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Resource guru Sprott: Silver could go higher than almost anyone believes
Thursday, 21 April 2011 9:15
From Eric Sprott and Andrew Morris
Follow The Money
You know silver’s doing well when the commentators start giving it the ‘gold’ treatment. Silver’s recent rise has been so spectacular that it’s caught many investors off guard. It’s natural to be sceptical when you don’t know the fundamentals driving strong performance, and many pundits and commentators have been quick to downplay it as a result - much like they do towards gold when it enjoys a run. Silver is also an awkward metal for them to categorize. Is it a commodity, a monetary metal, or both? And which side is driving demand? If it’s industrial demand, that’s ok, because that’s bullish. But if it’s investment demand for silver as ‘money’, well then that’s sort of bearish, isn’t it? The fact remains that most commentators have failed to grasp the monetary shifts that silver is signaling today, and in doing so they’ve failed to appreciate just how high it could actually go.
The financial media’s failure to grasp the benefits of precious metals ownership continues to perplex us, and it’s not just the commentators who are prone to perpetual disbelief. The sell side analysts are equally as irresolute. According to Bloomberg, the ‘expert’ consensus silver price forecast for 2011 is $29.50, representing a 31% discount from the current spot price. This same group of analysts also predicts prices will decline another 25% in 2012 and a further 9% in 2013 to $20 an ounce. When you consider that the silver price has appreciated by over 21% annually over the past 10 years, these forecasts suggest a very dramatic change in the long-term trend. Will this reversal come true? Probably not. These were the same analysts who predicted that spot silver prices would average $18.65 this year - so they’ve missed the mark by over 100% thus far.
We don’t mean to bash the silver analyst community, and there are several whom we highly respect, but it is important for silver investors to appreciate that these price forecasts are being plugged into financial models that dictate equity valuations. These models are used by traders, bankers, analysts, and portfolio managers to derive valuations for silver stocks and create asset allocations for portfolios. To anyone questioning current silver equity valuations, we would ask: what price assumptions are you using? Of course we as allocators of capital are thankful for this phenomenon, as it allows us to buy our favourite silver stocks on the cheap, knowing full well that the herd will be following behind in due course as those backward-looking forecasts get ratcheted higher.
How can we be so confident that the price of silver will continue on its upward trajectory? Our thesis is premised on the most rudimentary of economic principles – supply and demand.
One of the key indicators that we’ve been monitoring is the gold/silver ratio. Much has been written about the ratio of late, and we won’t go into great detail on the subject, other than to note that the last time money was synonymous with defined amounts of gold and silver, the ratio was set at 16-to-one. In fact, for most of the past millennium, one ounce of gold would have been convertible to somewhere between 10 and 16 ounces of silver - an amount roughly in line with the relative occurrence of each mineral within the earth’s crust.1 For the better part of the past century, due to the world’s abandonment of bimetallism and then the gold standard, the gold/silver ratio has fluctuated widely, twice reaching lows near the 15-to-one mark and a high of 100-to-one back in the early 1990’s. The most recent high reached in the latter part of 2009 was nearly 80-to-one. Since then the ratio has been tumbling to where it stands now at 35-to-one – which reflects the incredible outperformance of silver over that time period. In our opinion, this ratio will continue to move lower, driven by nothing more than basic supply/demand fundamentals.
The US Mint, which is the world’s largest silver and gold coin manufacturer, recently reported that it had sold 13 million ounces of silver coins and 370 thousand ounces of gold coins on a year-to-date basis.2 This means that the US Mint is now selling roughly equal amounts of silver and gold in dollars so far this year. Furthermore, bullion dealers like Sprott Money and GoldMoney have confirmed with us that they are now selling more silver than gold in dollar terms. For additional confirmation of this investment trend, just look at the flows for the two largest gold and silver ETFs. Investors have withdrawn approximately $3 billion from the GLD so far this year while the SLV has seen net inflows of $370 million over the same period. Dollar for dollar, investors are allocating as much if not more money to silver than to gold. And why shouldn’t they? Silver is much more of a "precious" metal than the current ratio of 35-to-one would suggest.
To explain, we must first address mine supply. In 2010, the world mined approximately 736 million ounces of silver and 85 million ounces of gold.3 The world also produced an additional 215 million ounces of silver and 53 million ounces of gold from recycled scrap.4 Adding both together brings us 951 million ounces of silver and 139 million ounces of gold supply, for a ratio of nine ounces of silver to one ounce of gold.
