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« Our Economic Future: From Best to Worst Case | Main | Competition Time »
Monday
Jun062011

Comex Physical Silver Drops To Fresh All Time Low Of 28.8 Million Ounces, 3% Drop Overnight, 30% Drop In Six Weeks

COMEX Silver chart 07 June 2011.JPG


This is an interesting 'take' on COMEX Silver withdrawals by Tyler Durden over at zeroHedge.com for your perusal:


When we first started paying attention to the physical ("Registered") silver held in COMEX warehouses on April 20 following the explosion in the silver price, the total amounted to just over 41 million ounces.

As of today, a short 6 weeks later, the total physical silver held throughout the entire Comex complex, has dropped by 30% over that period.

As of close today, the total amount of Registered silver is now 28,773,375 ounces, a decline of 2.9% overnight from 29,636,513. This is due to a withdrawal of physical from both Brinks and Scotia Mocatta, as well as the ongoing reclassification of 438,708 ounces of Registered into Eligible silver over at HSBC (but wait, it will revert back to Registered any moment... we promise).

At this rate of withdrawal and "adjustment", there will be no physical silver left in the entire Comex in about 5 months. At that point, even one delivery intention will send the price of silver to previously unseen levels.

So there we have it, by the time Guy Fawkes night (05 Nov 2011) comes around, things could become a little edgy!

Guy Fawkes

Regarding www.skoptionstrading.com. The stats and the charts have been updated and are as follows:.


Our model portfolio is up 338.11% since inception

An annualized return of 128.07%

Average return per trade of 40.41%

81 closed trades, 78 closed at a profit

Average trade open for 46.27days


sk chart 22 May 2011.JPG



The above progress chart shows our performance when profits are re-invested, however, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today.

Stay on your toes and have a good one.

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Reader Comments (19)

I guess the biggest question is "Why?" Why is all this silver bullion leaving the depository. Do people really want to have physical ownership of the metal or do they not trust the Comex to keep the metal safe?
I don't get it.

June 7, 2011 | Unregistered Commenterdaveydog

Maybe the last few groups will find they miscounted the physical silver and there is nothing left to take posession of... but they'll have a nice piece of paper saying they 'own' thousands of ounces.

June 7, 2011 | Unregistered Commentersilverdog

Although the article makes a bold statement, it does not give us the interpretation of what this means, as Daveydog points out.
Can the writer expand on what HE thinks it means? Can anyone else interpret if this is a buy signal for physical silver, or a sell signal? I can't.

June 7, 2011 | Unregistered CommenterRobert

It would seem that large contract holders are not speculating and settling in cash. Instead they are taking delivery. Why? Because they fully expect the dollar to implode and if there is no silver to deliver later why would they want to settle in cash only to receive dollars they are trying to hedge out of in the first place.

This is definitely bullish for prices down the road, but it threatens a blow-up of the COMEX and that is not a good thing.

June 7, 2011 | Unregistered CommenterPuroman

WHY ??...LIKE YOUR OTHER POSTERS , I AM IN A HOLDING PATTERN !

June 7, 2011 | Unregistered CommenterHA65MPH

I've been watching this since the total number of ounces (eligible and registered together) was more than 500 million. Over the last decade or so, it has steadily dropped. I'm looking forward to the transition below 100 million total. I think at that time, there will be a marked increase in anxiety. This will be an important threshold.

June 7, 2011 | Unregistered CommenterCannonfodder

Guys,

Bullish...as in wildly so. It's pretty simple. Demand is still extremely high, while supply is disappearing. Basic economics.

Somebody wants physical silver...in fact a lot of somebodies want a lot of physical silver. Why? From big picture to small:

1) Because the paper currencies of the world are a colossal fraud and silver is real money. Paper is being converted to metal.

2) The Comex (Crimex) is a colossal fraud. They can't deliver on their promises. There isn't very much silver left in the warehouses. If supplies were plentiful, people wouldn't be scrambling to make sure they got theirs first, but they are. This is a run on the silver bank so to speak. Why?

