"The national budget must be balanced. The public debt must be reduced; the arrogance of the authorities must be moderated and controlled. Payments to foreign governments must be reduced, if the nation doesn't want to go bankrupt. People must again learn to work, instead of living on public assistance."
--Marcus Tullius Cicero, c 55 B.C.
Recently, I have received some queries about the silver squeeze I have been discussing for over a month. Some Café members have invested in silver stocks in anticipation of such an event. Others would like me to clarify what I am talking about and why.
It all began with a complete change in the way silver was trading in October, 2003 It went from trading very heavily, to trading lightly. The tone change was noticed by some of the Café’s Comex floor contacts and was reported to the Café membership. At the time, silver was trading a bit below $5.20.
Not since Warren Buffet accumulated silver in 1997 has silver moved up so sharply so fast. The comparison is striking.
What is important to appreciate is what Warren Buffet saw then is even more apropos almost six years later (Mr. Buffet is known for his long-term thinking). I am no expert on the silver fundamentals like Ted Butler or David Morgan, but I know the market has been in a supply/demand deficit all these years and the silver market has been managed just like gold has. The Gold Cartel needed to keep the silver price suppressed to make sure there was no undue focus on what they were doing to gold. It wouldn’t look right to have gold at $280 and silver at $8.
Where and how the bad guys found enough physical silver to facilitate their scheme is beyond me. We just know they did find adequate supply, but more importantly, they used the derivatives paper market to keep silver under control. We know this because of the size of the commercial short position, which is concentrated in only a very few players and dwarfs the amount of physical supply available to bring to market. This is why GATA is supporting Ted Butler’s effort to expose the silver scam – one that has hurt so many investors and THE PEOPLE in silver producing countries such as Mexico.
The recent change in the way silver has been trading for many years tells me the Silver Cabal has hit the wall. They are running out of physical silver supply to continue their scam. They will be tapioca if enough buyers ask for delivery of Comex silver because they won’t be able to make the deliveries without driving the price to the moon. Why could this occur in the near future vis-a-vis months gone by?
Think of the confirming information flow sent your way by MIDAS thanks to the input from some very thoughtful Café members. Let us review a fair amount of it as it came in:
December 23 - Gold $410.65 up 55 cents - Silver $5.71 up 2 cents
A STALKER Of A Gold/Silver Tale For Christmas Time
Hi Bill,
A gold and silver dealer that I know told me today that he recently spoke with a very large coin and bullion dealer that he deals with, who told him last week that Warren Buffet has been buying a lot of silver. Buffett is also buying futures and plans to take delivery. This large dealer said that he expects a short squeeze by Buffett soon.
My dealer stressed that he has dealt with this large dealer for twenty years and he is not prone to exaggerate…..-END-
January 13, 2004 - Gold $423.50 down $2.60 - Silver $6.56 unchanged
GATA Love That Silver
Dear Bill
You will probably remember that when the gold was struggling with the $325 I sent you information that a big European fund which bought 2.6 billions worth of gold. This information came to me from a friend, a banker which took an active part of the purchasing process hence was total 100% reliable.
At the time, the fund's target was $380 at which point it intended to exit. Well, they are still in.
But, he now tells me that this fund switched some of it's gold to silver in the first 10 days of January - worth 250 millions dollar. Searching the world they couldn't find the 40 millions silver ounces they wanted, so some of it went into derivatives.
January 14, 2004 - Gold $421.40 down $2.10 - Silver $6.40 down 16 cents
An Ominous Close For The Cabal And Gold Shorts
Some more input from my friend in Europe.
The European fund I told you about few days ago, bought most of the silver in future contracts in Comex due to lack of physical supply. Most contracts are due in few months.
China is buying physical silver in a big and consistent way. These purchases started some weeks ago.
January 15, 2004 - Gold $408.30 down $13.10 - Silver $6.19 down 21 cents
Ouch! Gold Cartel Wins A Battle
Bill
A follow-up from my report to café members yesterday on the unavailability of silver bars in the UK:
I phoned Chard, my previous supplier, today. Here is our dialogue:
Q Lilly: 'I note you are sold out altogether on silver bars'.
Chard:' yes, there is great interest in silver bars recently'
Q: will you be getting any more in'?
Chard: 'yes ......... IN ABOUT 3 MONTHS'
Q: 'how much do think you'll be able to get hold of'?
Chard: ' 6 kilogram, IF we'll get it'
Q: 'when did you last get a delivery in'?
Chard: '6 weeks ago'.
Q: 'how much did you get'?
Chard :'16 KILO. WE HAD ACTUALLY ASKED FOR 100 KILOGRAM'.
Q: 'and when did you order before that?'
Chard: 12 months ago. 100 kilograms, we got that straight away. No
problems'.
I.e. : there WAS SO LITTLE DEMAND until recently, THAT 100 KG LASTED
THEM 10 1/2 months!
