Understanding reality

22/12/2010 by Philinje.

Ted Butler is the world’s foremost expert on silver. Period. We just got very lucky because he posted an article for his paid subscribers for free public consumption, here:

http://investmentrarities.com/ted_butler_comentary12-21-10.shtml

This article explains the background of what happened at the CFTC meeting on Dec. 16, including its abrupt ending which seemed to indicate a lack of a conclusion. But as I said, the meeting on the whole represented a positive development, and Ted’s article explains why.

Note also that he explains exactly how this manipulation has been allowed to happen for so long, and why that already has changed. Interestingly, he think Chinese traders are the culprits.

The CFTC will now examine the OTC swap book of anyone with a supposed hedge exemption. He was amazed to learn that the CFTC never did that previously, because apparently the CME had that responsibility. It looks like that responsibility just shifted to the CFTC. And so, soon enough, we will know who is on the short side of JP Morgan’s swap book.

Regardless of who that is, the fact remains that the short side is running out of places to hide, and mostly because the blatant manipulation has caused a flight to physical metal. As Ted says, the real crime is that the supply and demand dynamics have been distorted, and now physical supply is running out. That means without a doubt that the silver shorts are toast, and the end result will be ugly for them.

This situation is evolving quickly and it’s likely there will be plenty of action in January.

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