Comex Paper Silver: New Record Naked Short Interest

2014 total GLOBAL mine supply 877.5 million ozs. So Comex OI is now 110% of annual mine supply. What a sick joke.  – Craig “Turd Ferguson” Hemke on Twitter

I need to make a slight correction to Craig’s analysis.  2014 silver production is already used up.  70% of all silver produced is used up in manufacturing processes.  The other 30% produced in 2014 is sitting in jewelry boxes across India and China or in fabricated bullion form in private investment hands around the globe.

Because most silver is produced as a by-product of mining base metals, and because the world economy slowed drastically or contracted, it is likely that base metal mining production declined.  It is thus likely that silver output is declining in 2015.  Therefore, the open interest in silver futures on the Comex is likely even greater than the 110% of 2014 production cited by Craig.

Please note:  any open interest in silver futures on the Comex that is in excess of the amount of silver available for delivery – i.e. the “registered” account in the Comex vaults – is considered a “naked short.”  This is because paper obligations have been issued against physical silver that does not exist to be delivered.  In any other market, this activity would be stopped immediately by the regulators – FINRA, the SEC and the Justice Department. But the regulators blatantly ignore the most manipulated in the history of the world.   Click to enlarge:

SilverOI

This table above is the silver trading and open interest data from Friday’s Comex trading session in silver.  It includes the electronic Globex trading plus the Comex floor activity.  As you can see, the total open interest moved up to 192,527 contracts.   This represents 962 million ozs of silver – 110% of 2014 global silver production but likely a much larger percentage of the current 2015 global silver production.

To put the 962 million ozs in context:  the total amount of silver reported to be in Comex vaults is 179.8 million ozs;  the “registered”  and available to be delivered amount is 57.8 million ozs.  Please note:  the numbers reported by the Comex banks are suspect as to their validity, as banks have been successfully prosecuted for reporting fraud in other areas of their business activity and JP Morgan has been fined and censured by the CFTC for its Commitment of Traders data reporting.

Based on the numbers above, the amount of naked short interest on the Comex is 904.2 million ounces, which is the amount by which the total paper open interest exceeds the amount of silver – 57.8 million ounces – that has been made available for delivery.  Anyone see a problem here with the integrity of the Comex and its regulators?

The amount of July open interest – 456.2 million ozs – is 7.8x greater than the registered silver and 2.5x greater than the total amount of silver on the Comex.  The total open interest exceeds the registered silver by 16.6x and exceeds the total amount of Comex silver by 5.3x.

This market imbalance represents first and foremost a degree of market intervention and price-setting collusion that has never been witnessed in the history of any market, let alone the history of what is supposedly a country devoted to free markets and Rule of Law.

There’s a reason the Government is enabling this illegal activity to persist and to grow more extreme.  I have a bad feeling that no one wants to see this reason and I have a worse feeling that we may find out this year.

10 thoughts on “Comex Paper Silver: New Record Naked Short Interest

  1. Just wondering why they are even reporting this data, shouldn’t they be lying about it since they lie about everything else? Maybe as I think you said they feel it proper to give the masses hints before things collapse so as to satisfy themselves that they have a shred of integrity?

  2. @ Dave

    come on Dave…the reason….spit it out……as you have done so well on other topics….just ask’in

    dan

  3. Came the Bilderberg party to enthrall,
    Fabulous, fulminating, against the wall.
    “Should money be gilded at all?
    Silver released from the pall?”
    Thus united they stood in the hall,
    With each passing year less tall.
    “Let us leak crazy plans for the fall.
    Most people will hear the wrong call,
    Or lies that will make skin crawl.
    So a toast to success at the ball,
    For conquest, confusion and gall!”

  4. Wall St investment banks are calling for a rally of copper. Maybe they know a higher copper price is needed to prevent the silver market from blowing up? Once those hedges locking in a profit mining copper at a much higher price than current market price come off, I think potentially a lot of primary copper production where gold and silver are by-product could be in jeopardy. There’s been a dramatic over supply of copper thanks to artificial Chinese demand and their enormous amounts of unprecedented central planning on infrastructure, housing, etc. Many of the copper mines brought only in since 2009 needed copper well above $2.50/lb and a good % of the mines were so marginal they needed above $3/lb. Many copper producers did hedge but those hedges do not last for more than a few years and don’t last forever. If the copper price goes closer to $2/lb it should drastically help expedite a physical short squeeze in silver in my opinion.

  5. Dear Dave,
    You end your article by stating “There’s a reason the Government is enabling this illegal activity to persist and to grow more extreme. I have a bad feeling that no one wants to see this reason and I have a worse feeling that we may find out this year”.

    I shall be grateful if you will be kind enough to expand on that statement. Am I to understand that you expect the silver price suppression to intensify, and that you envisage new record low silver price ? If so, how low do you envisage the silver price declining ?

    1. Just the opposite. Why would the Government want to keep a lid on the price of gold and silver? What do gold and silver tell us about the US dollar and the US financial system when they are moving higher in price? Think about it.

  6. § 240.10b-3 Employment of manipulative and deceptive devices by brokers or dealers.
    (a) It shall be unlawful for any broker or dealer, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange, to use or employ, in connection with the purchase or sale of any security otherwise than on a national securities exchange, any act, practice, or course of business defined by the Commission to be included within the term “manipulative, deceptive, or other fraudulent device or contrivance”, as such term is used in section 15(c)(1) of the act. … except when it is in the interests of national security, as defined by the director of national security: see “Howe vs. The Bank”

  7. Gold/Silver manipulation is the linchpin that maintains the continued viability of the USD. The USG knows it and cites this clause as their de facto fallback.

    “when it is in the interests of national security”

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