I am not sure why $36 silver represents any more of a crisis to JPM than $40 or $30 for that matter. They have been putting on new shorts all the way up, and closing out some of the shorts on weakness. So my guess is they maintain a losing spread by being short for so many years but the overall liability is not that much worse now than it was a few dollars below the current price. The biggest issue for JPM to deal with is the fact they have tried several times to yank the carpet out from under the sector and lately the spot silver price has bounced right back. It means to cover they must pay up and compete with other buyers instead of just rolling over the market and letting the sellers come to them. That, IMVHO is indeed a big problem.

Looking at a longer term chart for silver it appears every $5 or so the Cartel digs and makes a fight out of it. Look how long it took to surpass $20. Then $25 fell relatively easily. Then the battle for $30 went on nearly 3 months. So far $35 has been defended but I doubt it will hold out much longer.

The amount of hysteria about a correction from analysts that consider themselves silver longs is one thing that stands out. There was a lot of rhetoric about silver getting ahead of itself in the $25 range too, and that proved to be a non-event. I would think there is a very strong contrarian play to suggest that silver will plow right through the $35 level without a sustained deep correction, and bully to the Moriarty-Hamilton-Maund gang and all the other chart gazers that cry wolf. With so many analysts urging caution here, it sets up the real possibility for a surprise rhomp to the upside leaving many offside yet again.

I am sure the Chinese do not care a big rats ass that a few analysts are calling a top. The market almost never does exactly what the 'experts' have said would happen. And while I get pissed off with the ongoing manipulation, the Cartel has probably done us a favor by capping the sector and keeping the specs from piling in too quickly. This is the kind of bull that can be sustained since many of the would-be sellers have already blown out their positions to wait for a correction. Without the weak specs there is less chance for a more severe selloff.

The buyers that are moving this market higher are not specs trying to score a flip trade for peanuts. I think the Cartel has a problem on its hands. I have stated this before, but I think the Cartel is in control of the short term trade only. The faster they run the spot price down, the faster the heavyweight buyers step up and say thank you very much. If they were capable of driving silver back below $30 they would have done so already. With all the bearish commentary out there, and all the volatility associated with the Yen carry trade unwinding, the Asian disaster, and the violence in the mid-east, silver came rolling right back to challenge the highs for the move yet again.

This may run much higher yet before we get a real correction. COMEX op-ex falls on the 28th this month so I think the Cartel will stage a major raid sometime in the next day or two. I do not think it will represent a top, just another test of commitment on the way up.

cheers!

mike