a week ago the sso short interest was around 2.2 million shares, and now it is up to 2.85 million. i can understand shorting companies in a weak sector. like home builders who can't sell houses, or financial institutions whose balance sheets are loaded with dubious mortgage-backed securities. but shorting a company like sso, whose stock is in a powerful uptrend, but is down 32% from its high makes no economic sense.

it is certainly true that the development phase of a mining company's often sees a decline in the stock price. in the initial phase of exploration the stock is driven higher by discovery, and when a company becomes a producer, its value is re-rated upward. in between, where sso is now, is where all of the problems seem to take place. it is rare that an exploration company makes it all the way to producer without being bought out. those who have tried, like Gammon Lake, often fall on their faces.

but sso currently has $230 in cash, not counting the $45 million in abcp carried as a long-term asset, so there will be no problem financing all of its activities until pirquitas starts generating cash flow. and there are no production problems in sight to derail the commissioning of pirquitas. it looks like all of the surprises will be good ones.

my first impression is that this short position means that not all of the crazy people are locked up in institutions. however it is possible there is a more sinister motive for shorting more than 600,000 shares. but if the intent was to drive down the share price, it did not work. i can only wonder how high the price would be without the short interest, but i think i will find out when the short-covering rally finally takes place.

as the price of silver bullion ran up in the past few weeks, it looks like some of the silver shorts on the comex had a religious experience. i expect that those shorting sso will also see the error of their ways, as the short interest is now 4.6% of the total float. if i were short sso, the economics of pirquitas would be starting to look downright scary. every time the price of silver goes up $1, the project adds another $100 million or so of npv.

perhaps there will be an effort to take down the price of silver and gold in advance of next week's fed meeting, and some nimble sso shorts will escape with some profits. but this is like trying to hold a beachball under water. the harder you press it down, the harder it will come back up at you.

good luck to all longs. and good luck to all sso shorts too, because you guys are really going to need it.