The following is an excerpt from commentary that originally appeared at Treasure Chests for the benefit of subscribers on Monday, February 27, 2017.
Incredibly, open interest (OI) on COMEX silver continues to skyrocket, now only a few thousand contracts from all time highs.
Why is this happening? Answer: Hedge fund buying with other people's money. What's more, the options are largely viewed as sacrifice trades (hedges), seen as lost money before the trade is put on, because if they don't pay off this means the rest of their gambling probably will.
Now normally, this would be a very bad sign for silver prices, because in terms of COMEX speculators, this is a 'bubble' based on history precedent.
So why are these people, whoever they are, repeating this apparent mistake again (and again, and again), where buying under such conditions has cost these clowns big money every time?
Answer: Maybe they don't follow OI figures. This is likely correct, which is what makes these people 'useful idiots'.
Thing is, the economy is tanking under the hood, and COMEX silver speculators are convinced a 'magic bid' is coming into this market because of this, so no matter (because God takes care of the less endowed), silver will go higher anyway, even though the banking cartel (who have unlimited credit) has it's collective finger on the sell button at the CME, and has no intension of taking off until 'things change' and they are forced to sell - again - just like the last time.
And one must admit, stocks are high and likely not far from tops; the computers are programmed to buy precious metals when stocks are going down (at least for now because stocks are going up); and again, Bob is the optimistic COMEX silver speculator's uncle - it's destiny you know.
That said, if stocks do in fact roll over soon enough, with gold (especially) and silver catching a further bid because of this, still, once the markets realize the downturn in stocks is not just 'garden variety', and leveraged speculators must 'de-leverage', because so much of the world's 'hot money' is denominated in dollar($), a synthetic squeeze develops (as debt is paid down) - bringing a bid into the $ - applying pressure to precious metals - which is when COMEX speculators have historically puked up their positions. This 'rinse / repeat' cycle is the backbone of the banking cartel's precious metals price suppression scheme because they know idiot COMEX speculators can be counted on to repeat their insane behavior every time.
Again however, the question that has got to be on growing numbers of people's mind's these days is how can this 'insane' behavior keep being repeated time after time with the same result? Is it just stupidity as Einstein suggested?
No - I think it's also desperation - but let's call it 'logical desperation'. Why logical desperation? Because it took an approximate 50% increase in COMEX volume last year to keep a lid on silver prices via the machines, and it will likely take more this year as owning silver appears to be a 'logical' decision based on it's increasing bright / diverse future. Too bad they are not buying silver - no? Stupidity to the extreme for supposedly smart guys - no? Because we do have the bankers with their collective finger on the COMEX silver sell button, and they will not take it off for any reason because the balance of the larger market(s) manipulation of all other prices (stocks, bonds, currencies, commodities, etc.) depends on their ability to keep the relatively tiny silver market contained - because it's used to control gold - and they will do so right to the end.
So in the end, if seasonality is to define the timing again, while this stupidity in the paper silver market can continue for about another month, by April, only the truly brave (stupid?) will still be playing this game against the bankers - again - if history is any indication. This situation would not be such a concern if leverage was not so pervasive in the system right now (at all time highs); but as long as this is the case, and COMEX continues to set prices for precious metals (which it still does), the next 'liquidity event' will cause the hot money hedge fund managers gaming COMEX silver right now to sell - one more time - because apparently these idiots never learn.
Could things be different this time? Because look, Clif High is forecasting Bitcoin prices tic for tic, and he's predicting $145 silver this year and $600 at some point, minimum. All I can say is Bitcoin doesn't have a futures market, nor is it correlated to the entire global pricing nexus, meaning silver is considerably more important than any crypto-currency. Of course this could change if the proposed Winklevoss Bitcoin ETF goes public, which will have options on it. This was the idea behind GLD, which is when things changed for gold, stealing primary demand from the real metal, and is something to keep an eye on for Bitcoin holders now. Such events have marked tops in many commodities throughout the years - anything the bureaucracy's price managers want to cap.
Back on track now, bottom line is, I don't think things will be different this time, where once the stock market turns lower for real and traders realize this, the resulting $ rally will kick the stuffing out of precious metal prices one more time before central authorities are justified in panicking again, and in response, crank up the printing presses again. The question then arises, 'just how high do stocks go then, followed by the unwinding described above?' While nobody knows for sure obviously, if I had to bet on anybody being right, I would have to go with Fibonacci, where as you can see below, a perfect projection target encompassing the entire rally from the 1982 bottom would be approximately 22,500, again, as seen in the picture below.
That's all for today folks. If you want to see the charts, observations, and conclusions that go along with them from this commentary, please visit our site at treasurechests.info and subscribe.
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