Friday, October 7, 2011

SRSrocco's Report: Silver Update


After the big selloff in silver over the past two weeks, the commercial net short position has dropped to levels almost as low as they were in Nov 2008 when silver was at $9.00 an ounce. The COT Report shows these figures on every Friday from positions held on the close of trading on Tuesday. There are several categories of traders, but the most important are either the Large Speculators or the Commercials. The large speculators are big hedge funds and etc. The Commercials are the bullion banks themselves. JP Morgan is famous for holding the largest percentage of Commercial shorts of all the banks.

In these two main categories, there are LONG and SHORT positions. If someone is long, they want to price to head higher, if they are short they are hedging their positions or they want the price to go lower. When there is a great deal of short positions, it normally means the price will be heading lower at some point. When the total short positions are low, the opposite is true.

In the graph above the term LCNS stands for subtracting the Commercial Longs from the Commercial Shorts, which gives us a Commercial Net Short Position. Here we can see that after the big selloff, the LCNS is now almost as low as it was in 2008. Now that a good percentage of the LCNS have been liquidated, a firm bottom may be taking place.

Also if you notice over the past four years the LCNS line (blue color) has been above the price of silver line (Pink color)…especially when silver hit $21 in March of 2008. That trend is now firmly below the silver price line and I believe it will remain there until we finally get our COMEX SILVER DEFAULT.

Silver Eagle Sales Continue to Fly off the Shelves


October turned out to be the second best sales month behind Jan. Already in the first three business days of Oct, the US Mint sold over 1 million silver eagles. This averages out to about to 330,000 silver eagles sold by the US Mint a day. If the price of silver falls from here, we could see that daily sales figure move upwards of a half a million. Even at an average of 200,000 in October, that would be over 7 million for the month. I don’t believe the US Mint has this sort of capacity. So, if the price of silver continues to fall to the $26-$27 level, I would bet the US Mint will have to suspend the sale of the Silver Eagles until 2012.

The United States produced 38.5 million ounces of silver in 2010, and it looks like the US Mint just might sell over 40 million silver eagles in 2011….more than the total U.S. domestic supply. Some have said that by law the US Mint must use silver mined in the United States. This is no longer true. I spoke with the Public Relations person at the US Mint a few weeks ago and he told me that in 2002, the Senate came up with a new law that allows the US Mint to purchase silver for their rounds from other sources.

The authorizing legislation for the American Silver Eagle bullion program stipulated that the silver used to mint the coins be acquired from the Defense National Stockpile with the intent to deplete the stockpile's silver holdings slowly over several years. By 2002, it became apparent that the stockpile would be depleted and that further legislation would be required for the program to continue. On June 6, 2002, Senator Harry Reid (D-Nevada) introduced bill S. 2594, "Support of American Eagle Silver Bullion Program Act," "to authorize the Secretary of the Treasury to purchase silver on the open market when the silver stockpile is depleted." The bill was passed by the Senate on June 21 and by the House on June 27 and signed into law (Pub. L. No. 107-201, 116 Stat. 736) by President Bush on July 23, 2002 (source-Wikipedia)

Peak Silver Article Finished & will be Released when the New SGS Website is Up

The article turned out to be 26 pages long. There are over 20 graphs and charts with plenty of detail on where we are heading with global silver production. Many analysts say global silver production will increase for the next decade. If we get that Depression in the next year or two…which I believe we are, all bets are off for increasing silver production.

This might seem bearish for the price of silver as the so called “DEFLATIONISTS” keep regurgitating this over and over. Very few analysts realize we are heading into a Hyperinflationary Depression…and not a deflationary one. It’s fricken hilarious to hear on CNBC and etc that this week is deflationary because Ben isn’t printing money…or next month will be inflationary because he is. That is all BS folks. Don’t forget what the biggest aspect of hyperinflation is….and that is the “LOSS OF FAITH IN THE CURRENCY”. You don’t need continued printing to make inflation…you just need loss of confidence and the whole house of fiat cards comes tumbling down.

It’s time to get your physical silver before the rest of the world wakes up from the nightmare that nicely printed Monopoly money and US Treasuries and not safe havens, but rather a Ponzi scheme several hundreds of thousands of times worse than Bernie Madoff.

85 comments:

  1. I believe Monopoly will be of more value in the Future.. There isn't as much of it printed! Great Post.. Thanks!

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  2. Major market crash about to occur. The entire month of October and into November should be some MAX PAIN.

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  3. Thanks SRS, look forward to the new site and your article.

    WARNING: Corporate-Fascist Military Coup Brewing in US?

