Ted Bulter, who has been watching the Commitment of Traders (COT) reports and the Bankers Participation Report for silver longer than anyone, has also come to the conclusion, that despite the utter misinformation we hear in the MSM, there was NO spec frenzy in silver in April, and most of the rise can be attributed to short covering, here is an excerpt from his newsletter via Ed Steer's Daily Gold and Silver:
"What makes the recent silver takedown the most egregious in history is the clear proof of manipulation provided by public data. I know the notion exists that silver was in a bubble, driven up by hot speculative money that suddenly turned tail. But I also know that there is no objective data backing such bubble claims. All that was looked at was the rising price and then an assumption was made that there must have been hot speculative money behind it. The data in the COT for the week ending April 26, when silver closed at $45.60, having traded above $49, was that the big buyers to the upside were the big commercials, mostly buying back shorts, to the tune of more than 10,200 contracts net. JPMorgan was a noted buyer, as confirmed in the May 3rd Bank Participation Report. The speculators were the big sellers. I still believe that there was a backdoor deal between JPMorgan and the few big speculators who did go short, illegally swapping positions, as I wrote at the time. Illegal swap or not, there was no hot speculative money driving prices higher, just commercial buying."
In case you're interested in seeing some of the numbers, you can find them in the links I posted in another thread:
I just wanted to add this about using the word bubble. The distinction is important, most people associate a bubble with some kind of speculative frenzy, and if it bursts the investment opportunity is over, but if it was not a bubble that implies the investment opportunity is far from over.
In fact, it was a short squeeze, and given the fact there are still a large amount of outstanding shorts, thought they number has come down a bit, there still remains the possibility of further short squeezes, think of what would happen if during the next short squeeze there was actually an increasing number of spec longs instead of the decreasing number we had in April? That is why people say silver has the potential to be hugely explosive.
There is such a thing as a "reverse bubble" - instead of prices being artificially high, they are low. Silver has been in this condition for years. When this "reverse bubble" pops the price soars - back to the level it SHOULD have been all along. Check out this article from 2008: https://www.gold-eagle.com/editorials_08/mladjenovic081808.html
Eric_2 wrote: There is such a thing as a "reverse bubble" - instead of prices being artificially high, they are low. Silver has been in this condition for years. When this "reverse bubble" pops the price soars - back to the level it SHOULD have been all along. Check out this article from 2008: https://www.gold-eagle.com/editorials_08/mladjenovic081808.html
Thanks for the great link Eric2, I think silver is still in a reverse bubble even three years after this article was written.......I'm going to go post this over at Kitco............