AND NOW THEY CAN'T GET ANY!!
Lilly Stuart, London
January 18, 2004 - Gold $406.40 - Silver $6.30
The First Clear Chink In The Gold Cartel’s Armor!!!
Hi Bill,
Thanks so much for your daily commentary; without it I would feel lost. Just to back up what you were saying about a potential short squeeze in Silver, I wanted to share this with you. I contacted my broker at REFCO about purchasing silver call options at a strike price of $7.00. He gave me the following prices for MAR and MAY:
March $650
May $2,400
Obviously, something big is going to happen before the May options expire. Feel free to spread the word in MIDAS if you feel it is worth mentioning.
Kirk A.
January 21, 2004 - Gold $410.90 down $1.80 - Silver $6.19 down 11 cents
Conflict At The Bundesbank
Dear Bill
My friend is telling me that a giant Swiss company took a position of 3.2 billion dollars in gold and silver.
No doubt the big money is going into the precious metals.
(MIDAS note: this company is a household name)
February 2, 2004 - Gold $398.40 down $3.60 - Silver $6.01 down 22 cents
GATA To Aggressively Support Ted Butler’s Effort To Expose Silver Market Manipulation!
But now for silver: two weeks ago I ordered this bank by telephone from The Netherlands the delivery of 5 kilograms of silver. They affirmed the purchase at € 216 ($270) per kilo (20% Tax Adjusted Value included) and we agreed on delivery in my holiday last week. When I visited the bank on january 28th they handed over to me this 5 kilobars (inscription: OEGUSSA / 999,7 / feinsilber / 1000 gr). I liked them so much, that I ordered at the same moment the purchase of another 5 kilobars and went skiing. At the end of the afternoon I returned to the bank. The girl reacted rather embarrassed: she had been calling several times to (I think) the national headquarters of the BTV and maybe other addresses. And had got the message that there was no silver for sale anymore. I asked her if my price limit had been the problem, but she said no, she just received the message over and over that therr was no silver available for selling for any price (The message she got was: ‘Es ist sehr knapp’. In english: ‘It is very scarce.’) A higher bid price I gave her appeared not to be able the solution. The answer kept coming on the day’s after (january 29th and 30th ): ‘ there is no silver for sale, and (ATTENTION!!!) there will not be for the coming two or three weeks.’ The girl excused herself to me, and promised to keep trying in the coming month. But she said to have few confidence in succeeding in the short future.
Is this a signal for a silver squeeze or isn’t it! My preparedness to bid higher prices could not lead to a purchase. I am beginning to have a strange feeling that, although silver is finished, the powers of the cabal succeed in maintaining low prices?! Even while they have to admit not to be able to deliver!
-END-
Then, THIS weekend a completely different source informed me another investment firm (or bank) is going to buy "ALL THE SILVER IN EUROPE" and plans to do so by sometime this spring. What is even more interesting, they have notified the regulatory authorities and told them what they are up to. I repeat: the authorities KNOW what is coming!!!! The buying firm has gone out of its way to notify the regulators they are going to buy a great deal of silver and do not wish to be chastised for doing so. I am sure they have done so to give the authorities time to put the shorts on notice. Therefore, there can be no official repercussions to the buying firm. That is how confident the buyers are!!!
OK, so take a gander back at silver's weekly/monthly charts and note the price action recently as compared to the past. Something HAS changed DRAMATICALLY.
I don’t have any "inside" information about a silver squeeze. However, I have been an extremely large commodities trader in the past (limit positions at times) and do know something about the markets. The easiest and best way to confirm fundamental market input is to observe (over time) the technical action of the market itself. The recent action IS confirming what I am hearing from a variety of informed sources.
Does it guarantee a SQUEEZE, which is very rare? Nope! Yet, I think the odds are 60-40 in our favor, and those are extraordinarily high odds for such an event. In 1987 silver went bananas in March, rallying $3 per ounce in a very short period of time, like in a week. I was heavily long at the time. Took the profits and bought thousands of cheap copper options. Copper went from 59 cents to $1.46 by the end of the year. Had I sold out then, I would have ridden out into the sunset and you never would have heard of me. Fortunately, I survived my eventual debacle for another day, with one more big play in me before I have no choice but to ride into the sunset. This time I intend to watch The Gold Cartel being carried out instead of letting them carry me out.
Anyway, back to silver. Yes, I think a squeeze is coming. There is just too much legitimate smoke out there. Has to lead to a coming fire in the not too distant future. However, the real squeeze, should there be one, might not come until May. No way to predict that. Regardless, the "unusual" silver trading action of late suggests something BIG is brewing!
One thing to keep an eye on is how the European silver premiums behave relative to the US. If they go to a sharp premium due to extraordinary European demand, silver will leave the US for Europe, exacerbating potential Comex delivery problems.
Stay tuned. I am sure we have not heard the last from a very sophisticated group of Café informants!
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