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Wednesday, December 21, 2011

Fear Hides Signs of Strain

People (traders) are bearish on silver and gold because standing with the crowd is easier than standing against it without emotion.

This London trader is no fool. The money flow analysis confirms the strains in the silver and gold market discussed below.

Someone is borrowing central bank gold to run important pivots to scare the hell out of the TA followers.

Real Silver Lease Rates (1-Month LIBOR less 1-Month SOFO) and London PM Fixed Silver Price

Real Gold Lease Rates (1-Month LIBOR less 1-Month GOFO) and Gold Price, USD

Participation at the COMEX has been flushed. Complete flushes are consistent with D-wave bottoms.

Gold London P.M Fixed (Gold) and the COT Futures and Options Open Interest Stochastic Weighted Average (WA)

London Trader - There are Tremendous Silver Shortages

King World News is receiving reports of significant waits for delivery of silver. Today King World News interviewed the “London Trader” to get his take on the situation. The source stated, “It is so tight, the silver market is so tight that we’ve been waiting three weeks plus, before this takedown, for deliveries of size to arrive. I’m talking about tonnage orders. This is also key, most of the silver being delivered was refined after the orders had been placed, and again, that was before the takedown. You can just imagine how long the wait times will be going forward.”

The London Trader continues:

“This game is getting so stretched that it’s going to break. You don’t think the Chinese know this stuff. If we get a close above the 200 day moving average in the mid 30’s on silver, watch silver immediately pop $2 or $3. Silver is totally incredible. There is nobody in COMEX silver contracts anymore, other than casino players. The only way they have been able to keep silver depressed is by borrowing silver from SLV to meet immediate demand. That’s the only reason silver isn’t trading $10 to $15 higher right now.

There isn’t enough silver for investors to buy (in large amounts) so they have been using SLV as a flywheel. SLV is over 20 million ounces short on the silver they are supposed to have in the vaults to back the shares which have been issued. The silver isn’t there. So there are people who purchased SLV to own physical silver, but all they have is shares that aren’t backed by the physical silver.

Part of managing the price of silver recently has been for the central banks to attack the gold market. But what is interesting is how this manipulation of the gold price was effected. Obviously, the bullion banks, which are working with the central banks, have inside knowledge as to the timing and just how much gold is going to be available to them.

So, in order for the bullion banks to maximize the effect of the physical gold they get from leasing, they add high scale paper leverage. They then short-sell just enough tranches of COMEX contracts to surgically take out three important support pivots....

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