If the source is corrupt, the data must be as well.
The nature of counterintuitive silver price action, secondary to ongoing, and blatant price manipulation lends itself to the swirling dreams of conspiracy and encourage those who choose to ignore the trail of bodies left behind by the powers that be.
Whether it’s daily volume, open interest, or warehouse data released by the CME…
…Or the dry, granular electronic schedules submitted by the largest traders and compiled by the CFTC for public consumption - the Weekly CoT Report.
Why Bother Rigging Something That 14 People Actually Look At?
The question comes up a lot.
The government rigs anything and everything. We are lied to, brainwashed, propagandized to the point where ‘everything’ is one giant illusion.
For now, spot price for all major world commodities arise from the COMEX futures market.
And the presence of a small group of sellers (of last resort) — or the few against the world is confirmed by the weekly reporting of positions held by all large traders.
Contrary to assumption, rigging BLS data, manipulating GDP, and/or re-calculating and substituting inflation data is simply not the same as fixing a Commitment of Traders (CoT) report.
Commitment of Traders (CoT) report is a weekly electronic schedule submitted by large traders to the CFTC detailing their positions each Tuesday at the close of trading.
They put it right out there in the open for all to see.
The CoT report provides a breakdown of aggregate positions held by three different types of traders:
Because the “Commercial traders” are considered “hedgers” and the fact they maintain a large presence in all futures markets, it is easy to overlook concentration. (Even when you are the regulator).
And concentration is (by definition) manipulative because a dominant position held by a few trading entities in any market cannot have a benign influence on price formation.
The SEC defines illegal concentration as 5% or more of a stock or option position held by one entity.
The 4 largest traders on the COMEX maintain 40% or more short concentration.
They likely do, but must also make concession because intervention would disrupt the market, and admitting that it exists would be bad PR - to say the least.
I understand there are many who claim the CoT data is faked or fictitious in some way.
It's worse than that.
They don’t even try to hide it.
Anyone can go to CFTC.gov and access the data that spells out concentration.
(I remember watching an interview with one of the most ‘prominent’ (ego-maniacal) publishers in the precious metals space a few years back and nearly falling off my chair when in response to evidence of price suppression and the COMEX he said that “no one can understand any of those little numbers they put out… The primary objection many have to the concept is that price suppression could be happening without them knowing about it first!)
What would be the point of making up all of those ‘little numbers’?
What conspiracy could possibly make sense here?
That the big commercial traders ‘want’ to paint a picture of manipulation as some sort of double diversion?
Have you, dear reader, seen the detail in that data?
Or taken the few moments to explore the markets and commodities included in those reports?
Why don't they just get it over with and conceal it like they do with London Bullion Market Associations (LBMA) position data?
The simple answer is because they can.
Who is questioning them?
Certainly, not the regulator.
And few traders even use data to begin with.
Partly, because technical analysis has long become the standard religion for all fiduciaries.
Price direction, volume, momentum, and moving averages are programmed into the trading algorithms.
And the commercial banks are the primary brokers to the hedge fund/managed money/technical fund counterpart/clients.
The weekly reports paint a consistent (retrospective) pattern of price action.
Aligned with a consistent pattern of (CoT) positioning over many years and decades.
Commercials cap rallies induced by hedge funds who, in turn, buy purely on momentum.
Then they rig the price lower (using a variety of trading tactics) by inducing hedge fund selling, thereby painting the ‘tea leaves’ of technical analysis.
Of course, the Commercials rarely ever ‘lose’, and profit by the hundreds of millions over these brief cycles.
Obviously, silver is not the only market where this occurs.
Silver is ‘special’ because it is the most rigged - or the most dislocated from it’s underlying supply and demand fundamentals.
Another reason they can get away with putting the data right out there for the world to see is that it’s just much easier to concede that it’s all rigged.
It is sad when politics maintain a far greater hold over the minds of men than the simple truth.
And this leads to the sense that it will never end. Despite investigation of that same data (much of it compiled and archived) reveals that we have departed from this lock-down pattern in the recent past.
Yes, the commercial banks (and the exchanges) involved are giant commercial Too Big Too Fail entities who, as a group, comprise the primary nodal points for the world financial system.
And this makes it all the more dangerous and inevitable that it will fail at some point.
COMEX warehouse movements and CME contract delivery reports are documented to the extent that if deep enough pockets took the time to fully digest, the implications, heads would spin.
At the same time, the greatest irony is that if any significant new (non-banking) longs stood for delivery, they would likely get a call from the CFTC.
Less than $100 Million worth contracts posted for delivery would overwhelm the normal percentage of registered warehouse stock posted delivery.
But wait, COMEX is not ‘meant’ for delivery.
Should we ignore the fact that JPM holds more than half of all COMEX silver inventory?
Why would they make that up?
Ultimately, the contractual agreements at the heart of the system serve at as a placeholder for faith and confidence. (A similar faith and confidence integral to the entire fiat system).
COMEX doesn’t need to default for the confidence to break or for the physical market to resume it’s inevitable prowess over price discovery.
Whether it comes from the outside and is blocked, or it’s JPM who initiates the squeeze, derivatives would wilt by the wayside. Call it a default or whatever you want.
As I put forth in part 2, if JPM has not melted all the eagles they’ve accumulated over the last 5 years, they’ve buried the corpse.
From the bank’s perspective, if it destroys a few of their cohorts in the process, so be it.
They’ll just take them over for cheap in the next round of bailouts — (if the dollar survives that long)…
Then silver will "price" based on physical supply and demand - not on derivatives. And it will be out of reach for the 99.99%.
Next up, a deeper look into the consequences.