Wow, sand puppy, what an awesome article from Ted Butler. I honestly can't disagree with most of what he says, mainly because the data backs him up so well.
I do not believe that the big banks can manipulate the trend in the long run, but in the short run, I believe they play the market like a fiddle, and I also agree with his observations that bottoms usually only occur when the commercial shorts cover, and the tops happen when the commercials load up short. The evidence for this is overwhelming.
The technique appears to be especially effective in a downtrend. The fact that silver is so well correlated to commodities, and copper, oil, and the rest of the commodities have been in a steady downtrend has given JPM & crew the freedom to short at will, since traders follow the overall trend, and any buyers are therefore nervous and easily frightened out of positions. It also allows them to accumulate silver cheaply, at what is presumably at or near "the low."
I also agree with the flawless trading record. They really profit from a weak market. I don't know why the managed money bothers to play, but they do.
The one place I'd object to his analysis is during the 2011 silver rally. During that time, the commercials were wrong a couple of times and had to cover on the way up, in late 2010 and early 2011, and once more approaching the top. Their technique doesn't do as well in a 'disorderly ascent' – when there is a buying panic that overwhelms their ability to play the cycle. They don't have infinite power, at least as far as I can see anyway.
So in essence, I believe when the market turns, the banks will go with the flow and continue to manipulate the market all the way up. They won't be capping the gains from a trend standpoint, they'll just be skimming the cream at the peaks and valleys of the cycle as the market moves higher.
If we had position limits, that fixes the problem. Sadly, we do not.
Oh- JimH – I would hope the COMEX default happens soon as well, but it has been predicted so often, a la "boy who cried wolf", that I have more than a touch of COMEX Default fatigue. 🙂
Incidentally, I'd like to thank the member that brought the whole commercial short thing to my attention six months or so ago. It was a great find. That's what makes this site so awesome, everyone brings a piece of the puzzle and together it helps us to see what is really going on.
I do believe we have a bottom coming up soon, but I'm not exactly sure when. Hopefully it is before we hit 15.25.