(originally posted 12/12/20; updated 3/1/21)
I can’t imagine how you must be feeling or what you are thinking. Who are the “you” in that statement? The 8 largest silver shorts on the COMEX; those that decided to try to manipulate the silver price down and make some money; those that made the decisions that got your mostly big banks into this position.
You seemed to do OK for 8 or 9 years. Manipulating silver and gold to the downside and making some money leading the managed money traders (mostly technical traders) around by their collective noses. As the top 8 silver shorts, you are now almost 80,000 contracts short on the COMEX. As you know, that is over 400 Moz. (million ounces). How are you going to buy back or deliver 400 Moz. of silver in this market without losing your ass?
You helped manipulate the silver price down to under $12/oz. in mid-March 2020, but you were only able to reduce you massive short position by about 40 Moz. and have been stuck at about 350 – 400 Moz. since. What was your average entry price? My guess is around $16/oz. You had a couple months until mid-May before the price went over $16/oz. when you could have tried to buy back your shorts. I assume you did try to buy back as much as you could without triggering a big price rally.
Then the price goes up. Per Ted Butler (https://www.butlerresearch.com/), the 8 Big Shorts in gold and silver futures are about $10B (yes, B for billion) in the hole between realized and mostly unrealized losses. You do read Butler, don’t you? Well, maybe not until recently because surely if you had been reading him you would have known that this would happen. I guess maybe JPM (JP Morgan) was reading Butler as they used to be the big short of the 8 Big Silver Shorts. But, they managed to whittle down their short position to flat and accumulate 700 – 1000 Moz. of physical silver to boot. I’ll bet for the right price they would sell you 400 Moz. to help you out of this fix. Or maybe they will lease the silver to you so you can’t be accused of naked shorts.
As you know gold accounts for a majority of the $11B of your losses. So, why I am talking about silver? Because I think silver has been more heavily manipulated and the fact that you couldn’t get your hands on anywhere close to 400 Moz of silver at anywhere close to current prices. I think you can probably squirm out of your gold short position, take your lumps and lose a few billion. But it will be much harder to get out of the silver position. I’m sure you know why, there is just not that much silver for sale.
From what I read there is only about 2000 Moz. of above ground silver in 1000oz. bars. Much of that has gone into the silver ETFs- a total of 1120Moz according to Butler. There is 380 Moz. in the COMEX warehouses, much of that owned by JPM. So, who is going to sell you 4000 Moz. and at what price? Out of the about 1000 Moz. of silver that is mined and recycled per year, almost 75% of it is consumed by fabrication and industry. You don’t want to compete with industry for silver. The world wants its solar panels and smartphones. This leaves only about 260 Moz. per year for investment demand and you are short 16 months what I call ASPI (Available Silver Production for Investment).
As I have said on my website – TheSilverStory.com – if what you have been doing isn’t illegal, it should be. You have managed to control the price of silver (and gold) for years to the detriment of producers and investors. Now how do you get out of your huge silver short position? It seems you will need to have some Prime Directives, such as:
PD#1 Do whatever is needed to exit the big short position without losing a fortune or your company.
PD#2 Don’t get charged or convicted of doing anything illegal.
PD#3 Remember everyone is watching including the DOJ.
So, PD#1 can make you break PD#2 because of PD#3. Maybe you should just take your losses and buy back the shorts now before the price goes higher, which it will no matter what you do.
Steve McWhirter – AgMan