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October 7, 2021 | More Critical Than Ever

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

Readers know that I am firm in my belief that silver prices have been manipulated for years by large trading firms on the COMEX. I have raised the issue with the CFTC and the COMEX since 1985. Since uncovering the mechanics of the COMEX silver manipulation back then, I have been steadfast in attempting to end the fraud, to the point that it has been my main focus. I am mindful of the great returns that will come from silver-related investments when the manipulation is ended.

The mechanics of the COMEX silver manipulation are centered on the concentrated short position of the largest commercial traders. For nearly 40 years, every time that silver prices have rallied, a handful of large commercial traders have been able to sell as many COMEX short contracts as necessary to cap and contain every silver rally. Once the necessary number of short contracts were added, the big commercial shorts would then grease the skids for lower prices and buy back their shorts at a profit. It was a highly successful and long-running scam, continuing to this day.

Over the decades, the identities of the biggest silver shorts evolved from Drexel Burnham Lambert Trading, to AIG Trading, to Bear Stearns and eventually to JPMorgan. Only JPM solved the riddle of how to quit the crooked game cleanly (by buying physical metal). Because the CFTC doesn’t disclose the identities of large traders, I’m not sure who the biggest commercial silver shorts have been since JPMorgan eliminated its COMEX short position a year-and-a-half ago.

Concentrated short selling by the largest commercial traders in COMEX silver reached a peak around February 1 this year as the 4 largest short sellers increased their short position to just over 65,000 contracts (325 million ounces) as silver prices hit $30, the highest level in 8 years. The short position began to decrease in mid-June, when the price of silver started to fall in earnest. This was the same old pattern of the big commercials greasing the price skids to send silver lower.

If my calculations are accurate, that means the biggest commercial shorts in COMEX silver futures have reduced their concentrated short position by nearly 30,000 contracts (150 million ounces) since Feb 1 and by nearly 24,000 contracts (120 million ounces) since May 25. Not only is this one of the sharpest reductions in the concentrated commercial short position in silver ever, it comes at a time when there is good reason to believe the reduction may have been prompted by a CFTC directive. Regardless, we are approaching or are at perhaps the most critical time in silver in four decades. On the next upturn in silver prices (through all the key moving averages), which must occur in time, we’ll find out if the silver manipulation that has existed for nearly 40 years has come to an end. If so, it will be the greatest silver rally in history.

 

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October 7th, 2021

Posted In: Butler Research

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