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Why Silver Prices Are Exploding

Avery Goodman profile picture
Avery Goodman


  • Silver prices have increased by almost 60% since March 2020.
  • The price increase has been driven by dramatically increased physical demand.
  • Indian silver jewelry exports have increased by 104%.
  • If physical demand continues, as is likely, prices will probably rise dramatically further in September, 2020.

The price of silver has gone up astronomically. It was selling for just about $12 per ounce on March 19, 2020. But, as of July 14, 2020, the price is over $19 per ounce. That's a price increase of almost 60% in less than four months. What accounts for it?

The answer is simple. Physical demand. The price has only exploded as a direct result of an explosion in physical silver demand. As Marcus Dunlop, the evil genius who designs market manipulation software in the thriller novel, The Synod, might have said: "Overwhelming physical demand will always defeat any commodity price manipulation if there isn't a minimum percentage of the commodity to back it up." Thus, if as many believe, silver prices are being suppressed, the things that are happening now will make continued price control impossible.

On April 30, 2020, the total open interest (the number of contract for future delivery of 5,000 ounces each) in COMEX silver futures (SI), maturing in July 2020, was 99,406. When those contracts matured on June 29th, if circumstances had been normal, we would have seen something like about 1% or less of the contract holders demanding delivery. Short sellers would have reasonably expected to deliver about 900 contracts, or a total of 4.5 million troy ounces.

Obviously, that's a lot of silver, but it doesn't compare with what is actually happening. So far, as of July 14, 2020, short sellers have already delivered 13,919 contracts, and over 2,418 July contracts are still waiting to be delivered! There is also an unusually high level of same month delivery contract purchasing in all the precious metals futures markets, including gold, silver and platinum. That means, in all likelihood, the final number will probably far exceed 16,337.

But, let's be conservative, and use the 16,337 total for

This article was written by

Avery Goodman profile picture
Avery B. Goodman is a licensed attorney and the author of the action-packed Wall Street thriller "The Synod". He holds a B.A. from Emory University, where he concentrated on history and economics. He also holds a Juris Doctorate degree from the University of California at Los Angeles Law School and is a member of the Bar, licensed to practice law in several jurisdictions. His career has consisted not only of prosecuting cases on behalf of clients, but in judging the claims of others. He serves he roster of neutral arbitrators of the National Futures Association (NFA) and the Financial Industry Regulatory Authority (FINRA).

Analyst’s Disclosure: I am/we are long HL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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