The big “buzz” over the weekend in the precious metals community was about the enormous short position in paper gold and silver taken by the bullion banks per the weekly COT report, published by the CFTC. The short position taken on by the big banks blew out by 54,832 contracts, which is the biggest one-week increase in history. This translates into 159 tonnes of paper gold.
Ostensibly this was done ahead of today’s June Comex gold futures options expiration, a time when the banks attack the price of gold using paper contracts and use the hedge fund stop-loss selling to cover their shorts and book easy profits. Wash, rinse, repeat while the CFTC and Government regulators take payoffs to look the other way – “nothing to see here, our markets are free.”
Below is a graph (Comex June gold contract) of the attack on the price of gold and silver, which occurred shortly after 2 a.m. EST, when Asian physical markets begin to retire for evening and the London fraudulent paper market opens (click to enlarge):
You’ll note that the ONLY news that would have precipitated a reaction from the precious metals was word that Greece was edging closer to default. This is an event that should drive precious metals much higher in price.
Instead, right at the 8:20 Comex floor open, 3,453 gold contracts were dumped on the market. This is 345,300 ozs, or 10 tonnes of paper gold. As of Friday, there were only 372,630 ozs of gold that were available for delivery according the Comex gold warehouse stock report. In the first 30 minutes of Comex floor trading, 17,840 contracts were sold. This translates into 51 tonnes of paper gold, or 4.8x the actual amount of physical gold available for delivery. In other words, this was an exceptionally aggressive manipulative attack on the metals today. This is unequivocally illegal and fraudulent selling of paper gold because it is almost entire unbacked by underlying physical gold. In creditor law this is know as “fraudulent conveyance.”
It’s been pretty obvious to anyone who pays attention to the precious metals market that the Fed/banks are trying their hardest to keep gold below $1200 and silver below $17. But both metals are in a nice uptrend since November. As you can see from this graph below, so far today no real technical damage has occurred (click to enlarge):
The other motive for the banks to smash the metals like this is the fact that “first notice” day is Friday. First notice is the day on which delivery notices can be issued to long a contract. As of Friday’s final open interest report, there were still 122,309 June contracts open. This is an unusually high amount of open interest with 3 trading days left before 1st notice. And technically delivery notices can begin going out the evening prior to the stated first notice day.
Anyone holding a contract needs to either be funded for potential delivery under that contract or has to sell by the end of trading the day before first notice. The bullion banks typically capitalize on this event by “helping” the selling decision along by smashing the market with paper.
While options expiry is often a target of paper gold and silver price raids, it’s a mere sideshow of what will occur if just 25% of the standing longs as of Friday decide hold for delivery. 25% would be 30,577 contracts, or a little over 3 million ounces – 8x the amount of gold available for delivery. The bullion banks are going to be desperate this week to try and force the big hedge funds – the long side of the bullion bank short position – to dump their long positions. My guess is that today will have gone a long way toward to taking the open interest in June gold below 100k, contracts.
Last Friday I was exchanging emails with Bill “Midas” Murphy of LeMetropolecafe.com and Craig Hemke of TFMetalsreport.com. We were discussing the incredulous increase in the short position in both gold and silver taken by the criminal cartel bullion banks (primarily JP Morgan, Scotia, HSBC). Craig summed it up with quote that is too good not to share:
I’ve never seen anything like it. Reeks of desperation. Why? For all the reasons we discussed yesterday (on the Shadow of Truth).
- Keep price below Nemesis Line and 200-day MA
- Thereby manage western sentiment and demand
- Manage silver into a high below $18.20 and away from a clear, massive “W” bottom
- 158 metric tonnes
- Equivalent to the entire holding of Thailand
- 5% of total global mine supply for 2015
- 75% of total US mine supply for 2015
- and this is the worst…65% of the total (registered and eligible) Comex vault, which stands tonight allegedly at 7,835,317 ounces
- about 93,000,000 ounces or 2900 mts
- 11% of total global mine supply
- 52% of total Comex vault