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Ted Butler: Why silver went down when it should have gone up
By Ted Butler
Butler Research, Jupiter, Florida
Two weeks ago it looked to me like silver was about to take off, following months of sharp price declines, yet we experienced the worst selloff in a couple of years.
Most puzzling was the cause of the sharp price declines. It didn’t appear to reside in Comex futures positioning. It was something else entirely. I've been (quite literally) agonizing over what was behind this completely unexpected selloff to no avail, almost to the point of questioning my sanity, until a simple question from Jim Cook, president of Investment Rarities, appeared to provide the answer.
Jim asked if the highly-counterintuitive selloff I was moaning about could be related to the short position in the exchange-traded fund SLV, and my head nearly exploded because it was so obvious that I couldn't conceive why I hadn't thought of it.
Talk about being too close to the trees to see the forest. I had been so pre-occupied with the excessive short position in SLV that I failed to make the most obvious connection.
Simply put, the most plausible explanation for the selloff in silver this week was the short position in SLV that I have been writing about.
The excessive short position in SLV is the explanations for the truly putrid price performance in silver over the past two weeks.
What makes the short position in SLV such a big deal is that the most plausible reason for its existence is a wholesale shortage in silver of thousand-ounce bars. ...
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