Silver Market Turning Bullish As Staggering 15 Percent Of Entire Annual Production Of Silver Shorted By Speculators In One Week!

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CYA: SE

With the Dow trading lower and gold and silver moving higher, today a 50-year market veteran told King World News that the silver market is getting bullish as speculators just sold short a staggering 15 percent of the world's annual production of silver in one week.  He also discussed the continued mainstream media propaganda.

 

John Embry:  “Just when you think things in the gold and silver space can’t get any more ridiculous, they do.  Last week’s Commitment of Traders Report, which came out on Friday, showed a massive change in positions in both gold and silver….

 

“The large speculators, who represent primarily large funds and black box technical players, reduced their longs substantially and increased their shorts by a stunning amount.  As you know, Eric, the commercials are on the other side — the bullion banks primarily — and they did exactly the opposite.

15 Percent Of The Entire Annual Production Of Silver Shorted In One Week

But look at the large speculators' position in silver, where they allegedly increased their shorts by 26,607 contracts in one week.  That represents a staggering 133 million ounces of silver.  Or put a different way:  These speculators shorted 15 percent of the entire annual global production of silver last week.

 

On the surface this should be wildly bullish in the near-term because the commercials routinely take the speculators to the cleaners by picking their pockets, and now the long specs are short.  The only thing that defuses my short-term enthusiasm is my ongoing doubt about the veracity of numbers provided by the CFTC.  In my mind, the CFTC is to the commodity world what FIFA represents to oversight in the world soccer scene and I don’t mean that as a compliment.

 

Record High Open Interest In Silver

Nevertheless, what is of interest is the blow out in overall open interest in silver on the Comex to over 190,000 contracts, which I believe is a record.  Thus there are over 960 million ounces exposed in these contracts, which exceeds global annual production by over 10 percent.  This number dwarfs by a vast margin the open interest in any other commodity, and I believe it points to the degree of suppression currently occurring in the silver price.

Why would there be this amount of open interest with silver trading well below the price that over half the world’s pure silver producers can extract it from the ground?  In a rational world, who would be short this amount of silver when the vast majority of silver coming out of the ground is being consumed in growing industrial usage and above-ground inventories have been sharply reduced?

So I remain convinced that we are heading for an upward explosion in both gold and silver, and this current bizarre situation in the paper market just strengthens my conviction.  This is especially true when looking at the extreme overvaluation in the global stock markets.

Stock Market Overvaluation And Continued Mainstream Media Propaganda

 

I’d like to commend Michael Pento on that very valuable piece that he contributed over the weekend.  I think it’s really important that people understand the extent to which the U.S. stock market is overvalued, and he did a wonderful job of laying it out, looking at any number of key metrics.

Pento did that without even commenting on the fact that the U.S. economy is falling away underneath the market, which is going to put great pressure on earnings going forward.  But I don’t think an awful lot of people look beyond the price action and the idea that they are going to print a lot more money and interest rates are going to remain low.  So people continue to risk their money in the stock market.  Regardless, Pento did a really important job of helping the public with that piece.”

 

Embry added:  “The headline late last week in the Financial Times stated, ‘Rich countries to resume growth role as developing nations stumble.  Now anyone who understands anything about economics, particularly Austrian economics, actually believe that rubbish they should actually be ashamed of themselves.

 

The so-called rich countries, the U.S., Japan, Canada and most of Europe, are buried in debt, and in my opinion have zero chance of any sustainable growth until their excess debt issues are addressed.  One of the main reasons developing nations are stumbling is because demand in the rich countries is waning and so they are having trouble selling their goods.  It is remarkable to me that the alleged quality newspapers in the mainstream media are printing this kind of garbage