    September 30, 2011 - The US intelligence community, in conjunction with Wall Street corporate-financier interests, have spent an inordinate amount of time positioning themselves for a possible military coup and martial law take over of the United States. This is being done under the guise of the fraudulent "War on Terror" but in preparation for a very real and inevitable economic collapse. In particular, one personality above all others is being groomed by intelligence operatives and policy wonks, while built-up by the corporate media [1][2] in the eyes of the public to intercede in America's accelerating political, economic, and even global tactical decline. This man is General David Petraeus who served as former head of US Central Command which included combat operations in Iraq and former commander of US forces in Afghanistan before being sworn in as the current director of the Central Intelligence Agency (CIA) in September 6, 2011.

    http://landdestroyer.blogspot.com/2011/09/warning-corporate-fascist-military-coup.html

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  4. Thanks for that careful explanation. I am not sure what "subtracting the Commercial Longs from the Commercial Shorts" means though.

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  5. Thanks SGS - will watch an exciting weekend of Sport as the Rugby World Cup hits the quarters then wait to see what happens after Anonymous flame the NYSE on Monday for arresting the Occupywallstreet protestors last week.

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  6. OneLifeLiveIt,

    > after Anonymous flame the NYSE on Monday.

    Like Wynter Benton, Anonymous needs to do more than just issue verbal threats to regain credibility. If nothing happens on Monday, then what? "Mean what you say, and say what you mean" or loose credibility.

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  7. Yep, hell the contrarian in me thinks its a ploy for net censorship!

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  8. Sometimes I feel that some Anonymous statements are good and others not so good.

    I think the movement has been highly infiltrated.

    The group is called Anonymous, yet they expose people? Oxymoron?

    I agree that it is possibly a ploy for internet censorship. Only time will tell.

    I think they should expose fraud and corruption. I don't really get the purpose of DDOS'ing.

    If they are successful, what will happen to the market? Do any of you have an idea?

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  9. Brother John Silver Update - Buy The Dips

    http://www.youtube.com/watch?v=owK0D2vC1XA

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  10. Bought some SVM this morning. This is about where I bailed on the dip.

    Also starting to build some paper positions. I'll buy more on a dip below $30.

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  11. LOL Im thinking as soon a I break even I'm out of most PM shares, selling GPL, SIL, SVM, and GDXJ! Gonna keep my Tinka and Pretnium and options, fuck this market even with QE3!

    I would be 90% phyzz at that point!

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  12. @SRSrocco...

    Can you make your 26 page report available in PDF format so we can print it out? Thanks in advance.

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  13. can anyone see any other posts from me beside this one?

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  14. How Fricken Interesting.....I have posted two comments trying to explain to reefman the Net Short meaining...and both were erased.

    Strange aye??

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  15. silver is manipulated to follow JPM share price, almost real-time *yawn*

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  16. Silver just shit the bed, I guess everyone is supposed to post at the WU site now..not..
    Developing........

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  17. double rating cut by fitch...here we go with the bullshit.

    I dont erase any comments other then tornado boy

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  18. @SGS

    Another chance to go long on XOM & SLV puts?

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  19. tornado boy , LOL

    I should have fucking sold at the fucking open!!!!!ARRRRRRRRRRRRRR


    Greed Kills!!!!

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  20. XOM above MA and that channel trade may be over now thats its in the MA I wont touch till its below it as anything can happen this weekend. Still holding SLV puts till expiry oct 22. Not adding here.

    I might be adding MS and TD puts. As that trend line seems to be intact still. I will make a decision in the 3-4 session if the selling continues.

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  21. Sold my 2X oil bull; US $ creeping up again.

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  22. FUCKING FINALLY some deflationary news. I knew that when silver turned south it could turn fast and far. The last two weeks are a dead cat bouncing up after hitting a jutting rock down the side of a cliff. Still holding slv puts till november 18th Still holding 225 ounces of physical

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  23. Tom H...I wouldn't mind making the article into a PDF file, but I don't have the Adobe PDF Writer.


    Commodityworldnews....Delfationary news?? Are you kidding me? Silver was $4.50 an ounce in 2000 and today its at $30-31. What deflation are you talking about?

    Also, don't you folks realize the markets are totatly run by Computers controlled by the PPT? Do you really believe the GDP and Inflation statistics?

    Come on folks...wake up and smell the TRADER BILE.

