There is nobody in COMEX silver contracts anymore, other than casino players. The only way they have been able to keep silver depressed is by borrowing silver from SLV to meet immediate demand. That’s the only reason silver isn’t trading $10 to $15 higher right now.
via My Blog
Eric Sprott’s PSLV filed a prospectus, as he is required to do, with the intent of purchasing $1,500,000,000 of physical silver for the PSLV.
SEC. 4. MEETING DEMAND FOR SILVER AND GOLD NUMISMATIC ITEMS.
Subsections (e) and (i) of section 5112 of title 31, United States Code are each amended by striking ‘quantities’ and inserting ‘qualities and quantities that the Secretary determines are’.
To our (lack of) surprise, a quick glance at today’s silver holdings at the Comex confirms that the trend of reclassification is continuing unabated, and total “physical” silver across the entire Comex universe has now plunged by almost 20%, or from 41 million ounces to 33 million ounces, in the span of one week!
Many have speculated that there could well be a run on physical silver. But for those looking for a smoking gun, this is probably as close as you will get to one, short of JPM actually declaring “force majeure.”
“There has been so much physical buying that it’s widely reported that the mints are having difficulty obtaining coin strip in the face of overwhelming coin demand. There has been suspicion with the March settlement and with subsequent near-term settlements that there will in fact be insufficient silver to meet the settlement requirements in those near month futures contracts.
via KWN My Blog
“[In January], it traded 500,000,000 oz in a day on the COMEX when we only produce 800,000,000 in a year. Who the hell is buying and selling this stuff. It’s a paper market,” said Sprott, speaking at the Vancouver Resource Investment Conference.
As with gold, many analysts attribute the rise in silver prices to growing uncertainty in many global markets, particularly that of the United States and some European nations. As with many metals, much of the growing demand is also coming from emerging markets like China and India.
“Chinese net imports of silver are 112,000,000. In 2005, they were net exporters of 100,000,000 oz. That’s a 200,000,000 oz shift. The denominator is 800,000,000 oz, that’s what the world produces in a year,” said Sprott. “Where’s it all going to come from?.”
Checking the futures numbers at this stage of the month shows potential for another shortage. As of February 9, 2011, less than three weeks from the first notice date for March delivery, there were 62,581 contracts outstanding for March silver. As of April 7, 2011, there are 69,555 contracts open for May silver.
If March taught us anything, it was that as little as 8 million ounces of silver is hard to come by for the COMEX dealers. There is no established, empirical reason for taking nearly the entire month to fulfill those obligations. This is especially true since there was as much as 3.5 million ounces unfilled as late as the last weekend of March.
As we approach the May delivery month and see that the open interest is ahead of February, the big question is how many of those will be lost to cash settlement and rollovers. If we use March as a guide then, it only takes 2,000 contracts standing for delivery to unleash havoc. So there is a very good likelihood that we are in for another month of physical news and shortage rumors.
On April 6, Bloomberg reported Comex Silver Stockpiles as of April 5, and if you scroll down through the report, you’ll notice that JP Morgan has enough silver to fill, wait for it, 6 contracts. Yep 30,844 troy ounces, that’s all.