“Don’t push a bad position”! This is good advice in many varied quests. It is good advice in games like chess or poker. Good advice in sports, business, politics, geopolitics and certainly in militarily ventures. Today we will look at two separate issues where “bad positions” are being pushed to the wall!
First, we have an insane situation brewing in COMEX silver. The open interest finally exceeded 200,000 contracts (1 billion ounces). I believe the only other time this much open interest existed was back in 1980 or ’81. This makes no sense whatsoever, the price is again plumbing 4 year lows yet open interest has moved to record highs? The fact open interest has expanded while price has declined is proof positive the “initiation” of this expanded open interest has been by “shorts” but absorbed by “someone” on the other side of the trade. Total global production of silver is only 800 million ounces or thereabouts so COMEX shorts have contracted to deliver 25% more silver than will even be produced globally over the next 12 months. Silver available for COMEX delivery only totals 57 million ounces so they sit on a naked short time bomb of more than 950 million ounces!
If we look at the July silver contract, there are 55,000 contracts still open with only 4 days remaining before first notice day. This is 275 million ounces still open with only 57 million ounces available to deliver. This is truly fraudulent sales of metal because the metal does not exist to deliver. Yes I know, the apologists will say “this always happens and the shorts will decline into first notice day and evaporate throughout the delivery month”. I agree, this “has” always happened in the past but something is changing now. In the past, total open interest always dropped going into FND, now it is not. Not only are all July contracts closed out being rolled into September, the total is rising rather than declining sharply.
I first wrote last August about the situation where huge open interest in the September contract dwarfed the available silver for delivery. My speculation then as it is now, I believe somehow the bulk of the open interest in the nearby month is of Chinese origin. I called it a “Kill Switch” then and still believe this to be the case. The shorts have had their way with silver but I believe “pushing a bad position”. They are “making” price by contractually selling silver which does not exist. This travesty was recently called out by Keith Neumeyer, CEO of First Majestic Silver corp.
Bravo! and you are exactly correct. Then of course we must wonder of JP Morgan reportedly accumulating millions of silver ounces, what of this?
To finish this section, there is NO market anywhere on the planet where the amounts of futures dwarf the physical product so overwhelmingly than in silver. Why is silver so important? Why has it been bludgeoned so badly and even priced below the cost of production? You must understand how small the silver market is. Total global production is less than $15 billion per year …”but”, silver cannot be left alone because high silver prices do not jibe with low gold prices. …And gold MUST be kept down and out of the limelight because high gold prices do not fit with low interest rates …which are an absolute must in an effort of reflation. You see, in no way can interest rates be allowed to rise with the amount of global debt outstanding. Higher interest rates will crush the debt outstanding, the silver market is at the VERY BEGINNING of the “food chain” that keeps the lid on interest rates. I believe the Chinese hold this market in their back pocket paid for with “pocket change”, they will use is it at their own discretion!
Another “bad position” is the stance the U.S. is taking with Russia (and the rest of the world for that matter). We have placed economic and financial sanctions on Russia in an effort to bankrupt them. It has been speculated the Saudis opened the oil spigots to lower energy and break Russia as was done in the 1980’s. So far there has been more stress in the U.S. fracking sector than damage done to Russia. This may have originally been the case, however, Russia and Saudi Arabia just signed six separate deals just last week. A case can be made, the sanctions meant to hurt Russia have hurt the German, French and other Euro economies just as much. The IMF has said they will fund Ukraine even after a default …but not Greece, they need some of that “austerity stuff” that no one wants. Greece has turned back and forth playing nice with Russia in an on again off again type romance.
The scary part is the military buildup of U.S. hardware in Eastern Europe. Mr. Putin has a “limit” to what he will tolerate just as anyone else. The danger to the U.S. is not just World War III, it may be the lengths Mr. Putin will go to avoid a war. I have speculated Russia (Mr. Putin) will drop a “truth bomb” in order to cripple the U.S. financially by breaking confidence in any and all things American. I believe Russia (via Snowden) has enough evidence of various false flags, fraudulent deals and U.S. scam tradings to “shame” the U.S. into retreat. When I say “shame”, I am talking about the dollar being undermined by a break of confidence.
We have pushed and shoved our way around for years while “losing friends and not influencing people”. In trying to isolate Russia, we have succeeded in isolating ourselves as the rest of the world prepares avoiding the dollar. Just look around, the U.S. has steadily lost allies in meeting after meeting. We have been in a bad position for at least 15 years, our manufacturing base is gone. Yet we have pushed our position harder and harder? You see, we have had to “push” because what was once “earned” and deserved is no longer true, we now must demand our place at the table to sit at it …and mostly unwelcome.
Let me finish with this thought, just as the high school football star is always invited to the parties, the invitations become less and less if he becomes conceited or if his skills diminish. In this analogy, the U.S. has not only become conceited but crossed the line well into arrogance. As for “skills”? These were shipped overseas just as Ross Perot said they would. Unfortunately, the U.S. has pushed itself from a bad position into one worse than anyone could imagine 20 years ago!
Regards, Bill Holter
If you were coaching the Chinese team in this game of brinksmanship, what would your next move be? Thanks for the insights.
they need do nothing, the U.S (West) will collapse of its own weight.
Sad but true, I believe.”
What your readership could really use is a little historical background in the form of a chart or graph. Could you show us a 12 month timeline comparing 1. Comex Shorts, 2. Open Contracts for Delivery on due date, and 3. Metal available for Delivery? It would really distill the message regarding the recent happenings at Comex and world demand. I hope you would do it.
if you or any reader can build the graph, I will post it. I am a tech dinosaur, all of my graphs are done by others.
Hi Bill, I have attached some charts and a graphic
illustration of how the “cartel” set up this move
to the downside in gold. It was primarily done to
make sure the 1200 level and above expired worthless.