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  24. temporary manipulated deflation so bankers can scare politicians and the populace into money printing hyperinflation, thats the deflation I'm talking about

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  25. Fuck me My Dec AGQ calls are getting beat down like a red-headed step child

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  26. I believe that as hard and fast as silver can fall now, and I personally think it can go to 20, it will rise just as fast, if someone were to go abroad to africa for 3-4 months with no computer he could miss 150% swings in silver thats what i think we're in the middle of

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  27. Its all going to hell..! USA doing the most.
    #33 don't forget those Canadians. He he he

    http://www.infowars.com/40-signs-that-america-is-rotting-from-the-inside-out/

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  28. nitsuj: thank fitch today for that...

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  29. SRS Rocco,

    > I have posted two comments trying to explain to reefman the Net Short meaining...and both were erased.

    That's a real bummer. I'd hate to ask you to try again please if it's not too painful for you.

    Before you post your comment press CTRL-A, CTRL-C. If it erases your post then you can use CTRL-V to paste it back.

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  30. 1oz Dragons delayed, but available. $99.99!

    http://www.providentmetals.com/2012-1-oz-silver-australian-year-of-the-dragon-coin-perth-mint-lunar-series-2.html

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  31. Does anyone here frequent Pebblewriter's blog as well? He's been talking about a move down to 350 on the S&P .. obviously a depression that would make. His analysis is detailed and seems to be playing out for the moment... of course, anything can happen, but check it out this chart.

    http://2.bp.blogspot.com/-fhgY3kBfZlY/To6RltaKO5I/AAAAAAAAA-Y/IrduHSKWHq0/s1600/2011-10-06-FC+EW+TL+FL+1040pm.png

    I got out of most all my longs at the freakin absolute (nearterm) bottom so my balance literally has been halved ... *sigh* ... I know the mistakes I'm making and I certainly love repeating them for some reason .. trading can be a Bitch sometimes.... not giving up on this though..

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  32. I'm debating on whether or not to cash out my Roth and buying phyzz. Good move or bad?

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  33. SRSrocco, if you have MicroSoft Word you can save the file as a .pdf. Just hit the icon in the top left corner and click on "save as" and pdf should be an option.
    Happy to help even though chalmers was the one who requested the .pdf.

    SGS, you do realize theat WU watching his own turd flush down the toilet is probably as close he gets to "tornado chasing", right?

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  34. Just so you know, google spiders, I hear, do not like .pdf's. So make sure you post it in HTML as well.

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  35. Tom H....great I just did it. When it gets published I will send you a PDF File.

    reefman....the commericals have been NET SHORT for over almost ever. They have held a great deal more short positions than longs. For example if we look at the COT REPORT from 2008 this is what it looked like:

    COT REPORT FEB 12, 2008

    COMMERCIAL SHORTS = 118,879
    COMMERCIAL LONGS = 46,904

    NET SHORT = 71,975


    This huge net short position is shown as the big peak in the BLUE LINE in the early part of 2008. Let's take a look at last weeks COT REPORT

    COT REPORT SEP 27, 2011

    COMMERCIAL SHORTS = 62,287
    COMMERCIAL LONGS = 38,025

    NET SHORT = 24,262


    What a difference. I will show in the new websites how these Commercial Short positions have declined over the past several years and that is why that BLUE line is now below the PINK PRICE LINE.

    I will also discuss the Bank Participation Report that shows month to month this change.

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  36. WOW...it finally worked.

    By the way the US MINT just did another update. Yesterday after my guest post they updated it to 1,260,000, which was 250,000 sold in one day.

    They just updated it again for close of friday business and it was 1,662,000.....thats another 400,000 CLAMS sold in one darn day.

    At this rate, the US MINT will not be able to keep up with demand.

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  37. SRSrocco said...

    Tom H....great I just did it. When it gets published I will send you a PDF File.
    ************************************************

    Adam Chalmers, you are welcome. SRS seems to be struggling with his reading comprehension today.

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  38. Tom H....this is true LOL...but you white guys all look the same.

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  39. "When there is a great deal of short positions, it normally means the price will be heading lower at some point. When the total short positions are low, the opposite is true."

    As many shorts, as many longs then. When there is someone short, someone else must be long, I suppose. They are betting the opposite way.

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  40. Latest COT, folks. Morgue covered another 5K silver shorts. Now the overall net short is below 100M Oz. Looks like a serious retreat.

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  41. So, here is what I do understand:

    -JPM has huge short position-naked
    -JPM can manipulate the price down at will
    -Dodd/Frank imposed position limits
    -CFTC dragging feet because they are dirty paid off whores
    -makes sense to try to get out of the short position after they worked so hard to manipulate the price. As evidenced by their diminishing overall net short.

    What I don't understand:
    - I thought their naked shorting was the main instrument they used drive the price down. How did they drive the price down so much while reducing their short position?
    - If they are covering shorts en masse, wouldn't that drive the price up?
    - Are they not covering these shorts with metal?
    - I guess I just don't understand how they can manipulate the price down and cover shorts at the same time.

