Ted Butler: Commercials Have No Interest in Shorting Silver Again [5th Jan 2012]

Silver analyst Ted Butler had his mid-week commentary for his paying subscribers yesterday and, as usual, I have a couple of free paragraphs.

"The big commercial silver shorts had a near death experience when the price approached $50 in April. They were at the end of their rope and needed to do something in a hurry. That’s why they rigged prices lower; so that they could buy and save themselves. These well-connected commercials knew, perhaps for the very first time, just how tight the silver market had become and how close we were to a profound physical shortage. The key is that the silver shortage wasn’t caused by excessive speculative buying or a bubble or a mania. The extreme tightness and near shortage in silver was as a result of the gradual and cumulative impact of normal investment buying over the past five years. There is nothing to suggest that the long term and steady silver investment buying has ended."

"Because there was no bubble or mania in silver, there was no bubble to burst. The orchestrated takedowns of the price by the big commercial interests were simply so that these commercials could buy and rid themselves of silver short positions. That’s done now. That means that the silver market is now in the best possible shape."

"What lies ahead for silver is exciting. While we have not witnessed a bubble in silver yet, we will some day. The silver story and the dynamics of the market are too compelling for an investment mania not to emerge at some point. If anything, speculative sentiment has been completely wrung out from silver, clearing the way for speculators and investors to enter the market with a vengeance. At some point, enough of the world’s industrial silver users will panic as prices climb and attempt to build physical silver inventories. This user buying, something that never kicked in during the run to $50 will create a silver shortage, the likes of which never witnessed before. It seems that the big commercial interests have come to learn the real silver story and they appear to want no part of the short side again. The major pressure of selling has passed...and the way seems clear for higher prices. By the time the next chapter in the silver story plays out, $50 could look cheap."

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Silver's average annual price reaches record high in 2011 [Author: Dorothy Kosich; Posted: Thursday , 05 Jan 2012]

With a 74% gain over 2010, silver outperformed all other precious metals last year in terms of average annual price increases boosted largely by investment demand
RENO - 

The average annual silver price of $35.12 per ounce last year, set a new price record, a 74% gain over the 2010 average annual price of $20.19 per ounce.

The Silver Institute observed Wednesday silver's average annual price has increased an astounding 703% since 2001.

Silver outperformed all other precious metals in terms of average annual price increases. Palladium recorded a 39% gain last year, while gold was 28% higher and platinum rose 7% over 2010 data, the Silver Institute reported.

In a report released by the institute last November Thompson Reuters GFMS forecast that world silver investment would reach $10 billion last year, easily surpassing the previous record of $6 billion in silver investment set in 2010.

"Silver's strong price performance last year owed much to the strength in investment demand, as well as growth in industrial demand, much of which is relatively price insensitive in the short term," said Michael DiRienzo, executive director of the Silver Institute.

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Silver Fibonacci Price Update 03 Jan 2012 [TheSilverLog]

Powerful Rebound In Gold and Silver Prices About To Begin? [SilverBearCafe; Jeb Handwerger

Rarely has such technical destruction been visited on stalwart sectors such as gold, silver and the mining stocks(GDX). The silver charts reveal technical damage not seen since the destruction of 1984. It can only be conjecture that can account for a once in a generation obliteration of a once hallowed sector. It must be remembered that both gold(GLD) and silver(SLV) had major moves earlier this year to the $1900 and $50, surpassing overhead resistance and reaching overbought territory. This may be the reason why the decline in precious metal is overextended and extremely oversold. We urged caution back in April for silverand in September for gold. Silver has characteristically corrected close to 50% from its highs, while gold has fallen less than 20%. Pullbacks are normal and restorative in a secular bull market in precious metals especially after explosive moves.

Unless such technical destruction is reflective of an upcoming geopolitical news development, we must look for more mundane causes. When the woods are ablaze, the fire obliterates the sequoias at the same time they incinerate the pines. The recent declines may be the result of a rush to the U.S. dollar (UUP) and treasuries (TLT).

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