By Ted Butler

A number of different factors have converged, creating what could be a lift-off point for the price of silver (and gold). This confluence of readily verifiable factors shows the silver market to be in a low risk and high reward situation. The factors involve both the paper and physical silver markets. The only question, as always, is if the manipulators, led by JPMorgan and protected by the CFTC, can thwart the set up once prices rally.

The structure in the paper markets, as defined by the CFTC’s latest Commitment of Traders (COT) and Bank Participation Reports, as well as the year-end OTC Derivatives Report by The Office of the Comptroller of the Currency, are extremely bullish on any objective historical basis. This means that the commercials, as a whole, have a greatly reduced total net short silver position after the recent engineered sharp sell-off. Normally, when the commercials have

Silver; Past, Present, Future Ted Butler

(Editor’s Note: The following is a speech delivered to the attendants of the Phoenix Silver Summit 2009, which took place over the weekend. - JSB)

Good afternoon and thank you for being here. It’s an honor to get to speak with so many interested in silver, especially at such an interesting time in history. I’m going to ramble a bit, and try not to get too detailed and save some time for questions where you can get specific.

I’d like to acknowledge a few people who are not here that had an awful lot to do with me being here today. First, I’d like to thank Jim Cook, from Investment Rarities in Minneapolis, for his

Both gold and silver had short, sharp rallies once Globex trading began in Sydney on Friday morning. Both were sold off immediately.

However, at 1:00 p.m. in Hong Kong [midnight in New York] a serious rally began which really accelerated to the up-side at 11:00 a.m. in London while North America slept. The rally ended at 9:00 a.m. in New York…shortly after floor trading began on the Comex. From there, both metals got sold off [for an hour] into the London p.m. fix [3:00 p.m. London - 10 a.m. New York]. Once the London gold fix was in, away they went again, with both metals being sold off hard once the gold price went vertical through $1,000…which occurred shortly before 1 p.m. in New York. Once that happened, profit taking dropped both metals back. Estimated volume on Friday was 152,368 contracts…with a switch effect of 9,898 lots.

Here’s the 2-year gold chart.

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Friday morning trading in gold in the Far East started like every day over there lately…heading lower.

Of course all this ended abruptly at 3:00 a.m. New York time…and about half an hour before the London open. But shortly after London opened, someone put up the sign that said ‘that’s it for the day’…and except for a $4 rise over the next 14 hours of trading…it was. Silver was similar.

However, I guess we should be thankful for small mercies…at least the ‘key reversal to the upside’ I spoke of yesterday managed to bear fruit. But despite gold’s gain of about $28 on the week, the shares actually finished down about one percent. Maybe next week will be better…although the RSIs for both metals are quickly approaching what some people might consider as being overbought.

Below is

As expected, the Thursday morning rally at the Sydney open got snuffed out in short order. Gold remained flat in Hong Kong until 4:00 p.m. in their afternoon …3:00 a.m. in New York. Then the boyz showed up, and down gold went until the London open, a short rally got turned over, and the bottom for the gold price came at the London a.m. fix. From there it rallied gently until the London p.m. fix…and then away it went to the upside.

Silver was the same, except it didn’t wait around for the London p.m. fix before it headed up. Its rally began promptly with the Comex open in New York. Both metals remained strong even in electronic trading after the Comex closed…and despite the strength of the US$.

Gold open interest dropped another sizeable chunk on Wednesday…down 8,387 contracts to 345,804. In silver, o.i. went the other way for the second

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It came as no surprise to me that both gold got sold off a bit the moment that the gold market opened in the Far East on Monday morning. But it didn’t amount to much, because shortly after 2 p.m. in Hong Kong…1:00 a.m. Monday morning N.Y. time…gold began a slow rise that continued right through the London open. This lasted until the silver fix in London (noon) before selling off about ten bucks. But as soon as floor trading opened on the Comex in New York, the price rose…then spiked to its high of the day…before it was gently capped and then got slowly sold off until the end of Globex trading at 5:15 p.m. Eastern time.

Silver followed a similar route, but it got sold off shortly before the Comex opened…with the selloff continuing until about 8:30 a.m. in New York. From there it rose in fits and starts

Gold started off early morning Far East trading on Wednesday as it usually does lately…going into a slow decline. And, as usual, at 3:00 a.m…shortly before the London open…the price began to rise, this time sharply. But it was all for naught once again, as someone was there to sell gold hard the moment that the London a.m. fix was in. The decline lasted for the rest of the London session…through the Comex open…and only reversed at the close of London trading at 4:00 p.m….11:00 a.m. New York time. However, this attempted rally was not allowed to amount to much, but gold did close the Globex session about eight dollars above its lows.

click to enlarge

Silver was far more volatile. The price rise at the London open was impressive until it, too, ran into the same seller at …

As per usual these last few days, gold did nothing in Far East or European trading. However, about an hour before the Comex opened in New York, the gold price headed lower in a very similar pattern to what happened on Monday. See the graph. This decline lasted until 9:15 Eastern time when a rally commenced. But it was all for naught once the London p.m. fix was in. The bids disappeared, and the price dropped $12 in just a few minutes…and that was it for the day…as the tiny rally that followed was negated by the end of Comex trading. The boyz just aren’t letting the gold price show any signs of life when the Dow is under this kind of pressure.

The US$ was not a factor yesterday.

The silver price followed the same

Gold sold off gently in thin Far East trading on Monday morning…and the bottom was in a couple of hours before Hong Kong closed. From there, gold rose until about 10:00 a.m. in London, and although it tacked on about another ten bucks during Comex trading in New York, it had given all that back by the Comex close.

As for the silver price, it bottomed at the same time as gold and was off to the races shortly after London opened. The top was was in shortly after 10:30 Eastern time when it appeared that the about-to-become-parabolic rally drew the attention of the boyz. From that point on, the silver price didn’t do too much.

As would be expected, volume in gold on the Comex Friday was pretty heavy; but somewhat lighter yesterday. In silver, volume was heavier yesterday than it was on Friday…which stands to reason when you consider the

Tuesday’s low in both gold and silver came at the close of trading in Sydney. From there, a rally began that lasted right until the London p.m. fix. Shortly after the ‘fix’ was in, gold popped up another $20 and silver another 40 cents. That $20 rally in the gold price looked like short covering to me. The party ended for gold at a very familiar time…the close of trading in London…and silver about 15 minutes after that. From that point on, someone made sure that gold only traded sideways and that silver gave up all its gains from its London p.m. fix rally.

The HUI was up a wonderful 15%…and some of the precious metal stocks turned in some rather spectacular performances yesterday…but we’ve got a long way to go to the up-side before we can break out the party hats.

Open interest changes for Monday were as follows….gold o.i. fell