- Local time
- Yesterday, 19:47
- Feb 14, 2020
KITCO Silver is the worlds leading silver news and silver charts website - Live prices, historical charts, news and expert opinions.
The question could not be more simple. Are we about to see what could be one of the greatest short squeezes in history. About a year ago in Colms site when silver was about 17 dollars I started a thread extolling the virtues of going all in at that price. It was a strategic metal and in my opinion was in short supply. It made mant runs at 18 dollars but just could not break through. It was stuck in a tight trading range. Then the virus struck and it was a massive deflation shock to the system and silver dropped to about 11 dollars. A complete collapse. Investors had to sell to cover losses elsewhere like stocks and with a depression, the industrial demand would collapse as well.
But then we saw the money printing and I believe a great demand from scared investors to get the actual coins. With mints closed and then stores, the premium between spot and coin expanded to outlandish margins of about 13 to 15 dollars a coin. That has since eased to 6 dollars which is still very extreme, as normal would be a little of 2.50.
So on Monday the 20th we finally had seen prices come back and after getting through 18 and then 19 in the past month, it finally broke through the important 20 dollar figure. IF may well stall and fall back here somewhat but after a few days if it holds above 20 then that will set a very important floor to the market.
The people who are now sweating are those who are short because this is a very thin market. A small amount of money relatively speaking can drive the price up and the shorts will be losing serious money and some will be forced to cover, which means they will have to buy back the silver they sold short. This buying will further exasperate the pain for the other shorts. This is known as a short squeeze and silver would be very hard to get hold of without dramatically higher prices. Everyone would be buyers, the shorts because they are forced to before they lose even more money. and the longs who would have made a huge profit, which gives them even more buying power.
A short squeeze is not a common event and can vary in intensity but in this small market it could be astounding, silver could go to 100s an ounce.
There will surely be an attempt to smash it down with more short selling of contracts but the physical buying is happening daily.
To give a understanding of figures here. It is extimated that 1 billion ounces exist and that would be values at 20 billion dollars. Monday, Jeff Bezos made 13 BILLION on his Amazon stock and is worth about 175 billion. He alone could buy all the silver existing 9 times over.
A more likely buyer would be Elon Musk who made 5 billion Monday on his Tesla stock and is worth now 74 billion. He cornering the silver market is logical as he needs a lot of silver.
Fingers crossed here as I have serious(for me anyway not for Musk) option contracts