Let’s Consider Silver’s Very Low Numbers

Let’s Consider Silver’s Very Low Numbers

Let’s Consider Silver’s Very Low Numbers

$SLV, $GLD

  • The Devils Metal will bounce right back up in symmetrical proportionally when the short covering begins to happen.

Let’s consider silver’s numbers.

The 52-wk low in specs’ silver-futures shorts was 41.5-K contracts in mid-September 2017.  Getting back there would require an astounding 78.6-K contracts of short-covering buying.  That’s the equivalent of 393.3-M oz of silver.  If that short-covering buying unfolds over 8 wks, it would boost global silver demand by 49.2-M oz a week.

The Silver Institute reported that in Y 2017 total global silver demand ran 1017.6-M ounces.  That is the equivalent of 19.6-M weekly, which includes everything not just investment demand.

The coming short-covering action has the power to boost this by 251% for at least a 2 months.  There is no way silver would not run dues North on such proportionally-extreme silver-futures buying.

Silver too looks wildly Bullish to me.

History has proven the worst time to be Bearish on gold and silver is when futures speculators are, as evidenced by high shorts and low longs.

And with both silver and gold shorts spiking to all-time-record highs in recent weeks, they both look exceptionally Bullish in here.

So, the market is likely on the verge of massive new uplegs in these precious metals, yielding big gains for smart contrarians.

These can be played in the metals themselves, their leading GLD and SLV ETFs, the stocks of their miners or there royalty streamers.

The latter offer the greatest potential gains by far, as their profits really leverage higher gold and silver prices.  The stocks of the elite gold and silver miners are radically undervalued today, having just suffered a rare capitulation plummet as gold and silver plunged on that record shorting, thus saying buy us.

The Key to this success is being/staying informed and being contrarian.  That means buying low when others are scared, before undervalued gold and silver stocks turn due North.

This is the bottom line

Speculators in gold-futures and silver-futures short positions have risen to record numbers in recent weeks.  These traders are HyperBearish, and betting heavily on precious-metals moving further to the Southside.

There’s nothing more Bullish for gold and silver than traders with extreme short positions.

The Big Q: Why?

The Big A: All futures sold short must soon be offset by proportional near-term buying to close out those positions.

That action feeds on itself thanks to the incredible leverage inherent in gold futures and silver futures thus resulting sharp short-covering rallies that bring in in new long-side futures speculators and later investors with their vastly-larger pools of capital.

Record futures shorts are the best gold and silver buy signals available. And our technical indicators are pointing that way.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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