One cannot help but notice that the bear raids in the precious metals sector are coming in thin trading and are notable for their lighter volumes as compared to buying. They are also coordinated across a variety of related products including mining stocks etc. which are likely used to hedge losses on the futures contracts.
One possible explanation for this unusual volatility is here: Portrait of Desperation, and I suggest that you take a minute to look at it.
I think the Comex dealer inventory chart is telling, and while it might be resolved through procurement of a large, unallocated inflow of silver, I am at a loss to find out where that might originate, unless it is from the market itself, which would seem to demand higher, not lower prices, despite all the jawboning and spin from the Wall Street demimonde. The western governments, central banks, and IMF have long ago exhausted their strategic supplies of silver, so the bullion banks cannot effectively turn to them for direct relief as they have done over the past ten years in the case of gold.
Obviously there are other explanations. But a short squeeze being conducted not by one or two big players who can be dealt with by the exchange, but by a global market acting independently and almost en masse seems to satisfy Occam's Razor, at least in my mind.
In this case the market corner by a few traders has been on the short side, which is what went parabolic first, in both the futures and the derivatives markets. And it appears to be largely held by two big banks.
The big players are eating that short position in stages while they scramble to hold the markets under some measure of control. I agree with those who say that this will end badly.
As someone who watches the markets daily, and for many years, I cannot help but feel that after all this, after the financial collapse and all the related frauds and deceptions in mortgages and CDS, that we have ultimately learned nothing.
Could the precious metals market and the Comex be placed at risk by a few large financial institutions that in their hubris engaged in over-leveraged but highly profitable trades that placed them at excessive risk, and by extension risked the financial system?
How many times can one be surprised by the disclosure of an outrageous and pervasive fraud before they might wish to start questioning their basic assumptions about how things really work?
But at the end of the day in the short term silver had gotten ahead of itself, and it is now correcting and consolidating its gains as I had mentioned it would. And the new holders of futures contracts from the option expiration will be tried, and after this silver will be held in strong hands.
And in the background, gold grinds steadily higher to our objective of 1590.
