As the old saying goes..."where there's smoke there's fire". I'm not quite ready to ring the alarm bells yet but there certainly is a lot of smoke. A lot of smoke.
For new readers, the topic of Comex cash settlement was discussed here back in December. I never wrote a full note on the subject but it was mentioned in the comments several times. Harvey was claiming then that the Comex settlement numbers didn't add up and that they had to be settling in cash, instead, and to get contract holders to take the cash, the Comex had to be paying a premium on top of the price. I was adamant at the time that this, if true, was setting a very dangerous precedent. Why? It's simple. If you are a big hedge fund and you just got a 10% or 20% premium to settle a handful of contracts in cash, why wouldn't you stand for delivery for 10X that amount of contracts in March? Shit, why not 100X? As long as the physical situation didn't improve, its free money, right? Sure it is!
I tell you this for one reason: I am not this "Benton" person. I have absolutely zero idea if "Benton" has any credibility, whatsoever. What I do know is that "Benton" has claimed for some time now that a consortium of hedge funds would stand for delivery in March...expecting the same, huge settlement premium when the Comex fails to deliver. "Benton" has always said that it would all begin on February 8. Hmmm....lots and lots of smoke.
OK, let's look at the charts because they're pretty friendly. First up, here's an 18-hour gold. Again, there's zero significance to the 18-hour period. I only chose it because it fits the space pretty well.
At any rate, the close today above 1365 was very important and now we just have to slog through some selling up toward the 1390 level. Beyond there, we'll run back toward the old highs pretty quick.
Now, silver is clearly where the excitement is. First of all, take a look at this 12-hour chart:
Closing above $30 in silver got the attention of Trader Dan, as well, and I highly encourage you to read his latest entry by clicking here:
Lastly, before we get carried away, remember these two things:
1) Blythe always attacks just when things look the most rosy. She has to because, if she didn't, price could get away from her real fast. If she doesn't attack soon, we'll be able to make even more assumptions about the causes of today's rally.
2) Today is Tuesday...also known as Happy Tuesday. Why? The EE is reluctant to add fresh shorts on Tuesdays because the Commitment of Traders survey is this afternoon. They often wait until Wednesday to attack so that they have a full week to cover their tracks. Read more here:
Let's keep a very close eye on the trading this evening and the overnight.
Its certainly an exciting time to be in the PMs! TF
9:00 EST UPDATE:
Just wanted to elaborate on a thought from earlier.
If "Benton" is for real and this rally today is related to his/her posts, you'd expect profit-taking tonight. As shown above, the "Swiss Stair" occurred on the COMEX today. The Benton theory is that the hedge funds will buy COMEX silver futures and demand cash + premium at settlement. It would seem logical then that today's rally would end when COMEX trading ended. It would not extend into the overnight. This is what we've seen so far. It Benton is to be believed, the rally will re-commence when the COMEX reopens tomorrow morning. This would seem to be a rather critical "tell", if you will. Tonight's giveback of 30 cents or so only seems to support the Benton theory. Let's see what the am holds.
Also, per the request of yours truly, TraderDan has drawn up a couple of silver charts. I suggest that you take a look. On his new blog, he also has a HUI chart for your review.
The sgs blog has an interesting take, too. They also expect some type of EE raid tomorrow:
You might want to read this, too, from Santa:
I'll keep an eye on things and will update later if necessary. Get some rest. Tomorrow promises to be a very interesting day. Turd out.