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Albert Sung is the author of the Katchum Macro-Economic Blog, monitoring breaking economic news from a day to day basis. He started investing in 2008 because of the economic crisis and holds a masters degree in chemical engineering. Previously, he worked several years as a process engineer at... More
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  • The Leverage In COMEX Silver Is About To Explode 3 comments
    Feb 27, 2013 4:07 PM | about stocks: SLV

    Why is the eligible silver going up at such high pace and open interest going up at the same time?

    As I told people before, eligible silver is not allocated. People think they own it, but it is not available for delivery. The ratio of registered to eligible is now: 29.7%. Down from 33% the last time I looked.

    As this ratio between registered and eligible goes down, the leverage is going up and up. And when this leverage breaks (due to a short squeeze), the non-eligible supply of smaller bars and coins is going to disappear in front of you.

     

     

    (click to enlarge)
    Chart 1: COMEX Silver

    People know this, and as a result are buying physical silver in record quantities. The U.S. Mint just sold a never seen record of 3.37 million ounces in February 2013.

    Disclosure: I am long AGQ.

    Stocks: SLV
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