motivated into the gold market and the number of newly created dollars for sale.

The size of the dollar pool is infinite, and the amount of gold is finite. That is the equation which will make Alf right in his take on the price. It only takes a failure of confidence to motivate the equation. This is why I have been trying to give you clear direction free of the fog of emotion and spin in order to protect you.

At every turn the media, government and Banksters have been trying to get you to dump your protection.

Stay the course. Gold is going to save more than your financial position.

Jim Sinclair

Editor’s note: Alf’s numbers are predicting $3,000 to $4,000 per ounce for gold during this next leg up.

Jim has said this move will begin in just a few days, around June 15, 2009.

I say, “Where gold goes, silver will follow at a ratio between 1:16 to 1:75. Silver is the poor man’s gold.”

$3,500 gold implies silver at $47 (1:75) to $219 (1:16).

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Reader Asks, “What’s So Hard About Busting COMEX?”

Scott's Soapbox

Here’s a good question from a reader, “Mike“:

Scott,
I have been following your website for some time along with Sinclair and enumerable others. I think you do a great job and I find your musings incredibly infromative. I’ve never traded futures on the comex but this whole comex cracking/failure to deliver thing puzzles me a great deal.

As best I can tell, if someone wanted to bust the comex couldn’t they just go long an unlimited amount of futures and then just ask for delivery?

The total dollar amount of all registered comex inventory is only about $3B which for many wealthy oligarchs, sovereign wealth funds, or potentially hostile countries is but a drop in the bucket. Is there something I’m missing here?

People seem to get excited about the comex potentially failing and it very well could but it seems that it wouldn’t be very difficult if anyone really wanted to. Again, perhaps I’m oversimplifying but I think getting a clear understanding is very important so people aren’t mislead in their understanding of the process and in any investment decisions regarding the precious metals skyrocketing if and when the comex collapses.

By the way, I am incredibly bullish on both monetary metals and am a firm believer in abolishing the fed, a return to sound money, etc., etc. etc. I’d love to hear your thoughts on this issue when you have a moment as it would probably be educational for me and many other of your readers.

Thanks so much and keep up the great work,
Mike

watermelons smashed 120x84Mike, here’s my take on it FWIW:

I agree, theoretically it shouldn’t be all that hard to crack COMEX open like a ripe melon. Like you say, it’s a relatively small market.

How small? As of yesterday, June 3, 2009, COMEX reported a total silver inventory of 120,879,235 oz. So, 121 million ounces at $15.92/oz works out to $1.9 billion.

[/begin conspiracy rant]
Chump change when the “govmint” is throwing around trillions. Geez, remember how the “govmint” gave JPMorgan $30 billion for taking over failing Bear Stearns? Monday, March 17, 2008 was the FIRST business day JPMorgan assumed and expanded Bear Stearns’ COMEX silver manipulation. [link] JP Morgan is almost solely responsible for the COMEX silver manipulation, and they’re funding it with money given to them by your “govmint”.

Oh, BTW, do you remember when silver hit its recent 28+ year high?

Monday, March 17, 2008,  you say, the EXACT SAME DAY JPMorgan took over the COMEX silver manipulation from Bear Stearns? What a coincidence…the price has been beaten down visciously ever since.
[/end conspiracy rant]

So, yes, if you know someone who’s pro-freedom and anti-bankster with a spare $2 billion* they’d have a shot at getting it done.

But normally there’s a problem with doing something like this. You can’t just go out and BUY long futures contracts: there has to be someone else willing to take the other side and SELL short. The COT report (Commitment of Traders) tells us how much JP Morgan’s willing to bet on shorts: right now it sits at 235 million oz.

prince-charming-v2smYes, you read right. JPMorgan is short DOUBLE the entire COMEX silver stockpile. Guess it won’t be hard to find someone to take the other side of your long bet!

BUT WAIT! YES! Now you’re catching on! The very fact that there’s 235 million ounces SHORTED out there right now means SOMEONE(S) ALREADY MADE THE LONG BET as well.

Are you getting this? While you (and any normal, rational human who can fog a mirror) would think all you’d have to do to bust COMEX is make a long bet for the ENTIRE COMEX inventory, you’d be wrong. It’s been tried before AND IT’S BEING TRIED RIGHT NOW. But JPMorgan just keeps making a bigger SHORT bet.

