woensdag 27 februari 2013

The Leverage in COMEX Silver is about to Explode

Why is the eligible silver going up at such high pace and open interest going up at the same time?

As I told people before, eligible silver is not allocated. People think they own it, but it is not available for delivery. The ratio of registered to eligible is now: 29.7%. Down from 33% the last time I looked.

As this ratio between registered and eligible goes down, the leverage is going up and up. And when this leverage breaks (due to a short squeeze), the non-eligible supply of smaller bars and coins is going to disappear in front of you.

Chart 1: COMEX Silver
People know this, and as a result are buying physical silver in record quantities. The U.S. Mint just sold a never seen record of 3.37 million ounces in February 2013.

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