Monday, January 24, 2011

Interesting Financial Stuff, Monday Jan. 24

Silver and Gold Sell Off

I found this on a message board today. It has veracity because it is over a couple of weeks old (Jan 7), and so far it is amazingly accurate. So, I clipped it.

In an earnest effort to help as many silver longs as I can I will relay information as I know it.

Major hedge fund traders are going to be buying hundreds of millions of dollars of March contracts during the last 3 weeks of February. The strategy is simple-force Comex to pay a hefty premium on contracts that CANNOT be delivered. Will this work? It worked like a charm in December. Those guys were all kicking themselves because they should have bought 10 times the amount of contract that they actually had in December.

This time around, they are getting everyone they know to get involved in this trade. They will pool their money together in order to get a large number of contracts so that Comex will not be available to deliver-thus forcing a hefty premium. These former traders are gonna pull a train on Blythe with all their hedge fund buddies and there is not a thing Blythe can do about it.

HOWEVER THERE IS A CAVEAT!!!

These traders have gotten word in the last 48 hours, that Blythe and The Morgue is about to undertake a major raid on GOLD in the hopes that silver will sell off too. Therefore, these traders are advising their colleagues to refrain from buying March silver contracts unless silver breaks $31 again. Their understanding is that Blythe cannot effectively execute a silver sell off but Blythe and The Morgue can still execute an effective GOLD SELLOFF.

If and when this GOLD sell off comes, scheduled for this Friday or perhaps next week at the latest (that would have been the 14th thru the 21st) Blythe is hoping that gold will break $1300 and go as far down as $1250. Blythe will be short selling intermittently in the silver pit but her main goal is to cover as many silver contracts as possible.

Once this Gold induced sell off is done watch for the mother of all rally in the silver pit. The hedge funds will be buying like crazy, but the MAIN assault will not take place until February wherein these former traders expect a rise of at least $10 (which was what happened to silver from October going into December).

December was just a dry run (RAID) on the Comex. The success and ease of that RAID has emboldened these traders to re-try the same scheme with a lot more money this go around (March delivery). The only defense Blythe has is to engineer a GOLD SELLOFF in the next two weeks in order to suppress silver so that she can cover her SILVER contracts.

So yes, I am very bullish on silver since I know that Comex cant deliver this March, but am expecting a sell off from a gold induced intervention.

I have been tasked by Blythe's former traders to spread the word about the fact that there is not enough physical silver in the world to cover The Morgue's short contracts. That is my role.

- I have a hard time buying off on that last line. For clarification, Blythe Masters is head of commodities trading at JP Morgan, often referred to as the "morgue." However, the gold and silver sell off did in fact occur during the weeks of 14 and 21. This piece was dated Jan. 7. Remember these are contracts. If you can push the paper price down, you can pick up the physical stuff. I hate presenting anonymous comments from a yahoo message board but this one seems to have amazing clairvoyance.

I clipped this tonight. Expect more downward pressure tomorrow. Contracts expire. Adding to positions on Wednesday. http://harveyorgan.blogspot.com/

Update 0415 MST. Gold down 21.00 bucks, silver down .75 cents pushing 3%. The predicted rout is on. 

The Continued Stock Market Rally

The 600 billion dollar flood of new money is scheduled to run through June. In addition to that, ZeroHedge reports this...However, what that also means is that the US stock market is about to become awash with another $25 billion in suddenly free cash every single week, until the entire $200 billion SFP buffer is depleted. In other words, take the liquidity impact of POMO, which is roughly $25-30 billion a week, and double it!

Once all of this has been absorbed, there is serious talk on Capitol Hill to allow American Corporations to re-patriate the one trillion dollars sitting off shore that they refuse to bring stateside and pay taxes on. If they are allowed to bring that money back duty free, I expect to see a good deal of it funneled back in the market. They will probably time that event to coincide with the ending of POMO and QE2 in early June.


Summary

In my humble opinion, anybody shorting this market in any way, shape, or form needs their head examined. You simply cannot fight this short term. Either be long or stay out. Be patient. This will take most of this year to run it's course.

Of course this could all change dramatically, with a number of nasty unforeseen events possible.

I am going to sit chilly until mid-Feb on my existing precious metals. They simply can't wash me out because I am prepared to ride this to any bottom they want to drive it to. I am going to double my physical amounts, allocating 2/3rds of my free cash to gold and average in lower. The only thing that could change my mind would be an event like all of the world's billionaires suddenly giving up their fortunes to pay down the USA's 14.1 trillion dollar debt.

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