Silver: The House Always Wins, Until Now

goingbroke

Something has drastically changed in the silver market. The banks that once controlled the price of silver are now closing positions at a loss. Traders may begin to speculate on what has changed and why. Some traders have reported that a large buyer is entering the market. Regardless of the actual reason the commercial shorts have begun to bleed money. And when blood spills, sharks will circle. Hedge funds and traders that never even thought of silver before will begin to squeeze the shorts. If the big banks don't quickly regain control of the silver market they may lose it forever.

While it can be speculated on how short covering could impact the market, a short squeeze could feed upon itself as it attracts capital. In five trading days of buying a net 3286 contracts, the price of silver rose by $1. However, the commercial banks are still a net 62,127 contracts short so at that linear rate it would take them 94 trading days to cover with a silver price of roughly $117. The resulting losses would be around $15 billion. Of course, markets aren't linear and after the second or third week of covering traders would begin to purposefully front run and squeeze the commercial shorts. So its unlikely that the positions could be covered that low or if at all. Unfortunately, those who were hoping for a correction to accumulate more silver may not get it here as a price reset may be on the horizon.price reset?

edmundfitzgerald

While it's true that we saw a one dollar daily rise in the silver price last week, I wouldn't be suprised if we see a daily + $1.50 or higher in the weeks to come. I believe that 26-32 for silver is a short term target. Anyone shorting or selling
here is going to miss out imo.

CoinCrazyPA

<< <i>While it's true that we saw a one dollar daily rise in the silver price last week, I wouldn't be suprised if we see a daily + $1.50 or higher in the weeks to come. I believe that 26-32 for silver is a short term target. Anyone shorting or selling
here is going to miss out imo. >>



I know of one board member here who shorted SLV last week and is biting his nails hoping for a pull back.

notwilight

<< <i>While it's true that we saw a one dollar daily rise in the silver price last week, I wouldn't be suprised if we see a daily + $1.50 or higher in the weeks to come. I believe that 26-32 for silver is a short term target. Anyone shorting or selling
here is going to miss out imo. >>



Anyone with "Prayer at Valley Forge" for an Avatar just exudes wisdom. I just bought 10,000 more ounces. Anyway, I always enjoy seeing your avatar.

Actually, dropping the semi-humor that probably amuses only me, I tend to agree with both of you. I did buy a bit more and haven't sold anything. I wouldn't even think of going short, even if I thought down was the most likely direction. Too much upside risk right now.

--Jerry

cladking

I can't help but wonder if the big shorts are starting to worry about legal
problems and just want out with their skin intact. I think this is going to
be a mess that's talked about for a long time. The government is going
to have to step in and it's likely to be an international mess since the bank-
ers sold off the risk.

Anyone in paper needs to bail. This especially applies to non-ETF paper.
Long paper can be nearly as risky as short when most ounces of silver are
owned by several entities.

I just pray the powers that be know that silver isn't the same as nickel.
Defaulting on nickel just means a little rusty stainless but a default on sil-
ver will shake the very foundation of the economic system. This has to be
resolved systematically and fairly and let the chips fall where they may.

Of course this might not be "the move" yet but it will come because you
can't sell the same ounce of silver forever while it is getting used up.

derryb

there is no reason the current rise in silver will not continue to see dips along the way. Buy the dips.