Silver went into a trading range of 17.50–18.50 and remained there through the summer. THIS WAS THE FINAL showdown area where the long term demand/supply dynamics met. The tight consolidation persisted and the short positions kept growing and growing – but the price would not break below 17. The underlying demand was like a brick wall. A last attempt to hold the market down resulted in this final tight price range.

By August the seasonal end to metal weakness had arrived on the calendar for metals. The stage was set. The transfer of control was complete. Was it the bulls or the bears who had gained control?

The final turning point for silver took place on September 1st. After a strong two week rally off the 17.25 area – and with silver at 18.90 – the internet waves hit with this story:

JP Morgan Chase to Close Proprietary Trading Unit, Rivals May Follow Suit

I cannot tell you exactly how big of a part this may have played, but when combined with the strongest seasonal month of the year for the metals, and the fact that JP Morgan was holding 40% of all silver shorts, and with price so compressed, that a flash point occurred in the market.

This brings us to the second part of the story.

After a review of the chart above and we can see how this scenario played out. Yes, it came as supplies where dwindling already and all the other fundamental bullish arguments. I am not downplaying that. But the point is no matter what the reasons are – the fundamental demand/supply equation has to come to a head at some point. Giving the shorts no ceiling position to short the market for the length of time it went on is like extending credit to a gambler in a poker match in when the cards are not going his way. At some point – his credit limit is reached. It seems the limit may have been reached by the shorts. It seems as we have seen the flash point. With every other asset in fraud or manipulation on earth – was it any wonder the metals weren’t?

http://www.lewrockwell.com/spl2/silver-price-breakout.html