In Ted Butler's Archive


On Jan 5, the 4 big shorts held just under 81% of the total commercial short position in silver. Two months later he concentrated short position of the 4 largest traders in silver is even more concentrated.  There is great physical tightness, and a budding shortage in both retail and wholesale forms of silver. There’s been the spontaneous outbreak of an internet movement on Reddit focusing on the short position in silver. Direct questions are being asked of the federal regulator to explain how the concentrated short position could possibly be legitimate – and not being answered. You got to be kidding me.

It’s remarkable how the 4 big shorts in COMEX silver have kept a lid on prices in the face of all this. The events that are transpiring in silver are nothing that anyone has ever witnessed before. These events are coming so fast and furious that it is hard to keep the proper perspective. The only thing that has prevented silver from soaring is the desperation of the 4 big COMEX silver shorts. Inevitably, they will be resolved, but in the meantime they have little choice but to resist.

Look at the rapidly escalating turnover or physical movement of metal either brought in or removed from the COMEX-approved silver warehouses. It absolutely soared once again this week with 12.3 million ounces coming in or out from the 9 COMEX warehouses in and around the NY metropolitan area. Once again, this is physical metal in the form of 1,000 ounce bars being taken out of the warehouses and loaded on trucks, or loaded off trucks and deposited into the warehouses. This physical movement must not be confused with paper trading.

On an annualized basis this week’s physical movement equates to 640 million ounces or 80% of annual world mine production. It’s crazy that such a large percentage of the world’s annual mine production of a vital and highly-desired world commodity would be physically moved around in such a frenetic manner.

Over the past 6 weeks, close to 60 million ounces of silver have been physically moved in and out from the COMEX warehouses or 10 million ounces per week or at an annualized rate of 520 million ounces a year, which is 65% of total annual mine production. Why is this occurring? At the same time over the past 4 weeks, there has been a net reduction of 25 million ounces in total COMEX warehouse silver inventories with 6.1 million ounces leaving this week.  So we have two unusual developments to consider: the frenetic turnover, unprecedented in its own right, combined now with a sharp reduction in total COMEX silver inventories.

This movement suggests a great demand for physical silver. The silver leaving is needed elsewhere and new stuff has to be brought in to keep the process going. It seems most plausible to me that the silver leaving the COMEX is because of user demand. Something is causing sliver to be moved more frantically than previously and now we are witnessing sharp reductions in the total inventories. How can that not be wildly bullish for the price?

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