ted butler has noted the tightness in the silver market in his latest essay, crucn time:

The main micro sign that we may be entering into a wholesale silver shortage is the appearance of an inversion or backwardation on the COMEX. For the past week, the nearby current delivery month of March has closed at a premium to the next major delivery month, May. What this means is that buyers are willing to pay more to get immediate delivery of wholesale quantities of silver. It means wholesale silver is "tight."

While not completely unprecedented, this inversion in the March contract is rare enough to command attention. It’s not just the premium of the March futures contract to the May contract that is unusual, it’s also the pattern of deliveries that suggests genuine tightness. The buyers are having to wait for deliveries, where they didn’t have to wait so long in the past. Conversely, the sellers seem reluctant, or unable to make physical deliveries with the ease they demonstrated in the past.

What’s somewhat ironic is that there was a tremendous amount of discussion over the past few months about backwardation and potential delivery troubles in the past December contract. None of those threats came to fruition. Now, with very little public discussion or warning, delivery tightness and backwardation seem to have arrived.

Other micro signs include the very recent announcements of production disruptions at two of the world’s largest silver refineries, the MetMex complex of Penoles in Mexico and the La Oroya facility owned by Doe Run Peru. MetMex declared a force majeure on silver contracts due to a strike, while La Oroya ceased production due to non-payment to concentrate suppliers and a subsequent credit line cancellation. These circumstances may prove short-term in nature, but if anyone could imagine a more bullish announcement for silver than these two facilities suddenly being shut down, I’d like to hear it. That prices plummeted today on this news is so bizarre that it can only be explained by manipulation.

On the macro side, there are also very strong signs that the wholesale physical silver shortage is here. Over the past few months I have been writing about the impending decline in silver mine production as a consequence of declines in base metal production.

http://news.silverseek.com/TedButler...