The paper silver open interest on the Comex is at all-time highs. The previous all-time high was 224k contracts when the price of silver was pushing $50 in 2011. The current paper silver open interest is 229k contracts with the price of silver at $18. At least the degree of fake silver open interest in silver was more appropriate to the price level at which silver was trading in 2011.
Having said that, the current paper silver open interest is entirely inappropriate relative to the amount of silver reported to be held in Comex silver vaults. 229 thousand silver contracts translates into 1.15 billion ozs of paper silver. That number represents about 37% more actual silver ounces produced by global by mining companies in one year. Compare that paper representation of silver to the actual 193 million ozs of silver reported to be held in Comex vaults, primarily “held” by JP Morgan which is reporting nearly 102 million ozs of silver in its vault.
Notwithstanding whether or not those 101 million ozs of silver are actually sitting physically in JP Morgan’s Comex-designated custodial vault (and much of it has likely been hypothecated), the amount of paper silver issued primarily by Comex bullion banks is nearly 6x the total amount of silver reported to be held in Comex vaults.
But it gets worse. The amount of silver that has been designated as available for delivery, or “registered silver,” is only 30 million ozs. In other words, the amount of paper silver issued by the Comex is 38x greater than the amount of silver made available to be delivered to the holders of those silver contracts.
The point here is that the Comex is likely the world’s most fraudulent market. In fact, It’s inappropriate to refer to the Comex as a “market.” The Comex is nothing but a mechanism by which the Fed, in conjunction with the Treasury’s Exchange Stabilization Fund and the Comex bullion banks, exerts control over the price of silver.
The degree to which the Fed et al has to exert fraud in order to contain the price of silver is reflected by the absurd imbalance between paper silver contracts issued in relation to the amount of the underlying silver available for delivery. In any other commodity sector this situation would be labeled “criminal.” With silver and gold it’s labeled, “nothing to see here, move along.”
As with silver, the trading patterns in gold reflect a high degree of desperation by the bullion banks to contain the price and demand of physical gold. Interestingly, right now most of the blatant manipulation appears to be connected to the London p.m. gold fix activity on the LBMA. We believe it’s evidence of a growing shortage of physical gold available to deliver into India, China and other gold-buying countries. We explain this view in detail in today’s Shadow of Truth episode:
The next issue of the Mining Stock Journal, released this evening to subscribers, will have new junior explorer idea with 5-10x upside potential. It will also have an alternative explanation to the JNUG suspension of new unit issuance and why this could be very bullish for the sector. You can find out more about subscribing to the MSJ here: Mining Stock Journal Subscription Info.