EDITOR NOTE: In the video you’re about to see, Jeff Currie, Goldman Sachs head of global commodities research went on to CNBC’s FAST MONEY to describe, perhaps to the dismay of activist traders on the recent Reddit wave, why it’s nearly impossible for anyone to trigger a short squeeze in the silver market using the silver-backed ETF--SLV--as the proxy. For starters, the very fund offering SLV is among the biggest players shorting the market. They also own silver. You can’t cause loss to an institution that’s shorting the market for the physical inventory they’re holding (they’re 100% hedged). Second, the ETF market--worth 900 million ounces--has position limits that prevent anyone from impacting the 25 Billion “paper” silver market. According to USDebtClock, the global paper market has created 184 ounces of paper silver for every 1 ounce of real silver in existence! These are tantamount to "fake" silver being created to inflate and manipulate the dollar price of silver by obfuscating "real" supply. So, even if traders can’t successfully pull-off a short squeeze, two facts remain: first, the paper silver market is a rigged market that’s being manipulated by the institutional holders of the metal (and issuers ETFs); second, because there’s more paper than actual silver, this manipulation game can easily blow up in terms of extreme volatility, putting paper holders at risk of severe loss. SLV is under major pressure, and the silver futures market is as well, due to March Delivery contracts soon about to expire. Deliveries start Feb, 24th and currently 65,000 contracts worth 5,000 ounces each could stand for delivery, that’s 325,000,000 ounces, enough to freeze the whole system if people finally have had enough and demand physical metal. Now is the time to buy non-CUSIP silver and gold before the battle over the paper and metal mismatch comes to a head.
Jeff Currie, Goldman Sachs head of global commodities research, joins 'Fast Money Halftime Report to discuss why it would be difficult to squeeze the commodity market
Originally posted on CNBC Television