from Silver Doctors:

The incentives for the shorts to drive the price lower is greater than ever…

by Chris Marcus via Arcadia Economics

Disclaimer: This report contains strategies that could be risky for certain investors and is presented as research for further investigation. As always you are trading and committing capital at your own risk

Current Silver Market Outlook:

• Price continues to rise in face of large COT bank short position


• Stunning increases in silver ETF funds continue to drive price


• Central bank rate cuts and hints of QE are supporting the rally


• ECB and Federal Reserve meetings in September will likely bring more easing


• Prospects for continuation of silver rally through year end are strong


• Arrests for “spoofing” continue as DOJ mentions defendants are cooperating

August Silver Recap

Well there was another fun month for silver investors!

Perhaps not yet time to go out and buy the new luxury car, although after the trading action of the past few years, certainly a welcomed relief. As silver rallied from it’s $16.23 on its July 31st close to $18.34 on August 30. Which is an extension of the rally that began on May 29 at $14.37, and closed at $15.28 at the end of June.

Last month I talked a bit about how while there were factors suggesting continued strength going forward, the COT positioning was indicating an increased probability of a near-term sell off. So far the long side has won out.

Because while we have seen some spikes down, such as the one in the chart below from August 13th, they continue to be shorter in strength and duration than what we have witnessed repeatedly in past years.

(chart courtesy of kitco.com)

Part of the strength in the silver price was due to the Federal Reserve cutting interest rates at its July meeting. And now only a month later, several central banks around the globe have cut rates as well, while talk of quantitative easing continues to grow. This time even from President Trump.

Of course this also is in the midst of one of the more mind-boggling trade wars in history. That’s seemingly escalated by Donald Trump’s Twitter feed on an almost hourly basis. Which may be a contributing factor to the rally. Although even if Trump and China reached a deal tomorrow, that wouldn’t change anything about the bigger factors driving the silver market.

As is detailed in this month’s report, with more money printing on the way, continued demand pouring into the silver ETFs (that has already reached shocking levels), and retail dealers reporting significantly more money going into silver purchases than gold, I continue to see silver rallying throughout the end of the year.

As perhaps most importantly, it seems that there are enough factors powering the bids, that they continue to overwhelm the paper offers. Which we will talk more about in this report. As while I don’t think that’s the optimal way for any asset market to trade, it does remain in my opinion the single most important factor in determining the silver price.

SLV and Silver ETF Inflows Continue To Surge

While rate cuts and quantitative easing may well in due time be driving the silver market, perhaps more relevant to what’s been moving the price is that someone has been buying an incredible amount of silver.

We’re not talking about something that could hypothetically happen in the future. But over 120 million ounces in 3 months have been added to the silver ETFs!

(chart courtesy of Nick Laird’s www.goldchartsrus.com)

This is in a market that already had a 29 million oz deficit last year. And is seeing the mining supply further decline, largely in response to the low price making many projects uneconomical.

This is the floor that silver investors have in their back pocket. Because while the price has gone lower in recent years, the natural laws of economics lead to a reduction in supply, which is playing out now. So in the short-term in a market where the price is often determined by the paper positioning, extreme things can happen. Or even over what sometimes may feel like the long-term.

But we have now reached the point where supply is actually going offline. And remember that one of the key differences between silver and gold, is that while most of the gold is still out there being stored for investment purposes, the majority of the silver is consumed.

So while I can handle debates either way about whether gold or silver will be used as money, or whether they should be used as money, the big difference with silver is that it has such a large industrial usage.

The Silver Institute has last year’s fabrication demand at 578 million ounces, while the supply was just over 1 billion. So to have over 120 million ounces of ETF demand over a three-month period, at the same time supply is falling, is my best guess of why the price has been rallying so consistently. While the counter moves downward continue to have less impact.

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