EDITOR NOTE: Rigging an expansive commodity market, such as silver, is an extremely sophisticated and complex operation not easily understood by regular investors. In the case of SLV, it concerns physical silver stored in depositories, futures contracts with varying expirations, and issuance of the actual ETF shares. Industry insiders involved in this rigging, such as CPM Group’s Jeffrey Christian, can easily deceive investors into thinking that the markets are not rigged by explaining only a part of the process that makes the rigging look like “business as usual.” In the video below, he explains it away as mere “rollovers’--or buying back a “short hedge” to roll the new “hedge” into the next month. Yes, this buying can cause the price of silver futures to rise--as you have investors who are buying shares of SLV, and funds who are “buying back” their shorts to offset their positions (only to short the next contract). What he’s not saying is that there are a total of 400 million ounces worth of short contracts in the market which by far exceeds all of the silver that can be hedged. He talks about up to 450 million ounces of unallocated silver that can be delivered as quickly as tomorrow should there be such demand. There is no such supply that’s readily available, and what he’s saying is blatantly false, according to many critics. Also, when he talks about 95 million ounces worth of SLV shares created, it was more like 120 million ounces (see the inventory change). When Christian claims that 50 million ounces were redeemed the following day, it was more like 13 million ounces. The point here is that CPM is supposed to be tracking this inventory, and the information he is providing is false--but is it more likely deliberately falsified? You be the judge. If you believe that latter, you’d have to determine the motivation. What is it? They got caught rigging the market and they don’t want people to know just how vulnerable they are to a massive short squeeze in light of the fact that there is not enough physical silver to meet demand and more importantly, not enough silver to cover their short positions!
Originally posted on CPM