    Sorry for the basic questions, but I am a salesman not a trader.

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  42. Wow, does the ESZ11 look horrible. Another big stock market downdraft next week?

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  43. SRS- put into word document and save as PDF

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  44. -.86 would be considered a smack down earlier this year, but what is consider a smack down now?

    Ledbedder said...
    @Treez, now that I just brushed my teeth & said a prayer...well, today's close was the highest since 9/22, so that is encouraging. I am not going to get bullish/excited until I see a close above $33.585 in SIZ11. Until we break that, a smack down is possible.
    October 6, 2011 5:34 PM

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  45. @ TomH

    "I just don't understand how they can manipulate the price down and cover shorts at the same time."

    The trick is putting margin pressure on under-capitalized Johny-come-late small speculators. Despite several margin hikes it still takes less than 20% of full silver contract value to play one, and lots of small speculators get greedy and overly extended on these future contracts.

    When Morgue decides to strike they could engineer a sudden plunge, say, 3-5%. 3-5% downward move hits the small guys hard and force them to liquidate. Keep in mind they only put 20% down to begin with. Once they all liquidate at the same time price plunges harder to trigger more stop losses.

    While these speculators are taken down one by one Morgue is sitting their covering their naked contracts. In a sense the small guys have themselves to blame. Should they stay with fully paid positions they would not be forced to sell.

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  46. @Tom H.

    Good summary and those were my questions as well.

    One thing I want to add is that if the large commercials have the huge short positions, what is stopping them from knocking the price lower? Through margin hikes on the silver comex, they are keeping everyone except those with very deep pockets out of the game. So what if demand for physical silver is very high? If the buyers on the comex are not there en mass to swamp out JPM, the price won't move unless JPM allows it to.

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  47. Rui, OK I get that, but, I read Harvey pretty much every day, and despite the margin hikes, the open interest remained pretty much the same throughout the price going from 43 to under 29.

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  48. Thanks SRS. I appreciate you taking the (frustrating) time to respond. :) Have a good Thanksgiving weekend (if you are Canadian).

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  49. Silver is going to walk straight up. I was initially thinking we would test ~$29-29.50 area. But I think we will not see that area now. I am not betting on it. I will complete phys buy over the weekend. I will hold my speculative S&G equities as they may turn and burn as the remaining market withers. Metals equities will this time find some love.

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  50. Moody's downgrades 12 European Banks... London Bridge is Falling Down-

    http://www.youtube.com/watch?v=RXnsqB8-o4g

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  51. Hahahaa... this is great... im a Hip Hop head so this is fuckin awesome...

    http://www.youtube.com/watch?v=rJpjt5DfdLw

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  52. Occupy Los Angeles - This shit is getting heated... make sure when you get home, you UNlock your guns.

    http://www.youtube.com/watch?v=JIDs81W4ZGY

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  53. from Bix:

    D-E-X-I-A!

    One of the largest derivative players in Europe is imploding as we speak. This will destroy ALL derivative markets across every continent. Watch for a bailout followed by massive market manipulation next week... followed by a total collapse.

    It's all about the COUNTER PARTIES!

    http://www.roadtoroota.com/public/709.cfm

    Stay Strong!

    Bix

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  54. Just downloaded and printed all I need about Open Carry in California... I will be attending Occupy San Jose and Occupy San Francisco this weekend. If I get anything concrete on video, I will upload and and post a link to it as soon as possible.

    To the rest of you out there... get off the computer this weekend and get out there. Sitting back and watching will not help the situation. Power in numbers folks. Lets take back America, and restore sound money.

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  55. This exerpt is from a friend of mine on YouTube, and he posted this on his channel. He goes by the name: JesusDillinger

    "Wanna really have an effect, or just blog? Take away the money with which invasions are funded. This is how:

    Government borrows trillions. The collateral for these loans is our labor. Birth certificates are courtroom-acceptable evidence that one is working at a job, generating value.

    Because you do not know what a birth certificate is for(you think it is for I.D.)you do nothing with it. Therefore the state registrar's office chooses to regard it as abandoned property, and they use it as such. How do they use it? As a bond against which they borrow. That is how gov is funded, not through taxation. Taxes merely pay the interest on the loans taken out on your BC.

    But the BC is YOURS. You can stop them from using it by simply demanding so. We can literally shut the whole damn thing down any time we want by merely writing to the state registrar's office, demanding they stop borrowing against our BCs. By law they must stop, and they really will.

    No money for invasions, fascism loses."

    Sounds like a fuckin great idea to me. Im in.