Interestingly, this 9-to-one ratio is very similar to the ratio of available in-situ silver and gold reserves. The U.S. Geological Survey estimates that there are current in-situ reserves of approximately 16.4 billion ounces of silver versus 1.6 billion ounces for gold, or about a 10-to-one ratio.5
The case for silver is even more compelling when one considers the ramifications of its dual role as both an investment and industrial metal. Last year, non-investment demand for silver (which includes industrial, photographic, and silverware demand) totaled approximately 610 million ounces.6 This represents approximately 64% of primary supply, leaving approximately 341 million ounces to satisfy investment demand.7 On the gold side, industrial usage totaled 13 million ounces, or about 10% of primary supply, leaving approximately 125 million ounces left over for investment demand.8 So, after netting out the industrial usage the primary supply left over for investment demand is about 2.7 times that for gold. However, if we convert those ounces to dollars at current prices, we’re left with $15 billion worth of silver available for investment versus $186 billion worth of gold, or a one-to-13 ratio of silver to gold! This means that in terms of primary supply, silver only has 8% of the capacity for investment that gold does despite having equal if not more dollars flowing into it.
Now, it’s true that another potential source of supply is the very silver that investors already own - and at the right silver price these inventories of silver and gold bullion may be sold into the market to supplement any supply shortfalls. As we’ve noted previously, however, due to decades of underinvestment, the amount of silver bullion inventories are actually extremely small, even compared to those of gold.9 Recent estimates suggest that reported silver bullion inventories stand at roughly 1.2 billion ounces versus 2.2 billion ounces of gold bullion, or roughly a 0.5-to-one ratio.10 To put that amount in perspective, consider that at present there is only $52 billion worth of silver bullion/coins and over $3.3 trillion worth of gold in inventory which could potentially be recirculated into the market. Converting this to a ratio, you get a one-to-63 ratio of silver to gold inventories. So how is silver still priced at 35-to-one?!
All indications lead us to believe that there is now roughly an equal amount of investment flowing into silver and gold on a dollar-for-dollar basis. And although the price ratio of silver to gold has fallen substantially since the highs of 2009, our analysis strongly suggests that this ratio must move lower to restore a fundamental balance between supply and demand. Only time will tell how much lower it will go, but we would not be surprised to see it hit single digits before settling into a more sustainable equilibrium.
What the so-called silver ‘experts’ neglect to account for in their models and projections is that the fiat money experiment has failed. And in this context, we believe the Market has assigned world reserve currency status to gold - not USD, not EUR, and not JPY. In our opinion, gold’s continued appreciation vis-à-vis every currency is assured because the great flight from fiat has only just begun. Like gold, silver also has a long monetary history, and as such, investors are now also buying silver as protection from the ravages of fiat currency debasement. Yet, when compared to gold, it is silver that offers the most attractive value proposition by virtue of the gross mispricing of its scarcity, which, we might add, has existed for many years. Thus, in our opinion, as this new bimetallic standard takes root, silver investors will continue to be justly rewarded with marked outperformance. We truly believe that this is the investment opportunity of a lifetime, and increasingly so, others are taking heed. What is clear to us is that with equal investment dollars now flowing into silver and gold, the current 35-to-one ratio is unsustainable and has only one direction to go: lower.
Read More: http://www.zerohedge.com/article/eri...-single-digits
A common refrain with many precious metals commentators (including myself) is that “one day” there will be an investor “mania” in this sector, where prices will finally explode into some sort of parabolic “top”.
For those who have wasted any of their time reading the gold-bubble babble currently on display on a daily basis in the mainstream media, “no” the day when gold and/or silver reach “bubble” status is not even currently visible on the most distant horizon. Put another way, as John Williams of Shadowstats.com tells us, just to “equal” its 1980-high (in “real”, inflation-adjusted dollars), gold would have to rise to $7,500/oz. Meanwhile, at its historic 15:1 price-ratio with gold (the average for the last 5,000 years), that would put the price of silver at $500/oz.
Naturally, the fundamentals for gold and silver are much, much, much more “bullish” today than they were in 1980 – when our economies first had their ties to “good money” totally severed. Thus, $7,500/oz for gold and $500/oz for silver should not be seen as any kind of “price ceiling”, but rather more of an intermediate price target.
With the bankers doing everything they possibly can to drive the values of their fiat currencies to zero, then the “long-term price targets” for gold and silver are simply “infinity”: the “price” of gold and silver, when defined in terms of worthless paper. However, there is one event which could interfere with this progression: if investor “mania” should hit the sector before the bankers’ fiat-paper has been deemed worthless by the masses.
