"They struck with the margin weapon again, trying to help the shorts. I assume you have been following the short position in silver -- amazing." ===============================================================
g'morning ml, Yes I have. The COMEX Au/Ag open interest has been of special interest to me, and especially so now that the rumors of a possible short squeeze in the March Silver Futures contract seem to be picking up in a manner similar the Cubs' chances to make it to the world series in '04. <g> Go Cubs! <vbg>
According to Ted Butler, the aggregated silver futures short interest represents several times the known quantity of all the above ground silver in the world and is the subject of his campaign to inundate NYAG Spitzer, the CTFC and the COMEX crooks with missives to that effect.
The 'unusual' strength we're witnessing in the PoS is thought to be a result of a genuine shortage in the metal and is the basis for the above mentioned rumors. It is 'said' that some 'monied interests' who are long the March contract want to fulfill their silver (and copper?) needs by waiting in line to accept as many deliveries as the shorted interests can come up with. The first notice day of the March contract is Feb. 27th, two days after the February 2004 contract becomes history.
Well, a funny thing happened w/r to the February contract the day before yesterday........
The expiring February '04 open interest JUMPED from 40 contracts to 190 contracts which could indicate that there are 'interests' who may not wish to wait for the March contract to mature and simply jumped to the head of the line in order to get their hands on some silver.
Does this mean we get a squeeze? No, but this is the first bit of hard evidence somebody is looking to the Comex for their silver needs.
The newly positioned 150 contracts represent 750,000/oz of silver (150 X 5000/oz) and could conceivably be one of the drivers behind COMEX's decision to raise their margin rates. If so, I can easily see them raising the rates again quite quickly in an effort to dissuade other silver speculators from joining the fray.
With silver bullion apparently having a finite supply available to the commercial shorts, I would think, depending upon the number of silver longs who wish to take delivery, that the chances of the shorts having to default on their committment to make delivery has increased greatly and is prolly the reason that the COMEX came out with the following PR last week, like they're thinking of saving any butts but their own. <ng>
NEW YORK, NY, February 12, 2004 — The New York Mercantile Exchange, Inc., today established additional retail customer protections supported by a commitment of at least $10 million available at all times to promptly reimburse retail customers in the event that their clearing member defaults as a result of a default by another customer and the customer account margin funds are used to address the default.
Retail customers are defined as those do not otherwise qualify as an "eligible contract participant" under the requirements of Section 1a(12) of the Commodity Exchange Act, and are not floor traders or floor brokers on the Exchange or family members of an Exchange floor trader or floor broker who maintain an account at the same clearing firm.
Exchange President J. Robert Collins, Jr., said, "While the New York Mercantile Exchange has never experienced a clearing member default in its energy or metals markets, as our market and product base expands, we are pleased to be able to offer this additional layer of protection to our already stringent safeguards."
The more I think about it, the more this is starting to resemble the situation where overextended Palladium shorts defaulted on their committments to make delivery at the Japanese TOCOM exchange in the 90's. The Pd longs who wanted the product were left holding the bag, but not before the price of Pd went into orbit.
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