The volatility in the metal prices are as traded in paper on the Comex exchange. The metal as traded in London, is the physical market, and shortages in the physical market are not being adequately reflected in the Comex paper market, which is normally used to offset risk, ie buyers also go short. This is the issue which is being realised by the markets.

June is neither a top nor a bottom but a potential 'inversion point', how that plays out in terms of paper or metals, both, or shares may be different. If there is equilibrium or a shortages in the markets after QE2, trading will be choppy but sideways. There's no guarantee it's going to do anything, in fact the market is more likely to react in an unexpected way, when participants are all expecting a single outcome.

Holders of miners shares may attempt to trade it, but basically the cycle is different, higher pm prices means additional profts on the books for the next quarter, with higher potential for a rising share price, based on increased profit multipled by the p/e ratio, so much higher leverage than the rise in the value of the metal.

Shorting miners as they book more profits on their books is a risky position to take with that additional p/e leverage, and cannot last IMHO.

It seems that the market thinks ECU is overvalued because it's being regarded as an operating miner with small assets, when in fact the company only ever invested in the mills to create enough production to cover the costs of drilling their extensive site, and they are actively now increasing their asset base. Coupled with the price of silver which has virtually doubled since Q4, which will have added a significant amount of profit on their books.

AP