The Battle Continues

I must admit that I am not really watching anything but silver right now. The way the action continues to be centered around $36 is really fascinating.

First of all, its not just me. My pal, Trader Dan, has picked up on this, too.
http://traderdannorcini.blogspot.com/2011/03/still-watching-silver-deliveries.html
Note that Dan is also paying close attention to the remaining March deliveries. As you might expect, Harvey is all over this. Be sure to read his update tonight.
http://harveyorgan.blogspot.com/
Here's a c&p of the salient points from Saturday:
"And now for our object of interest, silver.

Again, we had another volatile day at the silver vaults as silver moves around faster than the Lone Ranger's silver bullet. All the action occurred at the customer level.
Two customers received two lots of silver totaling 694,164 oz  (599,210 oz and 94,954 oz)
Three customers withdrew 3 lots of silver from 3 vaults:

1. first customer:   12,489 oz
2. second customer;  363,078 oz
3. third customer;  154,464 oz.

total withdrawal  530,031.

Net addition of silver to the vaults therefore was  164,133.
We had a tiny adjustment addition of 29 0z of silver to the customer.

The Comex folk notified us and this is totally mystifying us, a grand total of ZERO OZ of silver notices were sent down yesterday.  And this is in a delivery month!!!!!.  Blythe Masters must be beside herself on this.

Thus, the total number of notices remain at 978 for a total of  4,890,000 oz of silver.
To obtain what is left to be served, I take the OI at 893 and subtract out Friday's deliveries at zero which leaves me with 893 notices left to be served or  4,465,000 oz.

Thus the total number of silver oz that is standing for this delivery month of March is as follows:

4,890,000 oz (served)  +   4,465,000 (oz to be served) =  9,355,000 oz
Yesterday we had  9,510,000 oz so we most definitely lost  155,000 oz to cash settlements and probably a huge profit to boot. Nobody in the right mind would pluck 100% of the total cash waiting for delivery and then roll to the next month.  Because the next delivery month is equal to the current month in cost to the investor due to lack of contango it makes no sense to roll unless you receive your handsome reward.

Many of you are alerting me to a yahoo finance chat group discussion where one individual is having trouble receiving 3 contracts of silver and that the comex are offering him SLV paper with a 70% premium.
I have no verification as to the authenticity of this.  However I am trying to get this individual, if he exists, to contact me.

I would like to point out, that 4,445,000 oz of silver that remains to be served is huge with about 9 trading days left. Approximately 500,000 oz of silver must be served on average for the next 9 days. I think Ed Steer is going to lose his bet to his friend who bet Ed that the silver will default.  Let us watch this closely as the month of March ends."


Besides the open interest numbers, the main thing you'll want to watch is the contango/backwardation between March and May. The first sign of real, imminent trouble on the Comex will be the March11 trading at a premium to the May11 (backwardation or "the backward asain", as Hyde says). IF that begins to develop, the short squeeze may, in fact, be on.

Now, take a look at this updated chart. For me, the key area to watch is 36.18-36.28. You can see why here:

Based on today's action, I'd say there is a very high likelihood now that we are going to push through this area, perhaps as early as this evening. When that happens, the only remaining line of defense for the Wicked Witch and her monkeys is to fall back and try to create a double-top at or near 36.75. Since this containment strategy has failed oh, about the last 20 times or so, there's no reason to expect it to work this time, either. A break of 36.75 will cause another round of short-covering and silver will be drawn to $37.50 like Charlie Sheen to an 8-ball.

Regarding, the POSX (my new name for the USDX), Gonzalo Lira has submitted an update that you should take a few moments to read:
http://gonzalolira.blogspot.com/2011/03/toldja-dollar-broke-lowerso-now-what.html

OK, I've got a last of $36.12 so let's go get em! This could be a very fun 24 hours! TF

p.s. One more thing, as the Euro is taking out some resistance levels today, I thought you might like to see a euro/$ chart. Looks now like 1.45 is coming pretty soon.