This week is set to be another volatile week of whipsaw price action with December 2010 gold and silver option contracts expiring this Tuesday night the 23^rd November 2010. The commercial shorts looked to have over run the bulls last Thursday, by stomping silver back down to $25.00 in anticipation of clearing out the large grouping of call options at $25.00 for expiry this week. However, Friday’s explosive price action took silver back to $27, leaving the commercial shorts with some heavily lifting to do in the next 48hrs, if they are to succeed in their assault on the silver price which would result in the $25 calls expiring worthless. With silver continuing the climb this very moment, it would appear that the longs have got this battle won.

It’s worth rehashing the history of the silver manipulation to highlight just how much is at stake in this game. The clipping below is from an old piece by Kenneth Parsons over at the Silver Bear Cafe:

Silver is as important a strategic commodity as oil. The need for a supply of silver in times of war is so essential, that a shortage of the metal could pose dire and direct consequences to the continued well being of our country. With the evolution of technology, silver has become so intrinsically important, that a lack of it will adversely affect America's national security. Meanwhile, as a result of the collusion between industrial users, central bankers, the Commodity Futures Trade Commission, (CFTC), the Chicago Board of Trade, (CBOT), and government regulators, spanning the past fifty years, inventories have all but disappeared.

How and why have our silver reserves been so radically depleted? The major causal factor for the growing scarcity of silver in the United States is an organization called the Silver Users Association, (SUA). This group was founded in 1947 for the sole purpose of controlling the price of silver, and has since manned a small army of lobbyists. These lobbyists represent some of the biggest corporations in the country. As the industrial uses for silver are quite diverse, so are the types of companies that engage the services of the SUA. It is their job to lobby politicians and persuade them to suppress, depress, repress, oppress, or do what ever it takes to maintain a grip on the price of silver. The SUA co-ordinates campaign contributions between association members and complicit politicians in return for quasi-legal legislation designed to keep the price down. It does not matter to them whether the means of suppression are legal or illegal, so long as the price does not rise.

The chief purpose of the Silver Users Association, when it was formed 54 years ago, was to lobby and convince the US Government to dispose of its immense stockpile of silver, as much as 4 billion ounces of silver, at as favorable a price as possible. Of course, when I say "favorable", I'm talking about as low a price as possible to the members of the SUA. The prices were decidedly "unfavorable" to the owners of that silver, the citizens of the United States. But, in any event, the SUA was successful beyond imagination. In my opinion they conspired to hold down prices and that's an anti-trust violation. The SUA achieved an almost impossible feat. They made off with the world's largest known stockpile of silver. Let's see - the US Government had billions of ounces of silver the year the SUA was formed, and 54 years later, the US announced it would have no silver left this year. That is truly remarkable. And the best part (or worst part, if you are a regular citizen) is that the SUA got a real "steal" of a price on that silver, roughly one dollar an ounce. Slick and successful would be mild words when judging the accomplishments of the Silver Users Association. So would price fixing. - Taken from Ted Butler's 2001 essay entitled" Silver Users, Silver Abusers"

SUA members include corporations like Eastman Kodak and Polaroid who use great quantities of silver for the production of film. Obviously, the price of silver plays an important role in their bottom lines and it is of great advantage to keep the price of silver as low as possible. Other clients include Lockheed Martin, Raytheon, General Dynamics, American Superconductor, and Intermagnetics General who use even greater quantities of silver for the production of super conducting cables, missiles and torpedoes. All companies that produce electrical components for use in weapons, high tech aircraft, fighting vehicles, ships, communication devices, almost everything that has to do with the war machine, depend heavily on silver.

An interesting thing to point out is that when a missile or torpedo explodes, as much as 1400 ounces of silver is vaporized. This is one of the industrial reasons why the above ground stockpiles of silver have already been depleted to the point of scarcity. The artificial capping of the price of any commodity is not unlike the insertion of a huge cork in a volcano. This can result in nothing less than the massive explosion of its price in the immediate future.

