Where’s the silver?

There are some very interesting developments in silver going on right now.  First lets go back to 2011 when silver rallied up to $48.  This was largely off the back of a squeeze in supply against a mountain of paper contracts.  They can play with COMEX only so far as when it becomes apparent to the market the metal is not there to back it up you get a short covering rally as people clamber to get their metal.  We are again now in a position where the big players (J P Morgan etc) are enormously short on COMEX again with very little registered metal to cover it.  And now Ted Butler reported over 200 tonne of silver left the largest ETF (SLV) last week when the price action dictated that much should instead have been deposited. 

Like we also reported recently it appears ETF’s are increasingly ‘lending out’ their silver ironically as the market desperately tries to cover all the paper contracts that have suppressed the natural supply/demand price.  Have a look around the world at the cocktail of political and economic issues brewing and consider it takes just one ‘black swan’ event to trigger a rally that would see this unsustainable paper silver situation unravel overnight and the only winners being those who hold physical silver (and gold) themselves.  This much repeated quote on PM’s is worth considering “It is better to buy a year too early than a day too late”…