Arian Silver

I know neither Rule or Sprott, and realize they have a vested interest in talking their book, but their assertion that substantial upside for silver exists once a technical trigger is generated is supported not only by their observations in the physical but also by statistical concentrations in the paper market.

The invisible hand is furiously covering its shorts into (D-wave) weakness while the silver bugs liquidate their positions in disgust. The hand's net long position as a percentage of open interest has increased to -8.38% (chart 1). The highest level since 2001 demands some viral recognition followed by a string of WTF suffixes.

Chart 1: Silver ETF (SLV) and the Commercial Traders COT Futures and Options Net Long As A % of Open Interest


The commercial traders are loading up the boat and forcing the shallow pocketed and highly emotional retail trader to walk the plank with impunity. This setup is illustrated by clear, diametrically-opposed statistical concentrations of commercial and retail traders highlighted in the green boxes below (chart 2).

Chart 2: Silver London P.M Fixed and the Commercial (C) & Nonreportables (NR) Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest


What does this all means? It means more earthquakes before what could be one of the largest price eruptions in the investment world since 2008 (chart 3).

Chart 3: Silver ETF (Silver) and the Silver Long/Short Concentration Index (CI): 1 = Bullish Setup, -1 = Bearish Setup


Headline: Rule - The Physical Silver Market Is Getting Dangerously Tight

“Eric Sprott has pointed out that on a daily basis, the paper markets (futures markets) in silver trade about 100 million ounces, while the physical market produces less than 3 million ounces each day. That’s an indicated 97 million ounce shortfall on a daily trading basis. I would also like to add that 90 to 120 days ago, Eric Sprott was saying to me that the amount of silver available for good delivery, on the various metals exchanges in the world, was about 40 million ounces. So if you think about the fact that there were 40 million ounces available for good delivery, but 100 million ounces a day are traded, this would suggest that all of the available silver was traded before lunchtime. I would also say that if this market begins to move to the upside, it would appear from the disparity of silver available to trade and the amount that actually does trade, that there is the strong case for some very substantial upside.”