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Silver Short Squeeze

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Article by Adam Hamilton on 24hGOLD

Summary:

Silver has suffered a miserable year so far, bludgeoned by gold’s unprecedented selling anomaly.The exceptional weakness in both metals was greatly exacerbated by futures speculators piling on short-side bets.But with silver shorts hitting record extremes, a super-bullish short squeeze now looms.Any rapid silver rally is likely to spook the highly-leveraged futures traders, sparking a massive stampede to cover.

The bottom line is speculators’ short positions in silver futures recently soared to record highs.This group of traders has a long history of hitting peak bearishness when silver hits deep lows just as major new uplegs are being born.Their bets are a powerful contrarian indicator.And the only way they can exit their gargantuan silver short position is by buying a proportionally massive amount of silver futures.

his guaranteed buying will drive silver higher, putting great pressure on all the short speculators.They will have to buy to cover, forcing silver higher and igniting a vicious circle.A mere mean reversion of their total short and long positions to post-stock-panic norms would necessitate near-future buying equivalent to over a fifth of total global production!That is great fodder to fuel an epic short squeeze.

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