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$2 Billion Enough To Bust Comex Silver Dealers In Mar 2011
Are certain big private investors and huge funds managers thinking the same?
By the actions in silver paper and physical market since September 2010, I’d say definitely.
Since Sep 8th 2010 (leased 2.3 million ounces), Comex customers started leasing huge amounts of physical silver to Comex dealers and paper speculators started smelling blood by increasingly buying Dec 2010 silver futures contracts.
In period of Sep 17th 2010 to Sep 29th 2010, Comex customers leased – in 5 out of 9 working days, a total of 3.1 million ounces of physical silver to Comex dealers.
In this same time period, Comex dealers delivered 4.1 million ounces of physical silver to owners of Sep 2010 silver futures contracts.
This means that Comex dealers had only 1 million ounces of their own physical silver, even though at the same time, they reported to have around 53 million ounces in their warehouse.
Why would you borrow 3.1 million oz and pay a leasing fee if you own 53 million oz of silver yourself?
How else would you explain, silver open interest contracts (OI) jumping in period of 2 months (from mid Sep 2010 to mid Nov 2010) by over 30,000 contracts which represents around 150 million ounces of silver?
Note, that entire Comex silver inventory at that time was reported to be around 110 million ounces of physical silver (now below 105).
No wonder that price of paper silver jumped in this same period of 2 months by around 45%.
What happened with Dec 2010 Silver Futures?
5,428 contracts stand for delivery of physical silver with owners delivered money on their trading accounts on Nov 29th 2010.
And what a surprise or not was when in next 3 days 3,583 of this contracts settled in cash.
3,583 out of 5,428 (66%) fully paid Dec 2010 silver futures contracts settled in cash by Dec 2nd 2010.
I bet premiums were in a range from 10-30% depending on how many contracts each client had for negotiating higher premium.
For a comparison, in Sep 2010 only 483 contracts out of 3,002 (16%) fully paid Sep 2010 silver futures contracts settled in cash by Sep 2nd 2010.
Settled silver futures contracts in cash jumped from 483 in Sep 2010 to 3,583 in Dec 2010 which is a jump by 3,100 contracts equaling 15.5 million ounces of PHYSICAL silver or 642%.
Since some big players have figured it out, what an easy profit it is for them to just buy silver futures contracts and negotiate for premiums and pocket easy money in less than a month, I expect even higher number of settled contracts in cash with Mar 2011 silver futures.
Eventually, this fraud will end but until additional players – actually wanting/needing physical silver instead of USD, enters Comex playground, this shenanigans will continue.
What I expect with price of paper silver from now until the end of Feb 2011?
By 1st week of Feb 2011, spot price of silver…
Read the rest at AgAuPM.com/2-billion-enough-to-bust-come…/
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