This is why the beat down yesterday was so successful. For the PM players that understand the drill it was no surprise to have the spot market tank ahead of COMEX op-ex and the sudden rally in both metals right after expiry was the clued-in buyers stepping up to grab bargain bullion. The media commentary on the subject is as clueless as ever, but most traders understand the market is completely rigged and will wait for the Cartel to cover shorts before buying. Fine. Now they threw us a curve by hitting the market hard one more day after op-ex and in the process they sucked in a lot of schmucks that were selling and taking losses one day after buying back in.

More importantly, just count how many bearish warnings came out of the advisory letter crowd yesterday. Many of these guys have thousands of subscribers that act on the advice they are given, and I saw quite a few that stated it was too early to get back in, new lows have been breached, etc. So just one extra day of pounding on the PM sector was quite effective for those that have the objective to keep the metals from gaining steam.

Also, how many people were holding contracts in the money and opted to settle for cash instead of bullion on that dip? If you can create a wave of fear in the market that silver is due for lower lows, then perhaps some specs will take cash and wait instead of demanding silver bullion. And every ounce is precious if you are staring at a nearly empty warehouse and note that many hundreds of millions of ounces may be demanded by contract for delivery...

This whipsaw action will eventually simmer down. Each takedown event puts the Cartel at risk because they can only accomplish it by issuing new paper contracts (digging themselves in a deeper hole) or by dumping real physical bullion to cool the market (reducing even further the amount left on the shelves). The diminished returns of hitting the market hard when most specs have already been washed out is not worth that extra risk to pound silver lower. Meanwhile, as the price dips more buyers are lined up to take on new purchasing, and other shorts are more willing to cover and close positions. There is a limit to any intervention. The guys that draw pretty lines on charts always forget to account for this when they post their 'silver-is-going-to $8' nonsense.

cheers!

mike