If they've got an option to buy and take delivery and they exercise it ("I'd like to take delivery of the silver please") there is a problem if COMEX doesn't have the silver. COMEX says, essentially, "We'll buy the option from you ourselves for 10% more than the silver is worth" and by doing that COMEX doesn't have to deliver with silver it doesn't have. By buying more options to purchase and take delivery, those people are in a better "negotiating position" with COMEX to demand a higher premium for going away quietly without taking delivery. COMEX has to give them something but because the paper is for silver, the option holders are entitled to ask for silver. The alternative is for COMEX to make it worth their while not to receive silver, so it becomes a matter of COMEX saying "How much to we have to pay you to sod off?" At the moment, it look like a number of option holders are going to say "A lot" and COMEX has to pay it. Easy money. Easy money is in demand, so silver options are in demand and consequently, the price of spot goes up.
We're not quite there yet, but this is a good little read on Commercial Signal Failure: http://traderdannorcini.blogspot.com/2011/02/what-is-commercial-signal-failure.html
But gold is up and away too, by a ratio of about 15:1... It's not heading north because of SLV options...
the US didnt trade yesterday. I wonder if it will surpass $35 when nymex opens tonight or it will be sold off I think there is a combination of things pushing up silver. Africa/middle east, options expiry on comex, global inflation, bottle necks and shortages! Dont worry it will pull back some time, maybe to $30
I have a feeling that the SPOT will correct when the NY market opens, Seems like the world ganged up knowingly that the NY boys are either sleeping or not working due to public holidays. time will tell
The scary thing is it's just a matter of time before all the big players in the silver market (those holding hundreds of thousands/millions worth) start dumping all their silver at these massive profits and crash the market quite hard.... it's just a matter of how high are they going to go? Us little players need to be quite careful in monitoring the market at this stage.
You say it like it's a bad thing. If they want to dump and run, be my guest! I'd be delighted to see the market crash hard due to excess supply. There's millions of small time physical stackers out there licking their lips at a solid and prolonged buy opportunity!
The sharks smell blood in the water and will repeat this cycle of getting free money from comex for non-delivery until something breaks.