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  56. "CAUGHT ON TAPE: Former SEIU Official Reveals Secret Plan To Destroy JP Morgan, Crash The Stock Market, And Redistribute Wealth In America"

    How to take down the JP Morgue 101:

    http://www.businessinsider.com/seiu-union-plan-to-destroy-jpmorgan

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  57. B-I-N-G-O, de-capitalize the Morgue.

    "Lerner's plan is to organize a mass, coordinated "strike" on mortgage, student loan, and local government debt payments--thus bringing JPM to the edge of insolvency and forcing them to renegotiate the terms of their loans."

    "This destabilization and turmoil, Lerner hopes, will also crash the stock market, isolating the banking class and allowing for a transfer of power."

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  58. silverstacker I've been out dancing tonight, and am Smashed on my Ass, But I Get what your Saying ! On a Side note, there is a Demonstration going on against the Banksters in my City.. I will make it Down There.. I Will be Horse Preaching into the Masses,,,,, Against the Fed.! If it makes it onto Youtube, I will point me out !

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  59. BTW, I believe I liked the Name Highrise better..lol Always Enjoy Your Post! We're All Silverstackers Here! We know what the (****) is going on... WU will be Eaten! That part kind of saddens me, because he just needed the money to feed a kid, to mislead people.. And couldn't figure out his skill in life..

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  60. I'll go back to this once SGS.com is open.

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  61. a silver bullet for the EE vamps...they will not sit on their balconies and sip beverage when TSHTF...they will be judged...and mussolinied

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  62. Why don't they just let the post office sell weed? They would be relevant again and some people would really appreciate not having to leave the house.
    BURN ONE TO SAVE THE POST OFFICE! Plus it would bring a whole new meaning to the term "going postal"
    These politicians are so fucking stupid, I have to think of everything.

    http://online.wsj.com/article/SB10001424052970204612504576606743516301586.html?mod=WSJ_hpp_editorsPicks_1

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  63. SRS,

    Thanks for the post - very informative and written in layman's terms so that uneducated stackers such as myself can understand it. I look forward to reading your corner on the new site.

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  64. What is the site HR408 gave for the coins that are close to spot with free shipping? Thanks.

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  65. Why don't they just let the post office sell weed?

    That means they might actually turn a profit!

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  66. For those that still have not got their 1 oz Silver Eagle at spot...

    http://ecom.uscoins.com/ProductInfo.aspx?productid=228874

    or gold for that matter...

    http://ecom.uscoins.com/ProductInfo.aspx?productid=202170

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  67. Led, the shipping is not free on the gold coin, only silver. They shipped my gold and silver in the same package. Took about a week to receive. That little gold coin is pretty cool.

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  68. @Tom H: I bought 20 of those little guys this year in case I need to bribe someone. I am not kidding.

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  69. Led, you can bribe me with those 20 coins, what do you need? As long as it doesn't involve kneepads!

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  70. No longer free shipping with silver, just tried it.

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  71. This comment has been removed by the author.

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  72. Maybe a torn ACL on a "pretty boy" quarterback?

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  73. Speaking of bribing and kneepads:

    This guy is sitting at a bar and a drunk hooker walks upto him and says," I will do anything you want as long as you can describe it in three words or less"

    He thinks about it second, pulls out a twenty and hands it to her and says, "Paint my house".

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  74. OK. Can't help myself. One joke because I don't want to clog the site.

    What do you call a long fingered lesbian?

    Well hung!

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  75. This comment has been removed by the author.

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  76. How Lobbyists Are Undermining Dodd-Frank: A Case Study

    http://www.tnr.com/article/politics/95818/dodd-frank-lobbying-cftc


    The partisan nature of the CFTC and the active lobbying campaigns to influence the rule-making process are making it uncertain if the rule will pass the committee and, if so, whether the final version will be strong enough to live up to Dodd-Frank’s original intent.

    The rule has no chance of going into effect, however, unless it garners enough votes. At present, the CFTC is divided along partisan lines, with two presumed votes for the rule (Chairman Gary Gensler, appointed by Obama, and Bart Chilton, appointed by Bush and reappointed by Obama) and two votes against (Jill Sommers and Scott O’Malia, both former Republican Congressional aides). Meanwhile, Commissioner Michael Dunn, the swing vote who was appointed and re-appointed by Bush, appears to be leaning towards voting no, arguing the CFTC hasn’t performed the proper cost-benefit analysis to back up the rule. An appeals court recently struck down an SEC rule on the basis that it lacked a cost-benefit analysis, which has led the opposed commissioners to argue that all of Dodd-Frank’s proposed rules need such an analysis to be legally valid.

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