Silver Short Squeeze Could Be Imminent
Source: Right Side News, National Inflation Association (4/5/10)
"The very day Bear Stearns failed was the day silver reached its multi-decade high of over $21/oz."
JP Morgan took over the concentrated short position in silver from Bear Stearns and gained complete control over the paper price of silver. Within weeks, JP Morgan was able to manipulate the price of silver down to below $9/oz. NIA believes they were able to drive the price of silver down through "naked short selling," selling paper silver that is unbacked by physical silver.
On February 5th, we witnessed another sharp decline in silver prices, which NIA described on February 7th as being "just a temporary wash out, before a huge surge in silver prices later in 2010." Since then, silver prices have rebounded by 18%. The temporary wash out on February 5th was predicted by independent metals trader Andrew Maguire, who came out this week exposing the fraud that is taking place in the paper silver market.
The silver market provides a window into what is happening in the gold market. Because the silver market is very small and its short position is so concentrated, its price is easier to manipulate than gold, but the same manipulation is taking place in gold on a much larger but less noticeable scale. In our opinion, the CFTC is under pressure not to do anything about the manipulation because the lower gold and silver prices are, the stronger the U.S. dollar appears to be. If we saw an explosion to the upside in gold and silver prices, it would result in a complete loss of confidence in the U.S. dollar.
NIA believes the precious metals markets are currently being artificially suppressed by paper gold and silver that doesn't physically exist.