I like Stewart Thomson and I usually agree fully with his commentary. However I have some issues with some of the points he has made to support his outlook.

I do agree that the bullion banks have the ability to write millions of futures options and swamp the paper market. This of course constitutes market manipulation but no one seems to care about that these days. I do not hope for any hint of enforcement to resolve the criminal intent driving the COMEX. However, futures options are contracts. The buyers of those contracts have the right to take delivery. If the silver is not there to deliver against when demanded, then all of the millions of contracts that a party has the ability to write, legal or not, will be insufficient to collapse the price. One failure to deliver, one force majeur on the COMEX silver market, will in effect reveal the shortage of silver. The market price will rise thereafter to reflect that.

So the question is not should one be trading silver against the big boys. The real question is, does the new surge in silver buying represent interests that wish to take full delivery? If so, then those on the side of the banksters will be crushed. Period.

The second point is that while a gain of spot prices of 15% may seem significant, the buyers of gold and silver must pay high premiums above market. Last month I bought 100 oz of silver when the price was just below $18 and paid $19 per ounce for the bar. Then I also paid a delivery charge. If I wanted to sell my silver today, I would probably break even. No gain there, and the rise in price is thus not likely to encourage profit taking from new buyers.

For those playing metal ETFs, sure there is a trading gain. But I think the ETFs are for fools and eventually any profits in that shell game will be wiped out when the ETFs eventually go sour and default. No one has convinced me yet that that largest ETFs are not a complete fraud. I think the smaller ones listed on the TSX are for real, and they also tend to trade at a premium to spot prices.

As for the PM sector stocks, there is no law that says the stocks must trade dollar for dollar with the metals. Most of the stocks remain near bear market lows even though the metals have been climbing. One can argue that the investors buying and selling metals are in tough to make any money, but the reality is for the gold and silver producers, the rise in both metals is a bonus on the bottom line. Gold and silver may retrace from here for a lengthy correction, I do not know the future... But since most of the producers are still trading well below when gold was $1000 and silver broke above $17 a few years ago, I think they are worth accumulating here.

JMHO...

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cheers!

mike