In Ted Butler's Archive


The year 2022 was momentous for silver. On the physical side, the Silver Institute (usually quite milquetoast in such matters) has declared a large mismatch between surging silver demand and a stagnant supply to the point of declaring a near-200-million-ounce annual deficit, the largest in decades. Furthermore, the 300 million ounces of silver imported by India was the largest on record, at more than 35% of total world annual mine supply.

In addition, some 384 million ounces of silver have been moved into and out of the COMEX warehouses. That’s the largest annual physical silver turnover in history. The explanation for the -incredible physical turnover in the COMEX silver warehouses – alone among all commodities – is a physical demand so extreme as to defy description. The availability of 1,000-ounce bars may be approaching zero as the current shortage worsens. The reason silver and gold prices did not react to these extremely bullish physical developments was the manipulative effect of paper positioning, principally on the COMEX, but also in the shares of SLV, the largest silver ETF.

The massive increase in the short position on SLV grew to more than 60 million shares (55 million ounces), at its peak in August. As of December 15, the short position on SLV remained massive at 50 million shares (45 million ounces). In Feb 2021, BlackRock preemptively added new wording to the prospectus that warned of the danger to short sellers on SLV. What makes the short position on SLV critical is that the only practical reason one would short shares of SLV is because the physical metal required by the prospectus to be deposited for each share outstanding isn’t available.

As far as what to expect pricewise in the New Year, it boils down to one thing, does the 4-decade COMEX manipulation continue or not? I’m highly encouraged by the signs of change in that regard, but please know that what I’m talking about is extremely consequential. The end of a long price suppression must lead to an upside price explosion of almost unimaginable proportions. The only way to end a long-term price suppression that results in a physical shortage is through dramatically higher prices. So, while we must all gird for possible future crooked COMEX price smackdowns, we must also be prepared for the certain inevitable price explosion.

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