My April 13 article discussed Gene Arensberg’s theory that a short squeeze was developing in silver. The article further disclosed Arensberg’s evidence. With silver down sixty-five cents (as this is written) from yesterday’s New York COMEX close, one has to ask how a silver short squeeze is developing.
On a day-to-day basis, a short squeeze cannot be proved or disproved, just as one day of falling prices is not evidence of a bear market. Arensberg bases his position on ongoing developments: shrinking silver inventories in COMEX-approved warehouses, reduced large commercial traders’ short positions in silver futures contracts, and a flattening of the contango.
Following developments such as a potential short squeeze can be exciting, but CMI Gold & Silver Inc. clients need to remember their reasons for buying silver (and gold). Most probably, those reasons do not include the buying silver because of someone speculating about the potential development of a short squeeze. (Still, a short squeeze in silver, if one is developing, would be rewarding to silver investors.)
The primary reasons for buying silver and gold are the exploding federal budget deficit, the ever-increasing national debt, the crippling trade deficit and expectations of massive price inflation because of the massive monetary inflation associated with the exploding federal budget deficit. These four problems may be the Four Horsemen of the Apocalypse, but we still have the fact that many states and cites are bankrupt. And, let’s not forget the fragile condition of the world’s banks and the world’s monetary system.
There are lots of valid reasons for buying silver, other than the developing short squeeze in silver, but following the developments around any short squeeze certainly makes for an interesting and sometimes exciting silver market. Here is a link to the April 13 article: Silver squeeze developing? Here is still more information about investing in silver.