(updated 3/1/21)
The mainly big banks have been playing a no lose (so far) game for years. They have maintained a concentrated short position in gold and silver- selling more when the price is going up to cap the rally and then buying back as they manipulate the price lower. See my article on how they have done this. As of 2/24/21 the top 8 silver shorts per the CFTC weekly COT report are almost 80000 contracts short silver. That is the equivalent (at 5000 oz./contract) of almost 400 Moz. of silver. They seem to be having trouble at this point trying to get out of that position as they have been short this much and more for the last 6 months at least. I have no doubt they will do everything they can to get out of this position without losing their shirts or maybe their companies. See my Open Letter to the 8 Big Silver Shorts.
I know that Ted Butler has made an estimate on what the entry price of these silver short contracts was, but I can’t find that info right now. But, I am sure it was well under $20/oz. probably around $16 – 17/oz. and they seem very adverse to buying those back at a loss. The top 8 shorts may not be the same for both silver and gold, but they are currently (2/26/21) about $10 billion dollars in the hole- combining realized and unrealized losses.
Woes the big banks- right? I say this is the little guys chance to stick it to the “big boys” for once. We can keep their feet to the fire. The more silver we buy, the more people understand the situation, the higher the price goes, the more they lose, the more we gain. At some point (soon I think) one of them is going to flinch and buy back their short contracts, causing the price to jump up, causing the rest of the big silver shorts to fall like dominoes. How can they buy back a 4 month’s supply? Or the way I look at 350 moz. is over 15 month’s of Available Silver Production for Investment (ASPI) after average silver use, so ASPI is the amount available for investment.
For a long time now the futures market has dictated the price. That is not the way future markets are supposed to work. The supply and demand of the physical commodity is supposed determine the price and the futures market is supposed to give producers and users a chance to lay-off some of the risks. It is upside down in the PM markets and is completely out of hand in the silver market. For decades Butler has advocated for position limits in the futures market that would prevent these concentrated positions from controlling the price.
You may have heard the expression “silver is the poor man’s gold” and I think the current situation will prove that point. There are millions of people who could buy one ounce of silver per month, but not near that many that could afford an ounce of gold per month. I think gold will do fine in the coming market (see Gold), but I believe that silver will do much better.