-- Posted 22 September, 2007 | | Discuss This Article - Comments:
Source: SilverSeek.com
As we pointed out to you last week, the Commercials had just then started to go net short. This week they added some more, and are now net short 29,221 contracts. They will be able to add any number without risk as the CFTC looks the other way while the bullion banks underwrite any losses which they may incur. The banks' risk, of course, is underwritten by us. The idea being to so overwhelm the longs by shorting a number of contracts well beyond any reasonable number of longs. They just keep pouring short contracts into the bucket in which sit the longs upon a ladder until they are so flooded that they must jump off and hope to swim to nowhere. At this critical juncture the commercials then close out their short contracts and rake in more millions. Every time.
As shown it gets critical when the number of commercial short positions gets around 50,000 contracts and the open interest achieves between 121,000 and 126,000. But, for right now a capitulation of speculator longs seems distant although we can be sure additional shorts were added as must be the case to be the party on the end of the speculators' long positions.
So, everything is fine on the teeter-totter, up and down they go, until the commercials overload their end of the see saw and the only way off for the longs suspended at the other end is to jump off. This is a derivative scheme of the highest order of risk, a sandbox none of us should play in.
What we're waiting for is the stampede into silver so great so as to overwhelm the commercials in that they'll have to "cover" all their short positions or bankrupt their backers. What price ($) will that occur? Who knows. But, when this event occurs physical silver will be king. The COMEX futures will probably shut down to protect the commercials. Cash settlements will be the only 'delivery' options as there will be no physical worthy of inventory in the COMEX warehouse.
Okay, that being so, how high can silver eventually go in this bull market? A wise guy would tell you to go ask a Weimar survivor, but I won't. Instead, I'll say it'll go to somewhere around 1/20th of an ounce of gold.
In 1980, it went to something like 1/17th whereas you could buy an ounce of gold for seventeen ounces of silver. Right now an ounce of gold will cost you about 55 ounces.
At that point you'll want to reassess where we are in the economic world.
You can figure out your own projections based on dollar erosion (inflation)
here.
-- Posted 22 September, 2007 | | Discuss This Article - Comments:
