Silver Short Squeeze: Once in a Lifetime Opportunity?

Silver has been performing very strongly over the past month, has broken through previous resistance and continues to move higher despite the large concentrated short position by commercial traders (JPM and HSBC) on the Comex. There are signs that an increasing number of hedge funds and individual investors are demanding delivery of physical silver as the dangers of unallocated paper promises become more widely understood. So far this month, 453 silver contracts have been delivered on the Comex or 2.3 million ounces. There is a similar story with the ETF SLV in which nearly 15 million ounces of silver have been withdrawn since late February.

These funds and investors seem to be following the lead of Greenlight Capital, which shifted their gold position from GLD to physical gold during July of 2009. Passport Capital has also signaled their intention to take physical delivery in its $1.2 billion Global Strategy hedge fund rather than owning the ETF GLD. When funds with this amount of capital begin to shift into a relatively small precious metals market that is overly leveraged by naked shorts, the potential for an explosive short squeeze increases significantly.

Given the massive leverage (as high as 100-1) used by the banks that are naked shorting silver with paper contracts on the Comex, speculation has increased that a group of wealthy investors, Asian traders or funds may look to exploit this long-running manipulation scheme. This would be accomplished by demanding a huge quantity of the physical metal be delivered all at once, thus forcing the naked shorts to scramble to come up with the metal that is known to be in short supply. The short squeeze would then send the silver price blasting dramatically higher. I won’t go off the deep end and give this outcome a high probability, but it is certainly higher than it was just a few months ago and prior to the widespread manipulation exposure given by CFTC whistleblower Andrew Maguire, GATA and most recently the New York Post.

All of this adds up to what could be a once-in-a-lifetime opportunity to generate massive returns in a short time period. If you are not already invested in silver, you just might miss the ride.

Our basic needs are: Air, Water and Food. Our Additional needs are: Aluminum, Copper, Crude, Gold, Lead, Natural Gas, Nickel, Silver, Zinc. Email, Equity, Share Market, BSE, NSE

Recent Articles By Arya : -

Silver : The Opportunity Of A Lifetime Bananas a new gold rush after Yasi MCX Copper Falls On Global Cues