SP 500 and NDX March Futures Daily Charts

Isn't American crony capitalism marvelous?

Third bubble in eleven years.

Registered Silver Ounces Available For Delivery at the Comex: The Emperor's Errant Knavery

Here is a chart of registered silver ounces available for delivery in the Comex warehouse. Nine out of ten Americans may notice a trend.

If it seems somewhat counter-intuitive that the available supply continuously declines even as the price soars, you may begin to obtain some sense of the true nature of the management, regulation, and character of this market.

Comex has two categories of silver in its warehouse.

The eligible category merely means that the silver is in a condition to conform to the standards of delivery. Size and quality of the bar in other words. It is being stored at the Comex warehouse, but is not offered for delivery into contracts.

Registered means that the silver is available for delivery to those who demand bullion.

Eligible silver can become registered and deliverable if the owner of the silver declares it saleable at some price. And of course if it is there, and otherwise unemcumbered by senior obligations or conspicuous absence. There are a little over 60 million ounces of eligible silver being stored by customers at the Comex, in addition to the registered dealer inventory.

The registered inventory of silver at the Comex, 42 million ounces, is worth about 1.34 billion dollars at today's prices.

The entire silver inventory at the Comex warehouse, roughly one hundred million ounces of silver, is worth about 3.2 billion dollars at today's prices.

There are some rules passed a few years ago, delivery limits sanctioned by the CFTC, that prevent a large entity from taking too much physical bullion in a single month, and enforcing a paper settlement. I think that is why the inventory is undergoing a slow but very steady drain.

In other words, THEY can SELL as much as they wish, but YOU can only TAKE as much as they allow you to take at the current prices. That might sound like a con by any other name, but it is certainly no definition of market pricing of a physical commodity when you can sell what you wish at whatever prices you set, but then refuse delivery at those prices.

When and if this market leverage breaks, the silver on the periphery, the non-eligible supply of smaller bars and coins, is going to evaporate given the large amount of leverage in the unallocated silver bullion that people believe that they own, and the realization that the confidence which investors have had in the integrity of US markets has been abused. The silver on the periphery is a relative drop in the bucket compared to the growing demand from millions of buyers, however relatively smaller than the bullion banks which each individual buyer may be.

Gold Daily and Silver Weekly Charts

Next week is March options expiration for gold and silver on the Comex.

US equities are looking fully valued and entering bubble territory fueled by Benny's handouts to the banks. Thin volumes and short holding times in markets where price is set at the margin by the last transaction is a setup for a flash crash.

Watch VIX and try not to get out in front, but perhaps its time to take out some insurance and bring in some profits.

On the global front, the Arab unrest is spreading amongst the oil dictators and western client state regimes.

Remarkable that, outside of Iceland and Greece, the put upon people of the West seem to be very quiet. In particular the people of Ireland are surprising in their acceptance of a new form of tyranny, not by the gun and the jackboot, but by the pen and the ledger book, and of course the cooperation of local political corruption.

SP 500 and NDX March Futures Daily Charts

Tomorrow is equity option expiration on the US stock exchanges, and also the last trading day before a three day holiday (President's Day) weekend.

Stocks are quite overvalued, and probably ready for a correction, or at least a consolidation. Any macro exogenous event could trigger a five percent correction.

I hate to keep saying that this is a momentum fueled melt up on light volumes, with Benny's banks leading the charge, but that is exactly what is happening. And they seem to be getting increasingly edgy about handing this off to mom and pop and the institutions.

However until VIX turns, which could be happening soon, I would not step out in front of this. But as of the last hour of trading I started getting defensive and battening down the hatches.

As for the real economy, nothing will improve until 'the truth is found to be lies,' as the song says.