This guy agrees with you ebear with the thought that the gov will cover the shorts, i don't think it changes much though.

http://jessescrossroadscafe.blogspot.com/

I don't know if "agree" is the right word. I don't hold that as a belief - just a theory. Another theory I came across has to do with the PM shortage everyone's talking about. Can't remember where I read it unfortunately.

The theory holds that there's no real shortage, and that the bullion banks, taking note of the frenzy surrounding that theme are simply withholding supply in the interest of driving the price. A cartel, in other words. Notice, this doesn't contradict the notion of a conspiracy, just its nature.

One item from the article I do take issue with is this idea of a natural "gold-silver ratio" supposedly based on the relative occurrence of gold vs silver in the earth's crust. I would argue that this ratio more acurately describes the historic (ie pre-industrial) rate of extraction, or put another way, the amount of brute labor required to dig up one vs the other.

Does that still hold today? In the past, mining was labor intensive. Today, it's capital intensive, with large open pits producing silver as by-product. I suspect the demand for, and rate of extraction of these metals today has more to do with the price of silver than anything that happened in the past. That would account for the low price over oh so many years, and is just as good an "explanation" as any conspiracy to hold down the price.

However, given a choice, which of these two "theories" makes you the most money if you're long silver?

ebear