Market Curiosity: Exploring Markets And Systems

January 8, 2011

Silver fundamentals suggest higher prices after correction

Filed under: Editorials — Tags: , , , , — Jeff Fitzmyers @ 4:22 pm

Ed Steer’s stunning parragraph:

It was no surprise to me to see that Sprott Asset Management in Toronto had to wait such a long time before receiving the 16 million ounces of silver it had purchased on the open market. I had know that they were having problems, but was sworn to secrecy. It took them ten weeks to get it all. They were given a delivery schedule of about 1.5 million ounces per week…and that’s pretty much the way it came in the door. 1.5 million ounces per week is a hair over 11% of world silver production during that time period. One would have to conclude that large quantities of good delivery silver bars simply do not exist.

James Turk:

One other indicator that the game has changed is that Comex open interest actually increased on Wednesday’s big takedown.  What this means is that all of the silver shorts that are being put on are being met by new buyers… In other words there has been no net long liquidation, which one would expect on a big price drop. The bottom line is that it looks like new buyers are willing to take on the silver shorts, which is very bullish.

Now add this chart from Dr. David Eifrig’s The Silver Rush Is On

And the apparent fact that JPM has reduced their overall silver short by 14%.

These healthy retreats are usually big and fast, lopping 1/4th to 1/3rd off silver prices in less than 6 weeks! Because the fed printing is so rather extreme, the correction might be a bit less deep than usual.

It’s just a matter of time 🙂

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