How can they do that?

Ever play poker? Say you’ve got more chips than everyone else at the table. What the hey, let’s make that more than everyone else COMBINED at the table. Let’s also pretend you’re arrogant and cocky ‘cuz your rich uncle is standing behind you, ready to replenish your supply of chips. And, boy oh boy, is he loaded. (We’ll call him your good ol’ Uncle Sam.)

What happens when you’re dealt a crappy hand? Fold?

HAH!

Bluff your way to a winning hand, up the ante, RAISE, RAISE, RAISE. As long as you can outspend ’em all you got a shot at the pot.

bad poker handYou see, Mike, JPMorgan knows silver is going north like Santa on Dec 26th. Their silver hand absolutely sucks. But, our “govmint” gave ’em a $30 billion grubstake to keep a lid on silver. As long as silver is down, the dollar looks solid and the sheeple won’t panic. [See: JPMorgan Is Fed’s Fair-Haired Golden Boy]

And, so far, JPMorgan knows everyone holding a long position is NOT paid up; they’re LEVERAGED. If JPM can knock silver down a buck the longs’ll get whacked with a big margin call. If they can’t cover, they lose. When the whacked longs lose, their emergency exit pushes the silver price down some more. That causes more margin calls for the longs, pushing the price further down, et cetera, et cetera, et cetera, ad nauseum.

So far the longs (“us” not “U.S.”) have lost each time. But let me ask you this: can a guy win a poker championship with nothin’ but bad hands and solid bluffing?

Would you bet your retirement, your country, your currency, your very physical safety on the guy NEVER having his bluff called and winning EVERY time?

I, for one, want a place at the table when his luck runs out. That’s why I don’t trade my silver, why I have only bought silver since 2005, and why I never sell. I have all the silver I ever bought, except for that which I’ve given away to help people [If You Have No Silver I’ll Give You Some of Mine].

* So, can a guy step in and bust COMEX for $2 billion? Hmmm, sure, futures are leveraged so maybe you could do it for less. In an honest market (#snicker#) 1/10th of $2 billion oughta do it. BUT JPMorgan’s used those nasty margin calls to flush out the longs before. Guess you’d better have the full $2 billion to do it.

But wait! It ain’t enough to bet the entire COMEX stockpile long. Remember, JPMorgan’s betting DOUBLE the entire stockpile. If you wanna call ’em I guess you better pony up about $4 billion.

But wait, again! Who says JPMorgan won’t short even more? How MUCH could they short? $8 billion? $16 billion? Gee, wouldn’t the CFTC step in at some point and declare a manipulative short position and stop the madness?

NO.

[/begin conspiracy rant]
You see, the chairman of the CFTC sits on the president’s Plunge Protection Team [link]. He’s automatically in on the manipulation. If it makes him squeemish heading up a dishonest, deceptive “watchdog” organization he can just quit. Oh wait a minute. It does look like turnover’s been a problem at the CFTC Chairman position:
2005: Sharon Brown-Hruska
2006: Reuben Jeffery III
2007: Walt Lukken
2009: Michael V. Dunn
2009: Gary Gensler

Hmmm, maybe they do have a conscience. At least a small, easy-to-kick-around, Jiminy Cricket one.
[/end conspiracy rant]

So, NO, the crooked CFTC won’t stop JPMorgan’s silver manipulation, you see, because they’re backing it. So, if you’re going to bust COMEX you’d better have enough multi-billions on hand to call JPMorgan’s bluff. And, you’re not just going up against JPMorgan, but the guy who’s bankrolling them: dear ol’ Uncle Sam.

Maybe it’d be easier to replace CFTC leadership with an honest guy. Maybe you’d also have to replace at least 51 Senators. Maybe throw in 222 Congressman (you can keep Ron Paul, maybe Dennis Kucinich.)

Or, maybe you just wait for the US dollar to finally collapse. Once there’s no dollar to protect, there may be no reason to keep a lid on gold and silver. Actually, now that I think about it, since the Shadow Powers want a dollar collapse anyways (to cripple the U.S. and make way for greater global gov’t) maybe they already plan to trigger it by abruptly stopping the manipulation.

