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From the COMEX exchange’s weekly position reports, the commercial traders increased their net short position from June 3 to July 8 by more than 240 million ounces. This amount represents nearly 30 percent of annual worldwide new silver mining production. Normally such a huge influx of “silver” on the market in such a short time, even though it is in paper contracts rather than physical form, would lead to a significant drop in price.
Instead, the spot price of silver at the New York COMEX close jumped from $18.73 on June 3 to $21.41 at the close on Friday, July 11, an increase of 14.3 percent.Could this influx of paper silver represent sales by mining companies of future production? Partially. Almost 25 percent of the growth in short positions from June 3 to July 1 came from the bullion bankers who handle such transactions.
However, more than 75 percent of the net increase in short positions came from the 24 swap dealers (which probably includes Goldman Sachs).Since the bulk of the increase in short positions comes from commercial speculators as opposed to investor speculators, it is quite possible that there could be a near term silver supply squeeze. Trying to prevent such a development could be the reason that these bullion banks stuck their necks out so far. This influx of 240 million ounces of new short contracts costs the owners $2.4 million for every one cent increase in the silver spot price.
http://www.numismaticnews.net/article/news/general/big-move-higher-coming-for-silver