Sorry – stealing from George Gammon here. He was the one who got me started on a lot of this when I was looking up the repo issue in late 2019. That dude terrifies me. “I will tell you how the US will turn into a smoldering pile of ash in FIVE easy steps”! That being said – check out his channel. He takes some extremely complex items I could not possibly comprehend in 100 years, and gives you the play by play.
I decided to write this because I wrote a rather lengthy article at 3AM this week explaining how it is POSSIBLE this silver short could work. I have had some conflicting comments, lots of questions, and I wanted to boil this down into more of how this would work…that is, if people were planning such a thing. Which no one is, of course.
The high level, first.
- Buy out retail
- Buy PSLV
- Induce industrial purchasing
- Nicely ask shorts to cover by inducing squeeze from several fronts
Step 1 – Buy out retail
I’m not going to go too far as we saw what happened. There was a lot of semi-loose organization of people wanting to stick it to the banks, sort of. Many people who covered this failed miserably by making this a WSB thing. There’s stackers for years that have been doing this dealing with the manipulation of metals seeing a high short position – and seeing the WSB people organize a literal army of people to attack a 140% short position was almost an Arab Spring moment in this country. Many of us in the PMs know that hidden inflation that 99% of you don’t know about has been the root of wealth inequality in this nation since….the day we went off of the gold standard.
What happened was there was a cross section of those in WSB that also had interest in PM, and what you did was awaken a sleeping giant in those involved in PMs and miners. All of my channels on YouTube I watch blew up with WSB and how silver needs to be part of this. We saw the post on WSB, and then people who threw $300-$400 per share for a $5 per share company got livid that any attention was going away from their short targets. To me, I saw 1.5 million “broke millenials” become 8.5 million angry people with dry powder in a week. This was your civil war moment, without firing a shot. This is how you could get your wealth inequality back without those pesky drawbacks of socialist dictators.
By unwinding silver, you could reveal its true value, without suppression – which would have revealed true inflation over the last 40 years. As someone said, and I’m sorry for not remembering who recently, “It’s like 40 years of gains in 4 months”.
By buying out retail, this would get people items of value in their pocket. $30 per ounce, $35 per ounce with premiums. If we are going to a place with Weimar-style hyper inflation in the years to come – every single person who just went out and bought silver this weekend just stored their current “wealth energy” in those bars, which are redeemable on the other end of hyperinflation.
But more importantly, it got media attention of the below:
- Manipulation – many had no idea this was a thing, it was all conspiracy, right? Yeah, no. This actually happened. MANY TIMES. Most recently, JP Morgan fined $920 million. Fun exercise. Copy and paste this into your Google search browser: “precious metals price manipulation fines”. This exercise has brought about an understanding that these banks have been manipulating precious metals, for years, and paying fines. They pay these fines as a line item expense like stapler supply. They used this manipulation to suppress prices, then buy the actual metal cheaper. They then use this metal, they bought at a discount, to generate futures contracts to infinity to move the price down when it suits them. Please read all of the articles on this that come up. Educational.
- Inflation – many are starting to learn about how inflation is misreported.
- Supply – how little retail supply there actually is for you and me to protect ourselves against inflation. You just can’t get the mint to make more American Silver Eagles – as congress limits this number…you betcha…so we, the people, can’t run up price. I have seen many folks scoff at this entire exercise as futile because the retail market may only be like 5% of supply. I felt their analysis was missing some layers of the onion, so I wanted to add a bit below.
- What its uses are. One of my friends told me silver is dead, a Democrat is coming into office so you should look at investing in green technology. Yeah – it’s moments like this that this movement has helped. 60% of demand is manufacturing (more on that later) – and a good portion of that is in solar panels. Almost 100 million ounces now are in cars, with 78 million or so cars made last year. Electric vehicles are said to have twice as much silver. So you are looking at 1-3 ounces per car, in like 50 different parts. Trace levels – but the highest conductor of electricity, so they cannot substitute copper
- Understanding more about the COMEX and how the system works. Many are just floored. One of my buddies is a former IRS agent and didn’t understand why there would be a 400 million ounce short position with PMs going up. There are legitimate hedges out there, yes – but an overwhelming majority of this was for speculating. One of the media questions posed to me was, “do you have evidence this is 400 million ounces naked short”. First – I never said they were all naked short. Frankly – a lot of THIS part of the conversation is above my pay grade. I can refer people to Ted Butler about this, and have. He wrote a great article on this, and had a tremendous interview as a follow up to the price smash.
I had a back and forth with some questions to David Morgan today on twitter. He has no idea who I am, so I’m not giving any impression we are buds or anything. He posted a tweet with a video.
