As I understand it, silk caps are flattened out cocoons, and are spun in a similar fashion to wool, etc rovings, but you have to stretch the caps into an oval or something, to align the fibers perhaps? Something like that, I believe.
http://www.knitty.com/issuewinter05/...lkhankies.html
http://www.knitting-and.com/spinning/silk-caps.html
http://www.allfiberarts.com/library/aa97/aa070297.htm