USDX 2009-06-04

Hmmm… maybe the dollar dive has already started…

Have you noticed how nervous the Chinese have gotten in the past few weeks? How Brazil no longer uses the dollar for trade. How Russia now prices oil in rubles not dollars? How the Chinese laughed at Treasury Secretary Geithner last week when he said “the dollar’s strong.” [ Read Why The Chinese Laughed At Geithner by former Assistant Secretary of the Treasury Paul Roberts.]

And, finally, the last time COMEX had manipulated the silver price below its cost of production a couple brothers from Texas tried their hand at busting COMEX by going long on silver and preparing to TAKE PHYSICAL DELIVERY of 192 million ounces. What happened? The CFTC crooks villified them.

The Hunts shook the lying bankers to their boots – to the point where intervention by the Fed, Treasury, and the Defense Department were warranted – merely by asking for delivery of the 192 million ounces of silver they’d been promised. This was not a “cornering” of a market; it was the attempt to enforce a contract, same as you’ve got with your landlord or bank.

Read “The Hunts Tried to Corner the Silver Market” Myth.

Please protect yourself and your family. Don’t cash in your (gold and silver) insurance!

Scott

More:
COMEX Crimes: Your Tax $ at Work
JPMorgan Is Fed’s Fair-Haired Golden Boy

Is COMEX Cracking? Finally?

Many of us, myself included, thought COMEX silver might go bust last December. It inspired me to start tracking COMEX silver deliveries, thinking shortages may show up there first. [Vaporize COMEX countDOWN]

COMEX fooled me. [Gunther Asks If I’m an Idiot]

Most “deliveries” were not physical deliveries depleting COMEX’s metal reserves. They were really just moving a pile of metal from one bank’s hoard to another. So, I changed to just charting weekly changes in COMEX gold and silver inventory. [Charts: COMEX Gold & Silver] Gold inventory dipped through December, then recovered nicely. Silver, on the other hand, dipped and stayed, mostly, down.

Hmmm.

Now, no less an expert than Ted Butler [hero] is saying today:

tedbutler_sm“What’s somewhat ironic is that there was a tremendous amount of discussion over the past few months about backwardation and potential delivery troubles in the past December contract. None of those threats came to fruition.

“Now, with very little public discussion or warning, delivery tightness and backwardation seem to have arrived.

What’s this “backwardation” Ted’s talking about? 

“The main micro sign that we may be entering into a wholesale silver shortage is the appearance of an inversion or backwardation on the COMEX. For the past week, the nearby current delivery month of March has closed at a premium to the next major delivery month, May.

“What this means is that buyers are willing to pay more to get immediate delivery of wholesale quantities of silver. It means wholesale silver is “tight.”

It sounds like things may be heating up in silver…

See also:
COMEX Crimes: Your Tax $ at Work

COMEX Crimes: Your Tax $ at Work

tedbutler_smCheck out Ted Butler’s (one of my heroes) latest column. He asks some great questions… (I’ve edited together some excerpts below.)

BTW: Notice how you can never buy silver or gold at the spot price anymore? It’s always at least 15% above spot price IF you can find it?

Remember this: before March 2008 (when the events described below happened) silver was easy to get and you paid just 18 cents or so over spot. Now the US Mint is rationing gold and silver Eagles, they’ve halted production of fractional Gold Eagles, and silver & gold carry delivery lead-times measured in weeks or months. You can thank the government’s PPT (Plunge Protection Team) for this mess.

Q: How did we get to the point where a big U.S. bank, most likely JP Morgan Chase, has come to manipulate the silver (and gold) market?

Q: Why are U.S. banks allowed to speculate in commodity markets at all, when they have caused such havoc already with their failed trading in just about everything they touched?

Q: Didn’t they do enough damage with subprime mortgages and credit default swaps?

Q: Why should taxpayers subsidize bank commodity speculation and manipulation?

Q: When did the regulators stop enforcing the law and switch over to defending the criminal element?

Dead Bodies
As bad as the lack of justice for past misdeeds is to the public psyche, there is something even worse: regulators ignoring an obvious crime in progress, especially when the evidence of that crime is readily available and published by the regulator [CFTC] itself.