I take no personal credit for this fine piece of work.
The credit goes to Jesse @ Jesse’s Cafe American.
A true artist and gentleman.
thank you David.
Bill, We went back & forth so many times about this fraudulent open interest stuff, around last Thanksgiving & again in December. And NOTHING happened. I need to go prick myself with pin needles, arghhh!
maybe I shouldn’t write about 275 million ounces versus 57 million to deliver with 4 days left …because NOTHING will happen. When it finally does, I will have been on the record.
Oh, and 1 more thing:
Gerald Celeste said yesterday that he thinks entire Greek Syriza government might get assassinated in a coup if they used Russian alliance as their pivot.
Kind of like how Salvador Allende was eliminated in Chile & countless other coups before. (Patrice Lumumba in Congo, Sukarno in Indonesia, Arbenz in Guatemala & on & on & on.)
My apologies, it was Paul Craig Roberts who said it, not Celente. (Auto-correct keeps changing spelling from Celente to Celeste, technology!!!) Anyway, both of Celente and Paul Craig Roberts work together. So most likely Celente agrees with it as well.
“Better to retire and save your aircraft than push a bad position.”
So???????????????? which episode r we now???
July 4th da exceptional “INDEPENDENCE” birthday!
July 5th spartan “300 existential” end game?
July 6th? Macbeth Act 1 Scene 3 – The Witches meet Macbeth???
July 7th? ANY fruitcake Idea? gold for FREEEEEE???
SWEET DREAMS COMING TRUE TO YOU
JUST FOR YOU DEAR SWEET DEAR CHILDREN
IN DA DREAM OF YOUR DREAMS!
Dream withIN a dream withIN another dream…. without end….
“WHO ARE YOU?” …. is the QQuestion at the gates….
(just in case – the old version: what art thou?)
getting ….. STEAMMMMMMMMYYYYYY
Second Witch: Show me, show me
Third Witch: A drum, a drum! Macbeth doth come
COME WHAT MAY destiny await you!
I hate it when you forget to take your meds!
If the Chinese stockmarket continuous like it did on friday, they (the Chinese) will have other problems than attacking th US with Silver or whatever bomb.
The people will hang the leaders, like in the last culture revolution …
What is you take on that, Bill?
If the Chinese stock market continues like Friday …the WHOLE WORLD will have the problem.
Thanks Bill. Please help me understand the Chinese origin of open interest in silver. How are they playing their hand and why?
google “bill holter kill switch”. I have written about this many times
Looks like longer dated bond rates are portending big trouble!
Governments and TBTF banks have NO say on where the longer interest rates go. They may ‘influence’ the short term rates, but the massive (+100 trillion dollars) global bond market will have the last say.
Case in point – the TNX (10 year Treasury Note Yield Index)
January 30, 2015 @ 16.54
June 26, 2015 @ 24.76
Another word for bond? DEBT. A creditor lends money to a debtor who issues the creditor a bond, which is paid back with attendant interest. It is this rate of interest that will be the giant debtor killer.
The present global instability politically, financially, militarily, societal/economic, and their interaction, will ultimately dictate where interest rates go. Higher.
Time grows VERY short now. Prepare accordingly.
have already written a piece on this for Monday, please read when out.
I hate to come back to this again, but Bill:
Nazis pushed a bad position. Zhukov’s Soviet army demoralized Nazis in long bruising battles in Volgograd (Stalingrad), St. Petersburg (Leningrad) & elsewhere in Ukraine. True, the life/property losses were atrocious both for the Soviets & Nazis. But the Nazis had indisputably lost everything. There was no point for them in going on, on any fronts. They should’ve surrendered in all respects, both vs Soviet Union & Britain/US alliance.
But the Nazis were cornered rats, & they pushed a BAD position on the Western front AFTER the defeat to Soviets – necessitating invasion of Normandy, Stalin’s tanks rolling through Berlin & all the rest of that.
Moral of the story is: Cornered insane rats in a bad position do not necessarily do the most logical thing. They get into the bad position in the first place, because they’re evil & insane. Expect the evil cornered rats to push the bad position even further, this time around.
I agree but the entire crapper is going to come down around them as well as everyone else.
Unfortunately we are so far past tipping point that those in control have no option but to keep pushing that bad position. The future is not looking bright.
The decision to sort things out should have been taken years ago but no Western leader had the backbone to face up to the issues.
The UK has the same issues as the US , we are not democracies but more like two party dictatorships.
I have wasted hours trying to educate people around me and have now given up. Most people could tell me about gay marriage rights or who won Britains got talent or what the Kardashians had for breakfast , very few can discuss geopolitics or global fiscal responsibility . Apparently Putin is a bad man because the BBC told them.
If you try to explain, to the sheep, about Gresham’s law they ask what channel it’s on. It is futile and frustrating plus I lost credibility when I gave last Christmas as a probable collapse date.
Much respect to you for continuing with the message, despite the background noise and distractions. Hopefully you are attracting a few more black sheep every day.
thanks Nick, hang in there, your logic is correct.
“Sunday night” is finally here, at least in Greece.
Greek Capital Controls Begin: Greek Banks, Stock Market Will Not Open On Monday
Banks expected to be closed for 1 WEEK! If/when banks reopen, a €60 withdrawal limit will be imposed.
will have an article on this tomorrow, it can be seen on http://www.jsmineset.com now.
I read an article on the internet the other day which said that China would begin setting the price of gold around the end of the year. If true, my guess is that the entire western economy will collapse shortly thereafter. If they decide to back the yuan with gold the dollar might well become worthless overnight.
or… it may have already collapsed by then.
Here is an interesting article which indicates that JPM are acting on behalf of the Chinese in the silver market.
Your thoughts please ?