Ironically, I view such a “mania” as the worst thing that could happen to this sector, should it take place before the final implosion of the bankers’ paper empire. The reason such a development is to be thoroughly dreaded is because of the inevitable progression of all manias.
As prices explode to what seem to be excessive levels (even though those prices are defined in already-worthless paper), there would/will be a clear, intermediate “top” in the market. By definition, that peak would represent “irrationally” high prices for gold and silver. In the current context, for gold and silver prices to be “irrational” that would likely imply a sudden spike to a five-digit number for gold, and a four-digit number for silver.
Expanding on this irony, such a price-explosion in the precious metals sector would present precious metals investors with a terrible dilemma. On the one hand, all such manic peaks are followed by a “crash” – even in the case of precious metals, where “mania prices” would still undervalue precious metals versus worthless, fiat paper.
Thus over the short or even medium term, investors would know that they would be about to experience an horrific plunge in the value of one of their assets. The obvious, rational response to such a parameter is to sell – and take profits.
Conversely, those knowledgeable investors in this sector would also know that after the inevitable crash, that precious metals would immediately boomerang back up again – eventually exceeding any “peak” experienced during the original mania. This would cause precious metals investors to want to hold onto their assets – and simply absorb a crash.
Having already been through the Crash of ’08, and having watched my portfolio plunge toward zero once, I can say on behalf of all investors who were subjected to this that it is not a pleasant experience. And yet it would still likely be preferable to the “danger” of taking profits at the peak of the mania.
The problem with liquidating any of our precious metals holdings, even if we realize enormous (paper) “profits” is the paper. Making a 1000% gain, or a 10,000% gain in our precious metals holdings means nothing if that paper plunges to zero the next day. Thus anyone attempting to lock-in profits during a mania-phase runs the enormous risk of not being able to convert their paper back into precious metals – before the paper loses its remaining market value.
In talking about any potential, premature “mania”, Western commentators like myself are implicitly referring to their own domestic markets (along with the other Western markets with which we have more cultural and analytical familiarity). However, I would argue that if there is a premature mania in the precious metals sector, that it is much more likely to originate in the East than in the West.
There are three, very persuasive reasons to view an Eastern “mania” as a much more probable event:
1) Asian cultures (most notably China and India) have much stronger cultural and economic attachments to precious metals.
2) Asian cultures (most notably China and India) are currently buying gold and silver in much greater quantities, and with much greater enthusiasm than the average Westerner.
3) Asian cultures (most notably China and India) have vast pools of savings and incomes which are steadily rising (in real dollars), in contrast to the four-decade slide in the real incomes of the average Western citizen.
Expanding on this reasoning, the “herd” behavior which all market manias represent is obviously a much more likely phenomenon when the target of the herd is a good to which the herd-members already have a deep cultural and economic attachment. Looked at from the opposite perspective, with the average Western citizen having “forgotten” our own cultural attachment to precious metals, and having totally severed our own economic connection to precious metals, it would be much more improbable to see “gold and silver mania” sweep through Western cultures.
Indeed, despite a ten-year bull market which already represents one of the best bull-markets in the last half-century, precious metals represents roughly a 1% holding in the average, Western portfolio. You cannot get any more oblivious to the obvious appeal of gold and silver than that. Thus clearly on this basis alone, Asian “mania” is a much more likely event.
This is reinforced by the extremely robust (near-rabid?) buying of gold and silver by Indian and Chinese citizens, especially over the last year. While the gold-buying of Indians isn’t necessarily overwhelming in terms of total quantities, what is extremely bullish (and impressive) for the sector is that for once Indians have kept up their buying of gold even as it pushes to one new high after another. Typically, Indians have been extremely price-sensitive to this market, and demand often plummets when prices spike. This decisive change of behavior by the Indian gold-buyer is certainly a highly noteworthy development. Meanwhile, Chinese gold-buying simply moves relentlessly higher, quarter after quarter.
With silver, the explosion in Asian interest is even more remarkable. Last year, silver-buying in India sky-rocketed by over 500%, while silver-buying in China soared by roughly 400%. This has had a huge impact in the dynamics of the global silver market, where (as Eric Sprott tells us) China has gone from being a net exporter of roughly 100 million ounces per year to being a net importer of 112 million ounces in 2010. This change in behavior in one market by itself accounts for 25% of global silver production.