I watched the video and had some questions. I know he didn’t advocate one way or the other, and twitter is rather limited in depth of Q&A. But the video insinuated:
- plenty of silver, nothing to see here folks
- this leasing thing is too hard for anyone to figure out and we had to educate people on it.
I now had conflicting source, and no scholarly journals.
To which David then discussed abnormal premiums on 1,000 oz bars, which sides with what Andrew Maguire has discussed with tight supply.
Long story short with all of this – retail supply getting crushed may NOT immediately affect 1,000 bar supply, but this is many layers folks. What happens when there is no physical supply or people cannot stomach $8-$12 premiums???
Step 2 – Buy PSLV
While me and you aren’t going out there and buying 1,000 oz bars, PSLV is taking possession of bars. Many do not trust that SLV somehow moved 100 million ounces or the like into their possession in 3 days. I don’t know the logistics of this, but I do know Andrew Maguire in interviews had major concerns when he got deliveries of COMEX bars and serial numbers they sent didn’t match the inventory sheet he was provided. I have seen in reports where SLV had a 10% short position, but most recently saw it reported at 4%. So, the CUSTODIAN is JP Morgan. This JP Morgan.
Look – I got nothing against JP Morgan. 250,000 employees and perhaps 249,995 are really good, decent people trying to make a living. But…I’m sorry, the stakes are too damn high. This is why I’d look extremely hard at investing with PSLV.
And – the memes and videos are starting. James Anderson of SD Bullion recently posted some amazing videos you have to see. I wish I could get a youtube link to pass on!! Check out his twitter for the content.
Now – if you get ETFs buying sizable quantities of 1,000 oz bars, and supply is already tight, and premiums are high…and price starts creeping up, more people buy silver. More people are joining wallstreetsilver daily on reddit – now approaching 20,000.
What this does is start to really get the attention of industrial users. Well……I am skipping a step here. I have been following hedge funds tracking this closely, and they are big longs in this. Every delivery month, I am seeing on YouTube (meaning, not a scholarly journal) that people are being paid a premium to settle their contracts for cash and roll over to the next month. Essentially, they are being bribed to NOT take the physical metal by being enticed to roll over. These groups are making coin just buying futures contracts and demanding delivery, then cashing out at a premium.
I believe this group is also about to front run Industrial Users. If you start to see some major ETF buying and going into the last week of February there still a lot of contracts not knocked down…I would not put it past these hedge funds to deny premium to roll over and stand for metal delivery. Maybe 10 million ounces? 50 million? If you look at the numbers this morning, you see 117,000 contracts still there.
That is 117k x 5000 ounces per contract, or about 600 million ounces. And this is before perhaps major orders from ETFs and possibly Hedge Funds adding more towards the end of the month with possible media frenzy covering this. Can you tell me, definitively, that those 600 million ounces in Open interest right now do NOT want to stand for delivery? See..I just read Marin Katusa’s email today about silver, and he also dismissed the retail guys. I said in my article on Tuesday that it would take $4 billion in metals to move this. He said $6 billion – so we are in the same stratosphere. What I think is POSSIBLE he might be missing is Hedge Funds wanting to front run industrial users in a tight market.
Step 3 – Godzilla attacks
I can tell you, if this month goes on and #silversqueeze gets some more attention, more people buying in to ETFs and physical, and 1,000 oz bar premiums continuing to rise with massive open interest – to ME, THAT is the signal where a Toyota will buy a year’s supply for 10 million ounces. Ford follows with 5 million. Samsung for 10 million. This is how a good old fashioned bank run happens. And – in March, you can buy same day. So if this run DOES happen, they will continue to get in orders faster than they can service them.
One thing Katusa might have also overlooked is there are a LOT of YouTube guys that follow the COMEX very closely. One thing they pointed out to me is that if you have the metal to deliver, in the first few days, you hand it over. You may see open interest knocked down a lot the first few days of the delivery month. And then…it stops. In December, I counted FOUR DAYS with 0 deliveries. This was like a 70 million ounce month, and about half delivered in the first week – then you saw spot price rise all through the second half of December. To me, my GUESS was yeah, there were macro events – but they also had to source 40 million ounces on the spot market. So, with respect to Katusa, I don’t see any more than 40 million ounces per month liquid on the COMEX. Is there metals there? YES. But not AT THAT PRICE. I tell you, if I was some rich bastard vaulting giant bars of silver and gold, this is my doomsday stash, and I’m not selling my doomsday stash for a 5% rise in silver with worldwide economies running raging debt with each country trying to run their currency into the ground. THAT IS EXACTLY WHY I have those metals, and I’m NOT SELLING. So, Rob Kientz pointed out they they ESTIMATE 50% of their stores are available, possibly, but they don’t know. This VASTLY overestimates the liquid COMEX metals able to service the PRICES ON THE CONTRACTS.
