Silver prices had a good rally over the last few days From a low of US$ 17.53 per ounce on September 1 it reached yesterday a high of US$ 19.99 (+14%). For the last few weeks silver has been trading at a backwardation. In the

futures market there is contango and backwardation. Backwardation is a market condition where the price of a commodity's forward or futures contract is trading below spot price at contract maturity. Backwardation occurs when the difference between the forward price and the spot price is less than the cost of carry (financing, usually interest rate on 90-day Treasury Bills). It is argued that backwardation is abnormal and suggests

supply insufficiencies of the commodity in the corresponding physical  spot market.


In the silver market there has been a premium of 17 cents an ounce in the spot month over September futures, something some market observers have never seen before. But it just screams of tightness in the silver good delivery bar market (allocated silver).


Speculators (hedge funds and money managers) have been selling short silver the last few weeks what we hear on algorithmic trading, a method of executing orders using automated pre-programmed trading. Obviously they are selling unallocated (paper) silver and will not be able to deliver the metal. This kind of trading can lead to catastrophic results as witnessed in the silver market in 2020 when silver prices jumped from US$ 18 per ounce  to US$ 30 in just a few months

And this could happen again.

The silver paper market is 10 times bigger than the physical market, which

demonstrates the explosive action once the short sellers are forced to cover

as they run out of money covering the losses in the futures contract market.

The Silver 7 Index lost around 50% from top to bottom since April 2022.

For the patient investor a great opportunity is presented to them.

Summary :

extremely bullish on silver in the coming 2-3 years with upside

potential of 100% to 200%.



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