Mike L

Short Squeeze in Silver - How to Profit

In making the case why I am silver bullish, 'a,b,c,d..' I of course left out a very important 'e'..

Namely, the printing of a few Trillion dollars in the years ahead and the additional trillions required to pay for the hyper exploding deficit, can't help but be an inflationary pressure in the long run, current commodity and real estate price deflation collapses notwithstanding.

Short Squeeze in Silver - How to Profit

User 514512xxx whatever..

You said;

"Mike L: I believe you are punishing Hommel and Butler needlessly. If your "reclamation theory" is even remotely accurate, I have one question for you to ponder: Is current silver usage matching current silver production?.."

My answer is no they don't match. Current silver consumption is substantially LESS than silver production/mining/recl... See ANY valid reference on the topic which uses the actual industry data including the Fortis link I posted.

I am bullish on silver ,..but not because of a phony and fraudulent 'deficit' story from Butler and Hommel. I am bullish because I believe that;

a) Investment demand will continue to grow and will more than absorb the surplus silver, via vehicles such as the SLV ETF, the most important single new demand side in years, ironically bashed by Butler and co., and

b) as the global economy improves, emerging market demand for silver will increase, and

c) 'easy' low cost mine production sources will eventually dwindle, and

d) Silver is a very important 'safe haven' PM worldwide as we see clearly currently.


Re your comment;
"..If you think silver production is EXCEEDING silver usage (in any form) including physical accumulation by investors/accumulators you need professional assistance..."

Of course that is not what I said and your comment there is pointless and irrelevant. Even is silver was produced in numbers of a BILLION surplus excess ounces a year, SOMEone, SOMEwhere, would be happy to accumulate it at SOME price. It would not be tossed in a garbage heap and buried just because it was industrial excess, so it is a pointless exercise to pretend that if anyone would be willing to buy it at ANY price then there is 'deficit' silver production vs consumption. By that definition, deficit silver is never possible, unless the silver price is ZERO 0.0 and remains ZERO 0.0 It is a totally illogical and pointless premise.

Therefore, with silver in industrial surplus, what will drive the price higher in the near term? Quite obviously, investment demand in excess of whatever the current price level is. The key component from 2006-2008 to investment demand, was the huge demand from the ETFs. Without that ETF, the investment demand would have been far lower and silver's price would be far lower. Now in 2008, retail physical demand kicked in as well, and that helped, but it still remains a a small fraction of the ETF inevstment demand growth.

SLV now has approx 257 million ounces of physical silver. And though it is the biggest silver ETF, that doesn't count the other ETFs and investment vehicles.

Growing investment demand is critical to silver's upward price. It does no one any good to pretend that;

a) industrial demand is higher than supply, and/or
b) If any investor, anywhere, is willing to pay more than .1 cent for surplus silver, than there is a 'deficit' supply/demand in silver.





your comments spring from a woeful ignorance about silver supply/demand fundamentals. You should do some research starting with the links I provided above.

Short Squeeze in Silver - How to Profit

Jason,

re your comment;

".. I can't find any physical count of the metal, nor any recording of serial numbers. If you can point us to this "full inventory list" of physical bars, with weights and serial numbers, I would be happy to retract my statement..."

OK, if you take the few seconds it takes to pull up the SLV ETF's website front page, and click on the link on the left there that says 'Silver bar list', you will find the inventory.

us.ishares.com/product...

This is the problem I have with folks who follow Butler/Hommel et all's 'conspiracy theory' based school of investment strategy. There just seems to be not the tiniest bit of factual research involved before all kinds of inferences, allusions, accusations, skepticism, etc is lobbed at the ETF, without even a minutes worth of actual valid research, or established FACT involved.

Butler's endless accusations for example about silver loans and such are completely 'fact free'. An analyst should write articles based on verifiable data, not baseless meandering speculative accusations.