Let me repeat this, to ensure that people understand this precisely. I am not saying that “Chinese demand” totals 25% of global silver supply. I am saying that the recent increase in Chinese demand represents 25% of global silver production – on top of all the silver which China was consuming before this spike in silver demand. With the total Chinese appetite for silver representing around 1/3rd of annual, global production, that doesn’t leave much for the rest of the world – especially when the silver-lovers in India are ratcheting-up their own buying at an ever faster rate.
Most importantly, with the vast savings and sharply rising incomes in China and India, this huge surge in gold and silver buying has taken place without any leveraged-debt being accumulated. This is of tremendous significance, since all bubbles (by definition) require large amounts of leveraged-debt to exist – otherwise there is simply not a “bubble”. This allows an enormous building of momentum to take place in this market, over a long period of time. It is ultimately the momentum itself which takes on a life of its own in a “mania”, and thus the longer and stronger that the buying momentum from China and India persists, the more likely that this “momentum” will evolve into mania.
Concluding that China and India would almost certainly represent the origination of any “mania” in the gold and/or silver markets is literally only half the story here. The other half would be to hypothetically examine how such a mania would evolve – and what would happen once it had concluded.
I’ll cover those topics in the conclusion to this piece.
http://www.bullionbullscanada.com/in...ary&Itemid=131
http://www.marketwatch.com/Community...horts-subtitle
There is compelling new proof of a silver (and gold) price manipulation. The evidence connects the investment bank JP Morgan Chase, the dominant force in world commodity trading, the U.S. Commodity Futures Trading Commission (CFTC), the primary commodity regulator, and the U.S. Treasury Department, the arranger of every conceivable bailout.
This week, I received a copy of a letter, dated October 8, sent from the CFTC to a California Congressman, Gary G. Miller. It discussed allegations of a silver market manipulation because of the data in the monthly Bank Participation Report. The data in that report for August showed that one or two U.S. banks held a massive short position in COMEX silver futures of 33,805 contracts, or more than 169 million ounces. This is equal to 25% of annual world mine production, and was up more than five-fold from the prior month’s report. After this position was established, silver prices fell more than 50%, in spite of a widespread shortage in retail forms of investment silver. Never before had there been a such a large concentrated position in any market, including every manipulation case in the CFTC’s history. Concentration and manipulation go hand in hand. You can’t have one without the other.
The letter was sent to me by a reader who had the foresight to write to his Congressman. Of course, the CFTC denied that a silver manipulation existed, as they always have. This proves that the Commission responds much quicker to a member of Congress than it does to hundreds of ordinary citizens and investors. In the future, should you decide to write to the CFTC, be sure to do so through your elected representatives.
What was remarkable (and disturbing) about the letter was that it strongly confirms an analysis I presented in an article dated September 2, titled, "Fact Versus Speculation" http://www.investmentrarities.com/09-02-08.html. (didnt work for me)In that article, I speculated that the shocking increase in the silver short position by one or two U.S. banks was related to the takeover of Bear Stearns by JP Morgan in March.
Here’s a quote from my article, dated September 2.
"I am going to speculate based upon the known facts. Maybe I will be proven correct, maybe not. However, the nature of this speculation is so disturbing, that I hope I am wrong. But I need to state it because if I am close to the mark, the implications for the silver market are profound.
I think the data in the COT and the Bank Participation Reports indicate that the U.S. Government may have bailed out the biggest COMEX silver short by arranging for a U.S. bank to take over their position. This coincides with JP Morgan’s takeover of Bear Stearns. In fact, it would not surprise me if the bailout was JP Morgan taking over Bear Stearns‘ short silver position, at the government‘s request. While this silver bailout (if it happened) was no doubt undertaken with financial system stability in mind, it has disturbing implications of legality and equity"
This is the relevant quote from the CFTC’s Oct 8 letter.
"In effect the increase [in the short position] reflected a one time acquisition of positions that were acquired through a merger in the industry, and not new trading by a bank. Thus, the assertion that there was new activity undertaken by the banks that led to a fall in silver prices is not correct since the "new" activity reflected in the CFTC’s report was in essence positions that had already existed in the market prior to July 1st."
The CFTC clearly confirms, in effect, that the big silver short position was related to JP Morgan’s takeover of Bear Stearns, since no other merger provides a plausible explanation. However, the Commission is not speaking truthfully about an increase in the concentrated short position. The CFTC’s own data, in weekly Commitment of Traders Reports (COT), show a sizable increase in concentrated short positions of some 12,000 contracts (60 million ounces) from levels before July 1st to the August Bank Participation Report.
