Many of us in the precious metals community have been conjecturing, based on silver’s particular buoyancy since Halloween, that the bullion banks who are massively short paper silver might have a bigger problem with delivering physical silver right now than they do with gold.
There’s been plenty of “tracks in the snow,” like the huge volume of silver that moves in and out of the Comex silver vaults on a weekly basis, the unanticipated record amount of silver imported by India in 2014 and the stunning withdrawal of roughly 90% of the silver stock on the Shanghai Futures Exchange since 2013.
It’s almost as if the bona fide physical silver accumulators are removing as much physical silver possible while the NY/London bullion banks play “the shell game” with silver baseballing in and out of the Comex and the SLV Trust. Even HSBC, surprisingly, issued a report forecasting an 11 million ounce silver supply deficit in 2015. If a bullion bank of HSBC’s stature is admitting to a deficit, the real deficit will likely be more like 110 million ounces…
I wrote an article recently for Seeking Alpha in which I defended my view that silver would be the best performing asset in 2015: Silver/Seeking Alpha.
The graph below shows silver’s performance since Halloween (click to enlarge):
The black line shows that silver started to go parabolic until the bullion banks “stunted” the move on the day that the Government released the infamously phony non-farm payroll report. I have argued that they did us favor by slamming silver because parabolic moves are the “death” of a bull market. I also suggested that the silver would have healthy pullback and begin to head higher again. The blue line shows a more “healthy-looking” bull market trend developing.
This week and last week the bullion banks worked overtime everyday after the Comex paper gold/silver market opened. And every time silver was smacked close $16, it popped right back up, typically on little or no possible news triggers. Today was another example of this.
The point here is that silver should bought on every manipulated smack. If you want to accumulate a long term trading position, buy every hit and sell 1/2 your position on the bounce. But reload a little more than you sold on the next hit.
If you want a silver mining stock play that will be a home run on the next big bull run in the metals, I would suggest this junior explorer/emerging producer for which I’ve written a detailed research report: Emerging Silver Producer/Free Cash Flow Positive.
This Company started producing silver last year and is free cash flow positive before exploration costs. While the existing mine deposit has a lot silver, the Company controls several parcels of land near its existing operation on which the Company believe will contain, in aggregate, a lot more silver than at its existing mine deposit. In fact, the Company recently announced a new discovery on of these properties which contains near-surface gold and silver mineralization and confirms the potential for a low-grade oxide open pit operation from which it will be able to utilize the existing milling operation.
This Company has the potential to be a home run in 2015 if my silver forecast is even half-accurate.