The CFTC is on their third silver investigation within five years, while at the same time reporting that the short concentration has grown to the highest level in that time. This is akin to tripping over and not seeing the dead body in a murder investigation.

The Crime: In Progress Now
market-riggingAs I write this article, the big short(s) is attempting to rig the silver and gold markets lower to trip off technical fund selling below the 50 day moving averages. Will that attempt succeed? I don’t know. What I do know is that this is market rigging of the highest order. I also know that the big short is becoming increasingly isolated and more learn of the manipulation daily. That’s good for us, bad for them.

In the case of silver, while the manipulation has been ongoing for many years, the criminality kicked into high gear when JP Morgan took over Bear Stearns, at the government’s request, last March [2008].

Who Started the Crime?
Bear Stearns was the holder of the large concentrated short silver position and it was inherited by Morgan. In JP Morgan’s defense, it does not appear they initiated the concentrated silver short position. It was excess baggage from the forced takeover of Bear.

The Treasury Department and Federal Reserve backstopped Morgan and agreed to hold them harmless for financial losses and for criminal involvement in the silver manipulation. The financial system was weak enough at the time of Bear Stearns’ failure, that a blowup in silver had to be avoided. JP Morgan was given the go-ahead to “manage” and control Bear Stearns’ silver short position directly by the Treasury.

JP Morgan: Above the Law
prince-charming-v2smWhile it is understandable that JP Morgan would accept the Treasury Department’s request, and that the avoidance of a potential financial panic is always a good thing, panics are short-term events. A year has now passed, and the manipulation is still in force, stronger than ever.

What started as a temporary remedy for a short-term emergency, has evolved into a continuance of the long-term silver manipulation. This is wrong on every level. The U.S. is a nation governed by the rule of law. No one is above the law. Not the Treasury Department, not JP Morgan, not the CFTC. If my findings are accurate, then the passage of time indicates that there is potential real criminality here.

Why Does the CFTC Look the Other Way?
As far as the CFTC, it is a weak agency, incapable of over-ruling a directive from the Treasury Department. They had no choice but to allow the silver market to continue to be manipulated by allowing the transfer of the concentrated short position from Bear Stearns to JP Morgan.

Besides, the CFTC already dropped the ball by allowing the concentrated short position to come into existence at Bear Stearns in the first place and denying for years that the silver manipulation existed. They had no choice but to go along. They couldn’t stand up to Treasury if they wanted to. [Editor’s note: the CFTC is actually a member of the Plunge Protection Team (created by Executive Order # 12631) whose stated purpose is to manipulate markets. [link] See also Bailout Charade: The Hidden Reason Why]

Will It Ever End?
So how does this end, or can JP Morgan, Treasury and the CFTC allow this crime to continue indefinitely? No one has a lock on the future, but there is no easy way out for them. This cannot be resolved quietly or orderly, but it must and will be resolved.

Even if the manipulators don’t blink first, the growing shortages in the wholesale physical market will bring this scam to a head. That’s why you must own silver. [more]

Related:
JPMorgan Is Fed’s Fair-Haired Golden Boy
“Federal Reserve”: NO On Both Claims
CFTC to Investigate Silver Manipulation

“The Hunts Tried to Corner the Silver Market” Myth
Bailout Charade: The Hidden Reason Why

Sinclair Sez “Help Me Bust Comex”

Jim Sinclair, leading gold expert and hero, asks all of us with the means to “Take A Stand Against Comex Gold Price Manipulation.”

His letter from this evening:

Dear Friends,

I, like yourself, am fed up with the gold bank’s ownership of the gold price via paper instruments. Therefore I respectfully ask those that can afford it to purchase as many Comex contracts as you can afford to take delivery of and do so.

Accept my assurance that I will take delivery of Comex 100 ounce bars on every delivery month from this day forward.

Respectfully yours,
Jim

How close is COMEX to going bust? Answer: Vaporize COMEX CountDOWN

John Embry has warned:
Warning: COMEX May Default on December Gold 

Bob Coleman is doing the same for silver:
This Guy Plans 2 Kill “Paper” Silver

You can check COMEX deliveries online:
How 2 Track COMEX Deliveries 
Gold: Is This It, NOW?
Attack of COMEX Gold & Silver