Members of the SUA also include Union Carbide, Dow Chemical, Du Pont, Goldman Sachs, and JP Morgan Chase. Why would Goldman Sachs and J.P. Morgan Chase be members of an organization whose sole purpose is to suppress the price of silver? Well, from a central banker's standpoint, a worldwide recognition of the superiority of silver, as money, over their "funny money" would be a disastrous occurrence. Am I singing to the choir here?

The Federal government, apparently to make the paper dollar appear worth more than it is, allows artificial price depressive tactics aimed at silver and gold---Constitutional money. When Federal regulators default on their duties, it is up to state officials including you to take action. If anyone attempted to sell short 22 times the number of Ford Motor shares in existence, the SEC would lock that person up for 200 years. Yet, in silver, the CFTC allows such insanity. Such insanely huge and totally un backed short positions cannot help but have the effect of smashing the price to the ground, a situation on the COMEX complained about by high-ranking Mexican and Peruvian government officials as far back as 1971 (see New York Times, June 10, 1971, page 67, and June 21, 1971, page 42). Producers are cheated of fair prices for this commodity, and thousands are out of work because of this and central bank silver "leasing." Taken from a letter written by Charles Savoie to Drew Edmondson, the Oklahoma State Attorney General, on September 29th, 2003.

Again let me state, the radical depletion of our country's strategic silver reserve and the incessant, illegal action of the naked COMEX shorts who routinely sell 22 times more silver than is available for delivery is illegal, abhorrent, and reprehensible.

Common gambling, so-called, was a crime. The gambling of the exchanges was legitimate and legalized, and the men who thus gambled with the resources of the nation were esteemed as highly respectable and responsible leaders of the community. For a penniless man to sell anything he did not own, or which was not in existence, was held as a heinous crime and was severely punished by a long prison term. Gustavus Myers in History of the Great American Fortunes (1907) page 303

This demented and evil activity has served two purposes:

First, it has unjustly enriched large, soulless corporations, renegade COMEX traders, and central bankers. This unjust enrichment has contributed greatly to their wealth and power.

Second, to greatly diminish America's ability to continue to defend itself because of its growing reliance on imported silver.

The regulators, politicians, corporations, traders, administrators, bankers, financiers, souless opportunists and scallywags that have been complicit in the activities of the SUA are guilty of no less than treason, and should be dealt with accordingly.

Borrowing again from the research of Charles Savoie the following excerpt was taken from his recent essay, War and Silver

"Today not a missile goes aloft from Cape Canaveral, not a jet plane from Idlewild that does not contain some silver. A good 25,000,000 or more ounces of silver are used each year in the U.S. in the form of solders and brazing alloys in refrigerators and air conditioners, electric appliances, aircraft and rockets. About 19,000,000 ounces are estimated to go into electric contacts in appliances and electronic equipment. More than 1,000,000 ounces are consumed in ceramic colors and pigments. About 1,500,000 ounces are used in making silver-zinc batteries for jet aircraft, missiles and portable TVs and silver-cadmium batteries for portable equipment. Silver goes into such miscellaneous products as mirrors, pharmaceuticals, dental alloys, plating of fine copper wires, medical and scientific instruments. In certain high temperature applications, as in space vehicles, silver is ideal. Research is finding new uses every year. During World War II new brazing alloys of silver were developed by Handy & Harman. The automobile, the airplane and the telephone all call for the use of silver in their structure. The demand for silver in high temperature applications in guided missiles, jet and rocket aircraft has soared."

"Silver is a noble and versatile metal. It resists corrosion and so is ideal for chemical vessels and the lining of metal cans. Silver nitrate is used in hair dyeing and making indelible inks. Extremely ductile, a gram of silver may be drawn out into a wire 180 meters long. Malleable, silver may be beaten into a leaf 0.00025 millimeters thin. In making phonograph records, a thin deposit of silver is employed in making the matrix." - Economist Herbert Bratter, writing in The Commercial & Financial Chronicle, December 10, 1959, page 2422.