Higher prices, would of course, free up supply.
But do not tell me this past December they had the 70 million ounces. Then, if that’s the case, why did it take until the last day to settle the last 11 contracts? Really? You just felt like holding on to them all month? No. People had to be bought off at premiums (Hedgies) or eventually provided the metals.
So you are Toyota, and you have 50 parts in your cars that have silver, and these could be parts made in plants all over the world. If your car has one ounce of silver in it, at a cost today of $27 spot, do you care if the price of that silver is $27 or $100? No. You get it done. Because if you do not have that one ounce of silver, your entire company grinds to a halt. Ample supplies? Puhlease. They are trying to convince me that all have plenty of metals? Last year was industrial demand was 475 million ounces, but there was a net 350 million deficit in supply. With Just In Time delivery systems, no one stockpiles anything anymore. Well…supply has been tight ever since COVID as refineries have been backed up due to processing gold demand.
I feel industrial demand will pick up this month. $1.9T stimulus bill is about to be passed, and there will be a GREEN element to this presidency, requiring lots of solar and EVs. If last year’s demand was 475 and dampened due to COVID and most years are 500 million ounces, lets assume that same demand with a 5% kicker for solar and EV worldwide. That’s 525 million ounces, or about 43 million per month. Not every month is a delivery month, but maybe many people decide to take more delivery now than the next delivery month. Much of this supply is through refineries and private deals – and there are several other exchanges than the COMEX. From Maguire, he’s now having hard times getting from his usual refineries as a wholesaler because someone paid more and cut him out. So wholesalers don’t really have a lot of places to find material.
I can see supply getting more and more scarce, and if Hedge Funds come in with some purchases – along with RICH guys from family firms buying up to add more to their doomsday collection…
This leads to….
Step 4 – epic short covering. Now, this gets complicated, and again, this is above my pay grade when dealing with the details of who is short, who is long, net short, etc. What I can tell you is that some people say it’s a 100 million ounce short position (and they may say is net short) and Ted Butler talking about the big 8 who are short 400 million ounces – is that net? Don’t know. Point is – we have all heard 400 million ounces short. No banks apparently want to part with the metal, because doing so would then reduce their ability to short in the future and play games with prices.
- ETFs buying up anything they can in 1,000 ounce
- Retailers buying up coins, bars, etc
- Hedge funds buying up 1,000 oz bars and futures contracts on the COMEX
- Very wealthy people I can imagine making calls to their family offices to place large orders to get it on the COMEX
- Industrial users starting to get front run by hedge funds, start to pile in. This is what happened in 2011, I’ve been told.
We are HERE, if this was the run up in 2011. Note the pull back.
Does the above look familiar?
So where are we in 2021 terms, and where is this going???
I believe this then results in price hitting $35 inside of 45 days. The second half of March I believe is when they may have problems sourcing at $27 or whatever the contract was for. Supply at $27 or $30 or $32 doesn’t exist. We already touched $30 twice in this run, and the next time it hits $30, it’s going to $32 and $30 will be the next level resistance.
At the second half of March, I think things get dicey. 2 weeks to fulfill the contracts, and everyone that has bars, isn’t letting them go. 400 million ounces need to cover, with people who probably have a good chunk of that in silver but won’t part with it.
I believe this is the catalyst that quickly propels to $50. However, this might got right through that like a hit knife through butter. 3rd time past $49. All of the fundamentals there. No shorts. Yes – supply from retail will come in at $50, but sourcing 400 million ounces in a week? In good delivery bars? Nope. I heard in 2011 refineries were backed up 8 weeks. Today, they have back logs due to COVID.
So…this is where my overshoot theory comes in. I bought SLV call option lottery tickets for $54 strike price March 30th. I put my money where my mouth is. This is not investment advice, so don’t listen to me. I’m just some idiot on the internet. Speak to a licensed financial advisor about what to do with your money.
And there you have it. NO ONE has a crystal ball, and the guys I listen to on YouTube to connect all of these dots? All of them could be speaking out of their ass too. So do your own due diligence, and take a look at the article I wrote to point you to all of sources I listen to.
My call for end of March? Who the hell knows. Go talk to the brilliant chartist guys I love to watch like Patrick Karim, Deso, and Chris Vermeulen. My charts above are the equivalent of George Gammon stick figures. So there. I would not be surprised to see $75-$100 with a stupid unlikely chance of $150 with FOMO and stimmy checks coming in to drive PSLV into orbit.
Note, PSLV just celebrated its 100 millionth ounce a few days ago. I think this month, with the billboards that are going up for #silversqueeze AND all of the videos being created passed around with PSLV in them…I think this month all of us can really do our part to show support to PSLV’s business model of taking physical delivery of the silver!