In Ted Butler's Archive


Continued reductions in COMEX warehouse silver inventories, along with reductions in the holdings of the SLV and other silver ETFs add to the conclusion that silver demand is exceeding silver supply. When the demand for a commodity exceeds supply, prices always rise.  A big redemption in the SLV appears to be due to demand from India. The Indians are very price-sensitive and never buy on price run-ups. That can be seen in last year’s record silver imports into India of more than 300 million ounces. All the buying occurred over the summer months when silver was most depressed in price – $20 and lower – and Indian silver demand disappeared on the silver rally at year-end.

The latest release of the short report on SLV, for positions held as of March 15, featured a sharp increase of more than 11 million shares, bringing the total short position in SLV to 47.5 million shares (43.5 million ounces) and 9.5% of total shares outstanding. The sole reason why anyone would short shares of SLV is because there is not enough physical silver available to buy and deposit into the trust. This is fraud and manipulation of the first order, and I plan on renewing my ongoing complaints with the SEC and BlackRock.

However, more than anything else, the combination of metal being redeemed to satisfy sudden demand from India and new shorting in SLV because no metal is available helps complete a picture portraying a physical shortage more acute than at any time since I started studying silver in earnest nearly four decades ago. While I would never rule out the ability of the commercial crooks on the COMEX to rig prices lower at any time – that’s all that stands in the way of a silver price explosion both inevitable and perhaps imminent. Think of it this way – the artificially depressed silver price for decades is what brought us to the cusp of the first true physical shortage in silver over hundreds, if not thousands of years. Continued depressed prices can’t make the silver shortage go away, only higher prices can do that.

The COMEX market structure in silver is still remarkably bullish, both on a short- and long-term basis. In terms of a physical shortage, silver is industrially consumed and silver’s price is overwhelming depressed compared to gold and everything else. If there is any commodity that has a giant reset catch-up potential, that commodity must be silver. While gold is knocking on the door of all-time record prices, silver is still suppressed by more than 50% below its previous $50 price highs in 1980 and 2011. There’s no question that manipulative and collusive commercial positioning on the COMEX is singularly responsible for silver’s super-depressed price. The only remaining question is when the positioning scam will end. From everything I see, the answer would appear to be quite soon.

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