I have to tell you, the most recent COT, released Oct. 5, 2001, actually made me quite angry. I try to avoid that emotion, but I couldn't help myself. That's because this specific report proved so clearly and blatantly just how manipulated the price of silver is, that I was moved to try and do, once again, something about that clear cut manipulation.
I'd like to tell you what made me so angry, and what that means to you. What the COT showed was that a small group of dealers (they're called commercials in the report) sold naked short over 175 million ounces of paper silver contracts net, in a three week period. This period was from when trading was resumed on the COMEX after the World Trade Center tragedy, until Oct. 2, 2001. The key here is naked. Naked means no backing or no covering, as an uncovered body would be naked. In other words, they weren’t hedging silver they owned. I know these dealer short sales were naked for two reasons. One, even with the rally, silver's price was too low for a mining company to hedge. The miners are shutting down because of the low price, they're not thinking of locking in these low prices. Two, 30% of the entire COMEX silver inventory of 103 million ounces was buried in the Scotia Mocatta warehouse at World Trade Center 4, a building in the WTC complex destroyed when the Twin Towers collapsed. In fact, since COMEX has over 90% of total world known silver inventories, the 30 million ounces buried in the Scotia Mocatta warehouse represents a full quarter, 25%, of total world known silver inventories. Think about that for a second. A significant percentage of world silver is taken off the market, suddenly and for a time period unknown, and insider COMEX commercials rush to sell 175 million ounces of silver that they don't own. Does that smell right to you?
To me, it's clear manipulation, because there is no good answer as to why the dealers would sell short so heavily in such circumstances, other than the obvious - to control the price. To keep the price from reflecting market realities; to keep the price from exploding.