Silver Breaks Its Golden Shackles

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Silver Breaks Its Golden Shackles

Post by Logical Paradox on Mon Feb 07, 2011 3:37 am

Highlights:
Since September 2010 silver has broken its golden shackles. The algorithmic trading that kept the price of silver subdued for seven years has been completely annihilated.

On Friday silver closed in complete backwardation on the Comex. Spot silver closed at $29.075/oz while FEB 2011 closed at $29.064/oz and DEC 2015 closed at $29.026/oz. I believe this is the first time in history that this has happened. Silver traded in backwardation between the spot price and futures contract up to one year out during the blatantly manipulative precious metals bashing of January, but now the entire futures structure is in backwardation. This is a sure sign there are shortages of silver because it means that buyers will pay a premium for silver delivered sooner rather than later.

Signs of shortages have also been apparent from a shrinking silver inventory on the Comex in the face of rising prices. The registered inventory stands at a paltry 43 Mozs. In addition there is lots of anecdotal evidence that there are tight supplies everywhere. There are reports of refineries refusing to take new orders due to insufficient silver feedstock.

News out of China recently showed that China's net imports of silver quadrupled in 2010 to 3,500 tonnes (112 Million ozs). China has traditionally been a silver exporter. For example, in 2005 China made net exports of 3,000 tonnes of silver.

The US mint reported last week a record month in silver eagle sales in January of 6.4 million ozs.

This update of my previous work adds more fuel to the fire that the dynamics of the silver market have dramatically changed. Because silver has been suppressed for so long we do not know what its free market price should be, but we are going to find out soon and I strongly suspect it will be many multiples of the current price.

Continue at source: ZeroHedge
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Re: Silver Breaks Its Golden Shackles

Post by Logical Paradox on Mon Feb 07, 2011 3:51 am

This actually has happened before in January of 2009. Over the next few weeks silver rose from about $10.50 to $14.50, roughly a 40% move higher. The key to understanding backwardation is that the price must rise to entice holders of physical metal to sell and accept a national currency in return. I think we can expect a similar event soon. The backwardation in 2009 was extending 12 months forward, this time it's 4 years. Shocked
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Re: Silver Breaks Its Golden Shackles

Post by miabelieves on Mon Feb 07, 2011 3:56 am

ummm...can't you put this in mia terms
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Re: Silver Breaks Its Golden Shackles

Post by Logical Paradox on Mon Feb 07, 2011 4:07 am

Morning Mia pirat
Essentially it means that due to the price of silver being kept artificially low it is due for a hefty correction very soon. Meaning it will be going up and more than likely by a lot.
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Re: Silver Breaks Its Golden Shackles

Post by Strawberry on Sat Feb 12, 2011 7:16 am

You'll have to keep us updated.
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