Remember, it's not just the U.S. that needs silver, it's also everyone that we are fighting, or will be fighting soon, that needs it just as badly as we do. The collusion, between the bankers, industrial users represented by the SUA, and the government, has left us in an extremely uncomfortable situation. This collusion was motivated solely for the profit of everyone involved, politicians included, much to the detriment of every other American citizen. There are, and have been anti-trust laws in place that should have precluded this collusion, but the laws were systematically ignored. Placing themselves above the law, in this manner, goes against every tenet of justice and fair play in the book. When the stinky stuff finally hits the mix master, it's not going to be pretty.

There were some folks who realized the nature of the SUA conspiracy as long ago as the early 1950s, but it wasn't until the 1970s that anyone stepped up to the plate and tried to do anything about it.

In 1970 the price of silver was at $1.50/oz. The Hunt brothers, Bunker and Herbert, of Texas oil fame, were both acutely aware of the wholesale theft of the Nation's silver stockpile that had been taking place through the actions of the SUA. (For an in-depth examination of the Hunt brother's attempt to corner the world silver market, see H.L. Hunt's Boys and the Circle K Cowboys by Larry LaBorde.) When Nixon removed the dollar from the last vestiges of the gold standard in 1971, the brothers also realized that the New York Eastern banking establishment, led by the Rockefellers, was now free to work its diabolical monetary magic. Through the insidious contrivance called inflation, they could effectively transfer a portion of the Hunt's oil fortune into their coffers. The brothers started buying silver.

Over the next nine years, as the Hunt's predicted inflation accelerated and racked the economy, Bunker and Herbert continued to use silver to hedge their assets with a vengeance. By the accumulation of more and more silver, they effectively protected their family's property and, single-handedly remonetized the white metal. Throughout the world people began to remember that real wealth consists of real assets, not paper money, and that real assets include gold and silver.

In the summer of 1979 the SUA and their cronies in the COMEX and the CBOT, along with their co-conspirators at the CFTC, (a governmental regulatory bureau), started to panic. Obviously, the world's recognition of the monetary realities of precious metals was an untenable threat to the central bankers, and their "funny money". The elevated price of silver would also seriously impair the ability of the SUA to continue to swindle "We the People" out of our Nation's strategic silver reserve. But the main reason for their panic was that many members of the COMEX and CBOT had illegal financial interests in the silver market through their substantial silver short positions and were facing financial ruin. It should be apparent to everyone that these financial interests would obviously constitute insider trading and should have brought on a slew of indictments from the Justice Department.

Rather than to allow the Hunts to legally wipe out their short positions, they illegally changed the rules. The CFTC promptly backed up the rule change. Even after illegally changing the margin requirements on futures contracts, the market, fueled by the Hunts momentum, continued to go against them so the COMEX illegally suspending trading in silver. They would only accept liquidation orders. Then, through their continued selling of massive quantities of silver that they did not have, (naked short selling), they finally managed to, once again, artificially bring the price under control.

The "Dark Side" owned media was quick to let "Joe Six Pack" know that the whole debacle was simply a one sided manipulation attempted by a couple of greedy Texas oilmen. In reality, the shorts and the Eastern establishment had just as much, if not more, at stake than the Hunts. The final result was that the Hunt's would be fleeced for about $3.5 billion, and the world would once again be safe for the SUA, the central bankers, and the corrupt politicians to ply their trade.

And ply their trade is just what they have done. The central bankers, through their control of the Fed, in collusion with the Treasury Department, have diluted the value of Federal Reserve notes, (FRNs), to the point that the Russians, Chinese, Japanese, and Indians have begun dumping U.S. dollars and U.S. Treasury paper with abandon.

These countries make up the single largest bloc of U.S. bond speculators in the world. As I have mentioned many times before, the FED may set short-term interest rates, but bond speculators set long-term rates.

The liquidation of the U.S. currency holdings could cause the collapse of our economy. Please do not take what I just stated lightly. The FED, in collusion with the U.S. Treasury Department, has inflated the worldwide credit bubble to such an obscene extent that they have left our economy defenseless against the forced repatriation of our own dollars. We can't possibly absorb that much liquidity without first suffering the throes of hyperinflation. As a result, all four countries have us over a barrel. They will demand some major concessions, in the near future, if they are to refrain from cashing in their chips too fast.

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