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Silvercorp Metals Inc. Message Board

  • markedtofuture markedtofuture Dec 14, 2012 5:53 PM Flag

    Some interesting observations

    Midas: Ah good, good timing, just in … Dave from Denver…

    Some interesting observations

    Silver got hit by paper at 8:15 Denver time this morning. The SPX actually bounced and the dollar dropped. Not really consistent with "fundamental" selling. The open interest report for yesterday was very interesting. The gold o/i dropped over 6500 contracts but the silver o/i only dropped 888 contracts. The silver o/i is persisting over 140k contracts and has not really come down much from its recent peak despite 6% drop in price since the beginning of the month.

    This is unusual behavior in the context of the amount of silver o/i liquidation that normally occurs when the bullion banks are trying to sytematically take the price lower, especially on a day like yesterday where silver dropped over a buck.

    If you read Ted Butler's analysis on the short selling increase in SLV, it becomes even more obvious that the SLV Trust Approved Participants are shorting shares to avoid having to scrounge up the silver required to form new "baskets" and deliver 19mm more ounces to silver into the Trust. To understand why, if they were required to do this instead of shorting the shares, 19mm ounces would wipe out 46% of the silver registered for delivery on the Comex. Think about the upward pressure on the price of silver that would occur if they were required to maintain a 1:1 coverage of silver.

    The bottom line is that there's desperation in the air with regard to the metals, especially silver....

    Sentiment: Buy

1.24+0.02(+1.97%)Mar 27 4:04 PMEDT