More importantly, the real issue is not about when the one or two U.S. banks increased their short position, but how large that short position grew in the August Bank Participation Report. The CFTC is deceiving a U.S. Congressman by attempting to reduce the argument to when the short position was increased, not the obscene and manipulative size of the position. This is deception through omission and misrepresentation. What difference does it make when the manipulative position was established? The issue is how can a short position of 25% of the world production of any commodity, held by one or two U.S. banks, not be manipulative?
Bear Stearns held the largest concentrated short position in COMEX silver (and gold) futures at the time of its forced merger with JP Morgan in March. That position was not discovered until the publishing of the August Bank Participation Report followed by the October 8 letter from the CFTC to Congressman Miller. Furthermore, Bear Stearns had no legitimate backing to the short silver position, either in actual metal or cash. Otherwise it could have been delivered against or bought back, just as would have happened were it a long position.
The price of silver at the time of Bear Stearns implosion was $20 to $21 an ounce. A free market covering of a concentrated short position of this size would have driven silver prices to the $50 or $100 level and would have exposed the long-term manipulation. Rather than let the free market deal with the required short covering of such an uneconomic and unbacked short position, government authorities arranged to have the short position transferred to JP Morgan. This was undertaken by the U.S. Treasury Department, along with taxpayer guarantees against loss to Morgan worth billions of dollars. This was done, no doubt, to save the financial system from imploding. This was also patently illegal, as it aided and abetted the silver manipulation.
I’m sure the motive behind the illegal transfer of the silver short position was the mistaken assumption by Treasury that an explosion in the price of silver (and gold) would threaten overall financial stability. Well guess what - they succeeded in crushing the price of gold and silver, but to no avail, as financial stability has been shattered.
JP Morgan was not just an accommodative good corporate citizen in the illegal transfer of the manipulative silver (and gold) COMEX short position. In addition to undisclosed government guarantees against loss, JP Morgan was given free reign to liquidate the COMEX short position at their discretion, knowing full-well the regulators would look the other way, no matter what dirty tricks were necessary to cause the price to collapse. Nor was JP Morgan a neutral agent in the silver price collapse. Data from the Office of the Comptroller of the Currency (OCC) http://www.occ.gov/deriv/deriv.htm indicates that JP Morgan held a much larger Over The Counter (OTC) derivatives position in silver and gold than was transferred to them from Bear Stearns.
My analysis shows that Morgan has made many billions of dollars, perhaps tens of billions, from their downward engineering of silver and gold prices from their combined COMEX and OTC short positions. They have used that engineered price decline to buy back as many short positions as possible. If investors are wondering what caused the destruction of billions of dollars in gold and silver values, metal and share price alike, look no further than JP Morgan, and the government officials who enabled them.
There can be no question that the CFTC is complicit in all these illegal activities. Same with the CME Group, owner of the NYMEX/COMEX. It is not possible that they are not privy and an active party to this successful downward manipulation. To think that officials at the CFTC, from the top of the agency, to staffers and even the Inspector General, have taken oaths of office to uphold commodity law and then have allowed that law to be repeatedly violated is beyond repugnant. That they have knowingly participated in an organized cover-up of this manipulation and have taken to lying to a Congressman calls for criminal prosecution.
As bad as this is, it gets worse. The downward manipulation of the price of silver, initiated by the U.S. Treasury, undertaken by JP Morgan Chase and sanctioned and aided by the CFTC and the CME Group has proven so successful in destroying investment values that the low price of silver is now threatening to destroy tens of thousands of jobs of those who mine silver for a living, here in the US and throughout the world. Who do these people think they are that they can allow the artificial paper price to alter real supply/demand fundamentals? Those in charge of enforcing the law have enriched a few sleazy bankers who trade toxic paper derivatives at the expense of tens of thousands of innocent investors and now ordinary workers. This should make your blood boil.
Serpo,
could it be possible that the reply#105 of yours up above was genuinely originally composed and posted Nov 8th-ish 2009? That's how many days ago, approximately 892 days are according to some of the charts at that link.
Was that researcher 'early' in his / her understanding or what!!!
Thanks.
Looks that way Beefsteak...history in the making ,the game has been up for a while I guess and about to unfold.Exciting times.Take a look at this..............http://13minutes-after-midnight.blog...g-bell_22.html
100% of readers think this story is Fact. Add your two cents.