3) Because people are rightfully concerned that the claims they have on silver in the form of Comex longs or unallocated storage won't be honored. They won't be able to take delivery from the Crimex at some point...or even retrieve their metal from the vault at a bank, because IT ISN'T THERE! There have been many problems with the latter in the last few months. The Powerz That Be are just hoping people with claims on silver don't ask to many queations or actually request delivery. When they do, which they will do at some point, it's game over.

Likely end result: They'll be paid off in cash or the CFTC will change the rules like they did with the Hunts and prevent any buying other than that intended to cover shorts...or there'll be some other shenanigans that result in people holding silver substitutes getting stiffed. Why?

4) It's become common knowledge that JP Morgan and HSBC have massive naked short positions and if any significant number of longs stand for delivery, they're screwed and,if they can't buy them off with cash premiums, as they've been doing, they'll have to raid every known stash of silver out there to try to come up with the goods, which takes us back to #3.

Bottom line: Holding paper promises ain't the same as holding metal, especially when the people making the promises are criminals. The con is being exposed. The run for physical is on.

The orchestrated smackdown last month was a desperate last- ditch effort to cool the interest in this tidal wave of demand for silver. It worked...for now. It was a sleazy bit of business, but hey, it's given us a wide-open chance to accumulate more.

June 7, 2011 | Unregistered Commenterfallingman

We are in the bullish camp, this article tells us that investors are taking delivery and want the metal in their hands. A general distrust of paper is growing and so the demand for the metal will increase, bodes well for the future price of silver.

June 7, 2011 | Unregistered CommenterSilver Prices

Puroman,

Why do you think a blowup of the Crimex would not be a good thing? I'm not challenging you...just asking.

Aside from providing a bonanza for the holders of the physical metal, it would seal the fate of a bunch of crooks and conmen. Those would certainly be good outcomes. Also, anyone dumb enough to have trusted these jokers would receive an expensive education. Learning is good.

Are you thinking of the collateral damage to the economy? If so, Then yeah. Things could get ugly fast.

June 7, 2011 | Unregistered Commenterfallingman

Fallingman,

Your question is perfectly fair. My answer has a number of elements so bear with me...

First, if a "regulated" exchange were to blow up for any reason, let alone complicit behavior in a fraud, extreme damage would be done to investor confidence and the shock would likely be felt the world over. This is a bad outcome even if the exchange management deserves it. Remember, there are exchange members who are perfectly honest and playing by the rules who will also suffer in a failure.

Second, there would likely become a near-term liquidity problem until markets around the globe become able to adjust. For US investors, loss of liquidity nearly always equates to loss of capital. This is obviously bad. So, as you suggest, there is collateral damage to the economy and to innocent investors.

Third, and perhaps most damaging is that the custodians of GLD and SLV as you know are the primary offenders in this market manipulation and we know they are "naked short" multiple millions of ounces. Many experts fear that in a short squeeze (leading to a collapse of the exchange) they will probably raid the stores of the two ETFs in an effort to save themselves. When investors learn of this and try to liquidate their paper positions, a lot of people are going to lose everything.

Ultimately, I suspect that COMEX rules will be adjusted or invoked specifically to prevent such a collapse whereby they simply vacate the requirement to satisfy delivery requests with physical and simply state that they now have a right to settle in cash. If that were to happen, then investors would probably take their business elsewhere and effectively bring about the end of the exchange anyway.

I could go on but you get the general idea behind my earlier comment.

June 7, 2011 | Unregistered CommenterPuroman

Yes. Well said.

Certainly an argument to stick with physical...and the miners. And a warning to those in GLD and SLV.

Thanks for the solid response.

June 7, 2011 | Unregistered Commenterfallingman

Thanks, Puroman. That was a reasonable response and clear. My experience is that the big boys have a lot of cards up their sleeve and they are already preparing for any of the mentioned scenarios to unfold. They rarely lose.

June 7, 2011 | Unregistered CommenterRobert

Its the 'cards up their sleeves' that bothers us - there could be tactics available to them that we have no knowledge of and have never seen before - its hard to prepare for what we don't about. Sticking with gold and silver and quality stocks.

