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May 25, 2021 | Short Subject

No one has followed the silver market trading mechanics for as long or as closely as Ted Butler.

Again and again, I have stressed that silver has been suppressed in price for decades by the concentrated short position of the 4 and 8 largest traders in COMEX futures. Many have come to accept this, but my findings do not have universal acceptance. That’s too bad because it’s all that matters in determining price. It would be better if we were all on the same page. The big shorts have always been able to buy back the short position that they added regularly. Thanks to a steady supply of traders who readily sold out of long positions on rigged price selloffs, the big shorts were able to buy back enough of their short positions to make it profitable.

But starting a year ago, the silver price-rigging scheme run by the big COMEX shorts stopped working as it had for the prior three and a half decades. The big shorts were unable to contain prices, as silver (and gold) ran to multi-year highs generating billions of dollars in losses for the big shorts. Moreover, the former biggest short from 2008 to 2020, JPMorgan, had eliminated its once dominant short position in both COMEX silver and gold. This left the other big shorts to twist in the wind. The important thing now is what happens when the 4 big COMEX silver shorts move to buy back their massive concentrated short position on higher prices. It will be a moment like no other in the history of the silver market. Over the past 35 years, the 4 big shorts have only bought back short positions on lower, not higher prices. It will be a change so radical it almost defies description. Up until now, the 4 big COMEX shorts have always been the short sellers of the last resort on every silver price rally. No one appointed them to this price rigging role, they just assumed it.

If the 4 big shorts merely stop adding to short positions on silver price rallies that will be enough to cause the price to explode. If they try to buy back short positions on higher prices that will inflame the rally almost beyond description. Who in the world will sell to satisfy the buying that will inevitably occur on higher prices – including potential buying from the big shorts? Once prices start to move up forcefully, new buying will kick-in strongly. There have to be sellers for every buyer and if you take the short sellers suddenly out of the equation – whom do you replace them with? An article on Bloomberg commented on the developing shortages in just about everything. But of all the shortages, the only one in which there is aggressive investment demand is silver. So, who in their right mind would be massively short an item in short supply with massive potential investment demand waiting in the wings? Bottom line – as long as there exists a concentrated short position in COMEX silver beyond what exists in any other commodity, silver is a buy.

More and more, the 4 and 8 big COMEX shorts appear stuck – unable to simply quit the concentrated shorting game. This is the only issue that matters in silver and gold and we all have a front-row seat to the spectacle. Adding to their already excessive concentrated short positions only extends the manipulation and allows the big shorts to pretend they are in control, even though the losses can’t be pretended away. Moving to buy back would cause their losses to escalate sharply. Some might argue that this has been the case for decades and still the manipulation goes on. There’s a lot of truth in that, save for one new factor – the growing evidence of a physical shortage in silver. The combination of withdrawals in COMEX silver inventories, increases in ETF, particularly SLV holdings and the apparent lack of any significant quantities of leasable silver threaten to bring the ongoing scam of the 8 big COMEX shorts to an end.

Ted Butler

www.butlerresearch.com

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May 25th, 2021

Posted In: Butler Research

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