Silver Market Update originally published May 1st, 2011
Monday, 2 May 2011 4:47
The big question on the minds of silver investors and especially silver traders is whether the meltup in silver has run its course, or whether it has further to go. On Monday last week we saw temporary burnout with a Reversal Day showing up on the chart at a point where silver was fantastically overbought. On the basis of this, and also the extremely bullish public opinion on silver and extremely bearish public opinion on the dollar (the public are normally wrong) it was reasonable to conclude that silver had either topped out or that a correction was imminent, and that is what we did conclude. However, the situation is now complicated by the fact that the latest COT figures reveal that Commercial short and Large Spec long positions have been dramatically scaled back just over the past week, which is not what you would expect to see ahead of a drop - what should happen is that Commercial short positions either ramp up or least remain constant. This latest COT chart by itself portends another upleg soon. To make life even more interesting we had a bizarre divergence between the performance of gold and silver on Friday, with gold soaring and silver reacting back by about 50 cents. Even though they theoretically shouldn't, gold and silver normally move as if joined at the hip in their day to day fluctuations, so this huge divergence was most unusual. What can we put it down to? - well, silver has stalled out at its 1980 highs, and even though the 1980 highs are 31 years ago so we wouldn't expect much resistance at this level as very few will have held on for all those years, it is still a psychologically important level because a break above it means silver attaining new all time highs, and these highs happen to coincide with major "round number" resistance at the $50 level. Therefore, if silver gets above this level we can expect the meltup to accelerate even more, and the COT chart does suggest that this level will soon fall. This is why silver held back on Friday even as gold advanced strongly - the $50 level is hugely important.
To say that silver's uptrend looks unsustainable on its long-term charts would rank as one of the understatements of the year, given how incredibly overbought it is on its MACD indicator, yet, as we have observed the latest COT chart does suggest another upleg. You have all heard the saying "Be careful what you wish for - (because you might not like the consequences if it comes true), and that is certainly the case here, for if silver's meltup continues, and gold moves into meltup mode too, which may have just started on Friday, then it probably means a collapse in the dollar - not a drop, a COLLAPSE, that will have disastrous consequences for the US economy and way of life as a result of inflation ramping up in the direction of hyperinflation, which will collapse living standards in the US and destroy the middle class (what's left of it), most of whom will suddenly find gas unaffordable and food very costly. It will be back to commuting to work on a bus, if you are lucky enough to have a job, that is, and if you happen to live near a bus route. Look on the bright side, it will at least help to conserve the world's oil supplies.
Obviously, if you are long silver or silver stocks, you will want to milk the meltup for all it's worth - after all, it would be a shame to sell now and then have silver tack another say $30 in a matter of just weeks. But at the same time, you don't want to be around if the wheel suddenly comes off, especially given that when silver drops it drops like a rock. The way to handle this? - simple - stay long and buy yourself cheap protection in the form of out-of-the-money Put options in silver itself, or Call options in something like the ProShares Ultrashort Silver, code ZSL. The cost of these options is peanuts compared to what you will save yourself if silver should suddenly tank.
www.clivemaund.com/article.php?art_id=67
http://www.zerohedge.com/article/ano...er-brinAnother Decline In Registered Silver Brings Total Comex Physical To Multi-Year Lows
Tyler Durden's picture
Submitted by Tyler Durden on 05/03/2011 17:05 -0400
One would think that following the total "annihilation" (as it has already been pegged by some) in silver over the past few days, that Comex would promptly reverse its "temporary" reclassification of Registered into Eligible silver, or so the believers in Comex holdings claim. Which is why to our surprise we noticed that today, the Comex announced that the ongoing inverse reclassification from Registered into Eligible continues, with Scotia Mocatta seeing another 186 thousand ounces of physical silver moving into that dark pool known as "eligible" holdings.
This, following on the footsteps of last week's massive reclass action, which saw 20% of the Comex Registered silver being shifted away, means that today's Comex physical silver has now fallen to a fresh multi-year low of just 33.152 million ounces. Add to this the fact that there was another withdrawal of 300k ounces from Brinks, and one may wonder just how "justified" the fall in silver price has been over the past 2 days.
And for those who enjoy seeing long-term charts below, courtesy of 24 hour gold, is a long-term chart showing Registered silver inventories at the Comex. It kinda speaks for itself.gs-total-comex-physical-multi-year-lows