The Ultimate Confirmation [THE SILVER FIX SMOKING GUN]

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by Ted Butler, via SGT

I’ve embraced one central theme for the past 30 years – that the price of silver has been manipulated lower on the COMEX. For a good part of those three decades I’ve exerted an intense effort in analyzing the actual supply/demand fundamentals of silver, including production/consumption trends and the resultant annual balance between the two, inventories, investment demand, etc. Those fundamentals indicate that the price of silver must increase dramatically in the future, making the manipulation both the cause and explanation for the continued low price.

While I still follow the actual fundamentals of the metal closely; increasingly, I write less about their influence on the price. Why shouldn’t I? After all, I can’t remember an occasion over the past few years where the actual fundamentals had any effect on price; silver (and gold) prices are set on the COMEX when speculators adjust futures positions. Yes, the fundamentals will dictate the future price of silver, but they have zero influence on short to intermediate term pricing. That’s why I focus so closely on COMEX positioning.

When I step back, it is truly astounding how the acceptance that silver and gold prices are manipulated by COMEX trading has grown from the levels of five or ten years ago. Go back twenty or thirty years and you could count the number of observers who believed that silver or gold was manipulated in price on one hand. Despite the growing acceptance, not everyone believes silver is manipulated in price yet, but it occurs to me that we are moving towards total acceptance as new facts are uncovered.

The most compelling facts proving that silver is manipulated in price include the data showing the COMEX has become an exclusive speculative venue where managed money speculators vie against mostly bank speculators called commercials and the fact that COMEX silver has the largest concentrated short position of any commodity. Together, these two facts prove beyond question that silver is manipulated in price. Now a new fact has emerged that ties those two facts together and illustrates and proves the manipulation like never before.

I recently observed that JPMorgan and other members of the 4 largest short sellers on the COMEX had never taken a loss on any newly added short position in COMEX silver futures over the past seven years. Let me clarify that statement; JPMorgan and other commercial traders in the big 4 have never bought back a silver short sale at a higher price than the price they first sold short at (for a loss) and only and always have bought back silver short sales at lower prices than originally sold (for profits). In other words, the four big shorts in COMEX silver have a perfect trading record – all profits, no losses. (Of course, if a managed money trader enters into the ranks of the big 4, that trader will likely incur losses – I am only speaking of the biggest commercial traders).

In baseball terms, this is the equivalent of a Major League pitcher throwing nothing but perfect games for a full season or a batter hitting 1.000 for a whole year. Or in other words, a statistical impossibility. Think I’m overstating the case? Well, just imagine anyone entering into inherently dangerous trades (shorting the most undervalued asset of all) several times a year, year after year, and always booking profits and never a single loss. Do you think you or anyone else could do that? Yet JPMorgan and the other three largest commercial traders have done nothing but that in COMEX silver.

The proof of this resides in the data from the CFTC in the concentration section of the COT report. Every time the big 4 have increased their concentrated short position in COMEX silver, which only occurs on rising prices, they have never bought back those short sales on higher prices than originally sold, only at lower prices.

The most amazing aspect to this is that I have been studying this data all along and didn’t really see it. I have commented in the past on many occasions how the big 4 never buy back silver short positions to the upside, only to the downside. In fact, that’s a key core premise of my COT analysis in that whenever the concentrated short position has increased in size, that’s negative for prospective prices and when the position has contracted, that’s usually a good signal for higher silver prices to come. I guess that means even in understanding how the silver market functions, I overlooked putting a glaring feature into proper perspective – JPMorgan and the big 4 as a whole achieved the statistically impossible; never taking a loss.

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