The markets are closed on Wednesday for the Fourth and much of this week people will not be active in the markets. This is the time when the manipulators get the biggest bang for their buck. Exactly why I am expecting the metal prices to sustain a major hit.
Their modus operandi is to hit the market with a large amount of shorts when the trading is thin. We are already going into this week with weak prices. The support levels have been breached and the opportunity to push the price even lower is too much of a good thing to be passed up. The lower they can push the price, the cheaper they can buy back the shorts to cover their position.
Many of us are wondering where the bottom is. The bottom is as low as they can manipulate it to. Over the past few years, they have been painting the OI figures by using EFPs. This makes the OI look better but the short contracts are still open but they have been shifted to the London market. These contracts (theoretically) still need to be covered. I say theoretically because when the market goes ‘no offer’ they will likely void these contracts.
The terms of trading on the COMEX say that they don’t have to delivery to the short contract holder physical metal but it is the COMEX’s option to settle in fiat. The COMEX was established to provide people a way to own metals, back in 1933 the public was limited to owing only 5 ozs of gold. With the COMEX people could own more than the limited amount.
Today it is rumored that the COMEX has very little physical metals and most of the stated metal is in paper contracts. When short contract holder demand physical delivery en masse, the price will go ‘no offer’ and it will mark the end of the COMEX.
They want the price as low as they can get it primarily so they can buy back the enormous amount of short contract they have issued. If they don’t and the price of metals rise it will certainly end in major losses and the likely demise of many of the commercials.