Sterling silver price has been a strong performer lately, breaking through previous resistance and continuously moving higher on the Comex despite the large, concentrated short position by commercial traders like HSBC and JPM. There is evidence showing that more and more hedge funds and investors are requesting delivery of physical silver, especially with the dangers of unallocated paper promises becoming more widely understood. In fact, in February 2010 nearly 15 million ounces were withdrawn with the ETF SLV, with 453 silver contracts being delivered on the Comex (2.3 million ounces). That’s an awful lot of silver!
This trend seems to be following the lead of Greenlight Capital, who, in July 2009, shifted their gold position to physical gold rather than GLD. Passport Capital also signaled their desire to do the same with their $1.2 billion Global Strategy hedge fund. When funds of this amount begin moving into a smaller precious metal market, the potential for a fast boom increases significantly. It is fascinating how many heavy weight speculative interests are attracted to sterling silver price long term potential.
Speculation has increased regarding a group of wealthy Asian traders or funds looking to exploit the long-term manipulation scheme due to the massive leverage (100-1) used by the banks that are naked shorting silver with paper contracts on the Comex.
This could be achieved by requesting a large quantity of the physical metal to be delivered en-masse, thereby forcing the naked shorts to rush to come up with the metal that is known to be in short supply. This short squeeze could then force the price of silver through the roof. The probability of this is far higher than it was a few months back. All of this adds up to what could be a once-in-a-lifetime opportunity to generate massive returns in a short time period. If you are not already invested in silver, you just might miss the ride.
It is certainly a good idea to have physical silver, considering the today’s Sterling Silver price, in your possession as it is worth far more in this respect. If you have established a base holding of physical silver it would then be a good idea to consider buying shares in certain silver miners, providing you with extra leverage to the rise in the price of silver. Occasionally pulling out a portion of paper profits could increase your physical Sterling Silver Price holdings and maximize your returns whist ensuring you have a safety net.
As far as ETFs go, steer clear of funds such as GLD and SLV. The reason for this is that they may not necessarily have physical metals to reinforce your shares. The creators of these funds are, worryingly, the very same banks that have huge naked short positions against silver, meaning the ETF strategy doesn’t make much sense at all. The only exception would be the CEF, which holds your gold or silver in unrestricted, allocated and audited secure vaults in Canada. They don’t lease your metals out and they stick to their guidelines: to always maintain at least 90% of assets in gold and silver bullion – although this is usually higher than 95% in practice.
One of our most recent additions to the Gold Stock Bull portfolio – Alexco Resources (AMEX: AXU or TSE: AXR) is usually reserved for premium members, but I will share some of the information here with you now.
Running a profitable dual-focus environmental consulting / reclamation / mine closure business model, Alexco also owns a project dealing with the highest quality silver districts in the world, known as Keno Hill. Producing over 217 millions ounces of silver with the average grades of 40 oz/ton silver, Keno Hill is ranked as the second largest historical silver producer in Canada. Despite a fantastic history, it is believed that only approximately 5% of the area has been explored. Low silver prices in 1989 forced the Keno Hill project into government receivership which caused environmental liabilities. The government realised the value of the Keno Hill project, bought it to clean it up and then became 100% owner in 2007.
Confidence has grown in the Alexco’s future production and the potential of their properties since Silver Wheaton has taken a stake in the company. Alexco has since provided $25.7 million to ensure continued development of the Bellekeno mine. They also started an aggressive exploration program in 2010 with a view to significantly increasing their resources. Their value could easily double in value over the next couple of years, and even if the Sterling silver price only increases modestly their value is set to increase greatly. Should silver reach the heights it’s expected to though, then Alexco could see a truly astronomical boom in share value and Sterling silver price.