Something wrong in the silver market
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Posted 09 December 2008 - 01:08 PM
This would never be allowed in the oil market
ATLANTA (ResourceInvestor.com) -- The Commodities Futures Trading Commission (CFTC) releases its Bank Participation in Futures Markets Report once a month on the first reporting week of the month. The figures for December are out and they are a shocker.
For background, refer to a previous article of mine at this link. As of December 2, as gold closed at $783.39, the CFTC reported that 3 U.S. banks had a net short positioning for gold on the COMEX, division of NYMEX, of 63,818 contracts. The CFTC also reported that as of the same date all traders classed by the CFTC as commercial held a collective net short positioning of 95,288 contracts.
That means that just three U.S. banks accounted for 66.97% of all the commercial net short positioning on the COMEX for gold futures. Here''s what the three U.S. banks'' positioning looks like on a graph:
That is one hell of a dominant position in gold futures on the COMEX held by so few entities. For a little context, the net short positioning of the big U.S. banks represents a net short positioning of just under 6.4 million ounces (just under 200 tonnes). As of December 4, there were 2,918,028 ounces classed as “Registered” in COMEX warehouses. So, these 3 U.S. banks were net short 218% of the amount of deliverable gold from ALL COMEX members which use the COMEX warehouses.
For silver, it''s even more startling. On December 2, as silver closed at $9.57, exactly 2 U.S. banks held a net short positioning of 24,555 contracts. The CFTC reports that as of the same date all traders classed as commercial held a net short positioning of 24,894 contracts. So, the 2 U.S. banks, with one particular Fed member bank probably holding almost all of it, held a sickening 98.64% of all the collective commercial net short positioning on the COMEX, division of NYMEX in New York.
Exactly two U.S. banks have practically all the COMEX commercial net short positioning on silver. For a little context, 24,555 net short contracts means that the two banks held net short positions on December 2 for 122,775,000 ounces of silver with silver at $9.57. The COMEX said on December 4, that there were 80,239,857 ounces total in the “Registered” category, so these 2 malefactor banks held net short positioning equal to about 153% of the amount of deliverable silver in ALL the COMEX members'' accounts.
And people wonder why both silver and gold moved into backwardation over the past two or three weeks? People are apparently worried that they won''t be able to take delivery of gold or silver metal from the COMEX in the future. They''ll pay a premium now to get it now.
How is it possible that the CFTC and the SEC continues to look the other way as a couple big Fed member banks continue to overwhelm the market with the weight of their own trading?
"He who sells what isn't his'n
Must buy it back or go to pris'n."
- Daniel Drew
"I am a rich man as long as I don't pay my creditors."
- Titus Maccius Plautus (c. 254-184 BCE)
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