Gold/Silver Manipulation Over in 30 Days?

If you’ve been a precious metals investor for more than six months you’ve heard about the rampant price manipulation on COMEX. (COMEX sets the cash price for gold and silver through its daily futures and options trading activity.)

Many of us have been waiting for the illegal manipulation (run primarily by Bear Stearns until March 2008, then JPMorgan Chase since then) to end for over two years.

Adrian Douglas thinks it may be over in as little as 30 days.

At lemetropolecafe.com he writes (edited for length, link):

BIG MONEY MOVING INTO COMEX GOLD & SILVER CALL OPTIONS

In November 2005 when gold was trading about $450 I predicted the mega-move in gold up to $720/oz by noticing a very large build-up of call options in the HUI component shares. [link]

In August 2007 I identified a massive Gold call option build-up in the COMEX DEC 2007 contract and predicted a big gold move. [link] Gold was trading at $660/oz at the time and ran up to over $1000/oz by March 2008.

It just recently came to my attention from two different confidential sources that JPMorgan and Goldman Sachs have been buying large amounts of Calls in gold and silver. This made me put on my gumshoes and take a serious poke around the COMEX option open interest once again.

Figure 1 shows the cumulative Open Interest across all strike prices for the COMEX Gold Call positions and the Put positions for the JUN 09 options.

comex-au-oi-june-2009
Figure 1

The ratio of Calls to Puts is 1.81 so Bulls outnumber Bears dramatically. What is also remarkable is the amount of open interest. For example, 100,000 contracts would be in-the-money if the gold price runs to $1,250/oz in the next 30 days. This is an astounding amount of option OI considering the open interest in all the futures contracts stands at only 345,000 contracts!

Let’s take a look at Figure 2 which is for DEC 2009.

comex-au-oi-dec-2009
Figure 2

The bets by bulls outnumber those by the bears by a 2.3 to 1 ratio which is even more bullish than for JUN 2009. The Total Call option interest is 113,663 contracts which is very similar to JUN 09. Furthermore if gold is trading at around $1600 by DEC then 100,000 contracts will be in the money!

I consider option players highly sophisticated speculators.
Such large bets are likely being made by some large money interests who are buying out of the money options BEFORE going into the futures market. Buying long futures in large volumes will rapidly drive up the gold price but the massive open interest in the Call Options then allow access to much more futures contracts at the same price by exercising the options and then perhaps taking delivery of the gold. This is bolstered by sources revealing that JPM and GS are buying in quantity. So on the part of JPM this is likely a ploy to try to cover a chunk of their massive short position.

Let’s now look at silver.
Figure 3 shows the cumulative Open Interest across all strike prices for the COMEX Silver Call positions and the Put positions for the JUL 09 options. The ratio of Calls to Puts is 1.80 so Bulls outnumber Bears by 80%. What is also remarkable is the amount of open interest. For example, 18,800 contracts would be in-the-money if the silver price runs to $25/oz in the next 60 days. This is an extraordinary amount of option OI considering the open interest in all the futures contracts stands at only 94,000 contracts!

comex-ag-oi-june-2009
Figure 3

Figure 4 shows the cumulative Open Interest across all strike prices for the COMEX Silver Call positions and the Put positions for the DEC 09 options. The ratio of Calls to Puts is 1.68 so Bulls outnumber Bears by 68%. Again the total Open Interest in Calls is high at almost 25,000 contracts when the Open Interest in all futures currently stands at 94,000 contracts.

 comex-ag-oi-dec-2009
Figure 4

I conclude that smart money is being placed for a massive rise in the gold price in the next 30 days and silver in the next 60 days (which probably means within 30 days for both metals) and again by December.

Only sophisticated traders tend to be in the precious metals option market so when there is a huge build up betting on a particular direction that is typically a directional indicator as I have shown was the case for the last two big moves in the precious metal bull.

The flat contango in gold and silver suggests there is a shortage developing of precious metals for delivery. We know that two large banks hold almost 100% of the commercial net short position. They need desperately to cover their exposure if the market is about to make a big move.

It looks as if that is precisely what is happening.

Adrian Douglas
April 29, 2009

Vaporize COMEX countDOWN

COMEX gold & silver price manipulations are bashing precious metals investors, miners and shareholders. If COMEX gold and silver inventories become depleted the price fixing will stop and the precious metals will rise to their true levels.  

ComexSilver_2009-09-08

 

ComexGold_2009-09-08

Inventory levels are expressed in millions of ounces: For example: gold hovers around 3 million oz; silver at 70 million oz.

Jim SinclairWill Increased Delivery Demand Bust the Gold Warehouses?
Jim Sinclair: “I have been speaking with many people this evening who have taken gold delivery. What I am hearing is not impressive. When examined closely it is a paper system that may have fallen badly behind as gold moved ahead since 2001. There is a possibility the system is antiquated and more FUBAR than anyone, even the warehouses themselves, realize.” COMEX Warehouses in Trouble?

Jim SinclairWill the Manipulation of Gold & Silver Prices Ever End?
Gold and silver price suppression has been going on for years now, as documented by GATA and Ted Butler. Who’s behind it? Evidence points to JPMorgan Chase using massive (and illegal) short-selling on COMEX, at the bidding of the president’s Plunge Protection Team. Now, Jim Sinclair answers the question on everyone’s mind: Will the COMEX Manipulation Ever End?

watermelons smashed_70x69Crush COMEX Like a Ripe Melon?
A perceptive reader, Mike, is puzzled by all this talk about busting COMEX. Why hasn’t it happened yet? Does the fact that it hasn’t happened yet mean it’s likely it’ll never happen? Are we silver bugs simply doomed to suffer? Reader Asks, “What’s So Hard About Busting COMEX?”.

cftc-appreciation-medallion-front_70x68

COMEX Not Vaporized But, Maybe, Smoldering?
COMEX silver inventory didn’t vaporize last December, but it was knocked down a bit. Now Ted Butler is saying “we may be heading into a wholesale silver shortage.” I wonder Is COMEX Cracking? Finally?

 
Get Physical: Another Knock Against ETFs
David Morgan reports Barclays has changed SLV prospectus wording from “Silver Bullion” to just “Silver.” Does this sound like not all their silver is bullion? If it ain’t physical silver, what is it?  Silver ETF Isn’t 100% Real
 
 
 
Data Sources:
COMEX precious metals warehouse stocks:
gold: http://cmegroup.com/trading/energy-metals/files/Gold_Stocks.xls
silver: http://cmegroup.com/trading/energy-metals/files/Silver_Stocks.xls
COMEX precious metals daily delivery notices: http://cmegroup.com/trading/energy-metals/files/delivery.pdf
Link to master list of reports: http://www.cmegroup.com/trading/energy-metals/nymex-daily-reports.html 
Link to most recent clearing info (first & last notice dates): http://www.cmegroup.com/tools-information/most-recent-clearing.html or try this direct link
Link to delivery dates through 2015: http://www.nymex.com/gol_fut_termin.aspx

This Guy Plans 2 Kill “Paper” Silver

Bob Coleman, a physical gold and silver bullion fund manager in Idaho, says he’s ready to take on COMEX and break the back of “paper” silver. He has sent legal notice to the CME/COMEX and CFTC (the regulators overseeing COMEX trading) warning them of his intention to take physical delivery of  between 1 million and 5 million ounces of silver per month.

His letter, in part. (Click it to read more.)

Bob talks about his intentions, “Our programs are determined to follow the rules of the exchange and take physical delivery of their inventory for as long as possible. The structure of our programs and vaulting facilities are very unique and have been designed to fully insure and segregate all physical precious metals. The storage is independent from the financial and bullion dealer system. We specialize in providing private storing, safeguarding, and viewing of your assets. We have made arrangements with armored transportation carriers to pick up, transport, and store the metal to many of our available vaults.”

If Bob follows through, and you and I should hope he does, his actions could finally break COMEX’s back and stop the illegal manipulation of the silver market. If industrial users of silver are unable to “get physical” expect the price to explode as they scramble to meet their needs.

My aside: It is no secret that the “paper” price of silver and the “physical” price of silver no longer match up. COMEX has “paper” silver pegged at $9.36/oz as I write this, but it is impossible to purchase “physical” silver at this price. eBay has become a more accurate indicator of silver’s true price. (Click the image to get a list of the most recent sale prices of Englehard & Johnson Matthey 100 oz bars on eBay.) Current eBay pricing is running $13.01/oz to $14.92/oz.

Let Bob know you support his efforts! Contact him at 208-468-3600 or at profitsplus@cableone.net.
Go, Bob, go!

Let’s join Jim Sinclair and Bob Coleman and BUST COMEX gold and silver!

Vaporize COMEX CountDOWN

Sinclair Sez “Help Me Bust Comex”
Attack of COMEX Gold & Silver
Warning: COMEX May Default on December Gold
How 2 Track COMEX Deliveries
Gold: Is This It, NOW?

◊◊◊◊ Now: Gold @ $733.10, Silver @ $9.36, USDX @ 86.37 ◊◊◊◊
◊◊◊◊ Now: DJIA 8,378.95