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We often hear the praise of gold, which, though earned, detracts or distracts from the praise of silver.

December 27, 2011 – We often hear the praise of gold, which, though earned, detracts or distracts from the praise of silver. As an investment, silver has a lot potential that gold doesn’t match due to its industrial uses. That much is fairly well known by gold and silver investors. When economies are robust in their growth, such as we have seen in Asia and in developing around the world, the industrial uses of silver come to the fore and investors appreciate them.

When economies are a little cooler, the action in the silver market is not appreciated quite as much, though there may be a lot going on. A report today highlights the way the silver market has become so overstretched that physical demand is simply impossible to fill and prices, subsequently, are not realistically indicative of the silver market. King World News cites a “London Trader” who explained that deliveries “of size” have been taking “three weeks plus” to be filled prior to the recent action by European banks and this portends an extremely overdrawn silver market going forward.

There has been a lot of talk about silver and gold moving below the 200 day moving average, but as the trader explains it is more concerning right now if they should move back above the 200 day moving average. The market simply could not handle it. “There is nobody in COMEX silver contracts anymore, other than casino players,” he explained. “The only way they have been able to keep silver depressed is by borrowing silver from SLV to meet immediate demand. That’s the only reason silver isn’t trading $10 to $15 higher right now.”

Stated plainly, that’s what’s happening in the silver market right now. In order to meet the immediate demand, they are borrowing from other markets to fill physical silver contracts, which are already late, and they’re doing so at such a rate that it is literally depressing the price of silver. That makes the price of silver today an incredible bargain.

“There isn’t enough silver for investors to buy….The silver isn’t there,” the trader, speaking the SLV contracts that currently have no underlying physical backing or access to physical backing. It’s really a precarious spot for those particular market entities, but for silver investors it’s an incredible opportunity if you see and understand what’s happening in the gold and silver markets and take advantage by purchasing some silver now while it’s undervalued.

Shannon King

Senior Staff Writer – GoldSilver.org

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