Ditto the situation with silver industrial 'supply/demand' fundamentals. All these 'analysts' who have NO IDEA what the supply demand actual numbers are, are constantly making statements about there being a fundamental silver deficit 'shortage', when in fact there has been a surplus for years. They use the very deceptive and invalid technique as I stated before, of counting annual mine production, and ignoring annual reclamation production. So they for example, count an industrial silver demand of 100 million ounces for photography as a full demand number of 'used up' and gone silver, and ignore that 75% of that silver will be reclaimed/recycled and added back to supply! You can't trust ANYTHING that comes from an 'analyst' who uses such a fraudulently invalid methodology.

Here is a handy and well referenced summary of said fundamentals for silver.

www.virtualmetals.co.u...

Though the Fortis report is far from perfect or complete due to the nature of the silver market itself, I have been searching for years and have not found a better web based, more thorough, more comprehensive snapshot summary, and incidentally, it also agrees in the 'main' with the 'Silver Institute', 'CPM group' etc. as to deficit vs surplus silver.

I think investors should be very cautious about ever accepting any premise by 'analysts' as Ted Butler.

When a guy like Butler for example states that 'above ground' gold is far more plentiful then silver..and then you find out his methodology is grossly deceptive, and you see this kind of fraudulent thinking and methodology routinely from him, (i.e. he counts all the estimated GOLD jewelry and artifacts as 'above ground' gold, but FAILS to count all the SILVER jewelry, silverware, artifacts, et al .....which numbers in the BILLIONS of ounces.....in his above ground silver number!)..then you can count Butler and his offshoots out completely as to having any genuine credibility.

Again, we don't know what the total above ground numbers are, but rather than just lying to people as Ted Butler does, there are those who have actually done some research on the topic, like this silver bull here below, who at least has done some good research and used some data from which to draw inferences.

www.gold-eagle.com/edi...

www.safehaven.com/arti...

www.financialsense.com...

I don't mean to be harshly critical. But making false and spurious skeptic claims about the single most important new demand segment of the entire silver market, i.e. the SLV ETF, is destructive to silver investors. Butler and his ilk do so because he is PAID to make these kinds of claims by IRI, a physical bullion dealer, trying to capture investment money away from the ETF. Yet most of the important ETF demand, comes from investors unlikely to buy substantive physical bullion in any other form.

I am a silver LONG and will be for years to come,.... I own physical bullion in several forms (bars, Eagles, Numismatic), and I own SLV ETF, SLW, CDE, and SSRI. But I really hate to see the parroting of fraudulent nonsense by guys like Butler who give a black eye to the entire silver analysis and silver investment sector.

They are no friends to silver investors.

Short Squeeze in Silver - How to Profit

The problem I have with the short squeeze theory, is as follows;

1) Rather than 'piling on' more paper short interest to hold the price down as the author implies, the short interest and open interest has been dropping for months.

2) The 'retail shortage' has gone away and physical premiums have come way down.

3) The 'supply/demand' fundamentals the author alludes to re Ted Butler and Hommel, are false in that those authors claim a 'deficit' exists between physical industrial demand vs annual supply...but they IGNORE reclamation in their supply figures! Reclamation has to be included as it has always been a huge part of annual 'production' of silver, and when it is included there is 'surplus' supply /demand to teh tune of 50 million to 150 million ounces annually as to production vs consumption. That surplus has been absorbed by strong investment demand, primarily from the very ETF (SLV) which the author bashes.

Also, the author states SLV does not allow independant audit of its silver but of course this is simply false as they are indeed independently audited and also publish a full inventory list of their silver bars, available on their website.

Not a bad article overall, but I hate to see the false and misleading deceptions of the 'industrial deficit, misinformation so commonly spread, and the 'short conspiracy theory' school of investing, taking such a prominant role.

I am very bullish on silver, due to future emerging market demands, investment demand, global financial instability, and a 'too high' Gold/silver ratio, but I don't like to see bogus argument used to bolster silver's case.