June 8, 2011 | Unregistered CommenterSilver Prices

Silver Prices - thanks for bringing this important info to our attention. I have been watching the price of PAAS eroding lately, supposedly a top notch company, and wonder what is going on, and is it part of some overall more potentially sinister situation as described in some of the posts.
John

June 8, 2011 | Unregistered CommenterJohn Ell

John Ell, I am not specifically tuned in to PAAS and what their balance sheet and margins look like, but the recent price action you describe is not unlike many other silver miners recently: SLW, SVM, EXK etc. In fact, much of the gold and silver mining complex is in the same boat. The stocks have badly underperformed during this Spring's move higher in the metals.

The questions that come to mind are why, and does this portend anything else we should be alert to? I can only guess, but I think that the "speculators" have taken their positions in equities rather than bullion. Bullion is savings; Futures represents investing and hedging; and Equities has been the place for speculation.

Smart money speculators believed the metals moved too high too quickly (especially silver), and they know that JPM is being permitted to move the market as it suits them - so they refused to chase the miners higher... expecting a correction. Now you see why.

That the stocks dropped hard on the correction and that gold stocks fell even though gold bullion held pretty steady suggessts to me that there is another leg down in our near future. The US dollar bouncing out of its 3-year cycle low should be sufficient catalyst to knock them down again. Be patient however, as it probably washes through the market by mid August or so and you should have a very good buying opportunity at even lower levels.

June 8, 2011 | Unregistered CommenterPuroman

I was all in with 6 top silver miners and did not understand why they did not move with the bullion price. I was told that the institution holders were selling stocks prior to a price correction, which happened, and I belatedly followed. Now 100% cash and waiting for end of august to buy back in. QE3 will follow and silver will be minimum 75 dollars by year end. Dont lose the faith, the best is still to come

June 8, 2011 | Unregistered Commenteriain macnicol

If the big boys need the price down in order to cover their shorts, then there is pretty much nothing that they will not do to get there. The question is can we survive the possible hammering in the mean time?

We have been battered before and bounced back, but its always a choice between holding on or selling up and coming back in at a later date. The re-entry point is a hard one to predict, in our humble opinion, but some manage it to do it fairly well.

We will keep our core holdings and wont be adding to it just yet, however, August could be a good 'buying' time.

June 8, 2011 | Unregistered CommenterSilver Prices

Agreed that the bullion banks hold all the cards just as they have for years. What is different today however is that they have large losing positions and they are desperately trying to exit those positions without bleeding any more than they absolutely have to. Their retreat is becoming less orderly with each takedown...

It is a mystery to me why some large SWF or other foreign entity with cash doesn't just swoop in and take a massive position for delivery to knock them out totally. Everyone knows that JPM doesn't have the silver. It would be the same thing as bond vigilantes taking down a weak debt position. This may yet happen.

In any case, if you look at the silver continuous contract price chart, the next pivot point you would have to cross to get leveraged longs to cough up their positions (and allow the bullion banks to cover) looks to be around $33.80. They can probably take the price there pretty easily, but based on open interest, there just aren't a whole lot of contracts to collect. So if they have to take on further risk in order to push the price but stand to get little in return, it doesn't feel to me like a very smart play.

What I think they might do instead is take down gold as best they can and hope to get silver to follow. If a lot of SLV holders liquidate, they can also pick up physical at the same time. They also have some leverage to rig this through the back door by shorting the mining stocks. If they can time that on top of a broad market correction they can do some damage.

This would likely spread to bullion futures, (particularly if the miners get nervous and start building their hedge books again) and it would get the bullion banks just what they were looking for - but by a different mechanism altogether.

It will be interesting to watch. Raise cash if you haven't already done so and keep it handy. The next buying opportunity could be sweet.

June 8, 2011 | Unregistered CommenterPuroman

Puroman,

Very well stated. My thoughts exactly. You clearly are all over this. Thanks.

June 9, 2011 | Unregistered Commenterfallingman

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