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Silver Drivers

|Includes: CDE, HL, iShares Silver Trust ETF (SLV), WPM

Silver spot price is grossly out of line with its supply/demand fundamentals.  The gold/silver ratio should be 1:16 based on the natural abundance of the metal and historic precedent.  With gold holding over 1000 USD/Oz, silver should be holding over 60$/OZ.  
Gold is acting as it should as a contrarian play.  China and India are market drivers, and many are seeking gold as a hedge.

Silver is not acting as it should for two reasons.   The most dominant reason it that the COMEX has vast silver holding, and has a significant agenda to hold silver in check.  Holding silver down favors their USD based holdings, and is in their best interest.  Numerous articles by Ted Butler and David Morgan et. al. bear this out.  Secondly, we are being drawn into the convenience of silver ETFs that may or may not be back by physical silver holdings.  This skews the demand side of the equation downward. 

Unless the CFTC recommends, and Congress approves a cap on futures for silver, it will be range-bound.  Large banks simply have a lock on silver spot . This is self preservation for the large banks, and just the reality of silver for the time being.    Conversely, China seems to have quite an increasing apatite for gold and silver both in bullion and mining companies, and is certainly a market driver in the opposite direction. 

So we are being whipsawed by these two forces.  For those who hold silver bullion this can be frustrating.  If one trades silver mining stocks, the volatility makes for good trading if one is nimble.