Loading ...We know what happened on Thursday and await Monday afternoon to learn of Friday’s open interest action. On Thursday the open interest in COMEX silver ROSE 3,164 contracts, this represents 15.8 million ounces. The all-important December contract rose by 4,588 contracts or roughly 23 million ounces! 23 million ounces is the equivalent to 12 days of global silver production. Let me explain this a little further, total volume for the day was 466 million ounces, open interest for Dec. with just one month left before first notice day for delivery stands at 616 million ounces. The entire world (excluding China because they do not sell their production) only produces 700 million ounces of silver per year, yet the COMEX in one day trades two thirds of all production on the planet and has contracts outstanding with only 1 month left for nearly 90% of all global production.
So the open interest rose by 15 million ounces in just one day, what does this mean? Did someone have an extra 15 million ounces that they just “HAD” to sell at four year low prices? Did someone suddenly come in to an extra 23 million ounces that they would like to deliver in December? No, of course not, what happened is “contracts” that did not exist on Wednesday morning were “opened” and the trade initiated by sellers. Do they have to actually have the silver? No, anyone who has the money to put up as margin can sell as many contracts as they wish. No product necessary, just cash as collateral for margin and in the case of the December contract, they can sell an additional 12 days of global supply. Please understand that when silver, real silver enters the physical market place …it is used. It is used in jewelry, it is used in industrial processes like high tech gadgets, solar panels and the like, and it is even used for many medical purposes also. Oh, and let’s not forget “coins” and bars, the U.S. mint alone will use maybe 8% of global production for Silver Eagles and the Royal Canadian mint about the same …so right here we are talking about 15%+ of total global production being spoken for!
My point is this, if real silver was being sold by panicked investors we would see a glut of product. Silver would be sloshing around everywhere and falling off of trees like autumn leaves, it’s not. Again the silver market has gotten tight and there are “wait” times for delivery. This is not explainable in any way possible if the price of silver (and gold) were truly “made” or set by a free market, they are not. I was always taught that if you sold something you did not have and could not obtain to settle the deal, it was fraud. In my opinion this is exactly what you are seeing in silver. More silver is “promised” than actually exists. If you look at the COMEX and their own numbers, they claim to have 1/10th the amount of registered and deliverable silver than is promised just one month out! I believe we are now at a critical price point where if the paper shorts push any further, they will unleash a tsunami of demand which actually breaks the casino and shows whether it is real or fraudulent.