Searchlight Innovations Inc T.SLX

RE: RE: Again I hate to bug you guys but..

[MudCreeker]

I'll take a shot, but I probably have it all wrong, so do your own research.

The comex is the commodity future exchange.  They trade in futures contracts, which are promises to deliver the commodity in question at some time in the future, from next month to a year from now.  We're interested in silver and gold, but they trade futures contracts in all sorts of commodities.

The comex has some inventories, but they actually have less than 10% (some say less than 1%) of the stuff that would be required to deliver, if all outstanding contracts demanded delivery.  Of course, that never happens.  The people who trade in these contracts don't want the hassle of accepting delivery of the actual physical bullion, so the vast majority (like over 99%) of them are "rolled over" - as they approach maturity they are sold and a later month contract is purchased.

Given that all they are trading is paper and promises, it is easy to understand that there is unlimited supply in that market.  Not like the physical market.  Easy to push the price down if all you have to do is make yet one more promise.  Easy to let it rise if you just stop promising more.  Even I could probably make money if I could control the price both directions (lol).  The problem is when someone breaks their promise.  And it looks like it has gotten near the point when all of the promises can't be kept.

The issue is that a couple of American Bullion Banks, JP Morgan inparticular are short large amounts of silver and gold contracts.  IIRC, the top 4are short like half a years global production of silver.  It's justnuts.  They've promised to deliver all the silver that's going to beproduced world wide for the next half a year, and they don't produce asingle ounce of the stuff themselves.   They've lost billions of dollars on their short position in the last 6 months as the price of silver took off. 

That much is pretty clear.

I was speculating that they would never take such a risk "naked" - that they must be hedged.  Normally that hedge would be physical silver, but they clearly don't have that quantity of bullion, so I was speculating on what the other side of their position might look like.