I don't think anyone of us could put a finger on anything specific, but something just does not feel right and these periodic sharp ripples indicate some heavy under-the-radar activity.

Something's up - VHF

-

Interesting Volatility in the Silver Market

Jesse

January 27, 2010

Interesting action in Silver Wheaton, SLW, today, one of the strong silver stocks. As spot silver remained weak, down most of day, SLW started climbing, at one point up almost the same percentage as ZSL, the 2x ultra short silver ETF!

At some point I expect the silver market to absolutely explode to the upside because of the severe imbalances in supply and demand being created by the paper manipulation in the futures markets. But perhaps not yet. Still, the divergence was worth noting today, perhaps if only to sell some puts to provide a foothold in this crazy market and hedge some risk.

The move today did look like either short covering or arbitrage, absent any specific news.



"Silver Wheaton has quickly positioned itself as the largest silver streaming company in the world. The company has entered into seventeen agreements where, in exchange for an upfront payment, it has the right to purchase all or a portion of the silver production, at a low fixed cost, from high-quality mines located in politically stable regions."

I obviously hold a position in this stock on the long side. Hedged, I might add.