this is from another excellent "got gold" report by gene arensberg:

Bottom line

When the silver LCNS:TO is under 30% like it was in the last COT report and the COMEX commercial traders are at historically low net short levels; when the gold:silver ratio is still closer to 70 than it is to 50 (or lower); when we have been witness to company after company announcing production cutbacks or outright closures meaning much less silver will be produced ahead; when the largest silver ETF has to name (and is late in naming) a new custodian because they have run out of storage space and the silver to put in it (and that’s from the largest possible custodian there is); when premiums for anything and everything silver are sky-high on the Street and some products are just plain scarce to boot and when the contango for COMEX futures has a razor-thin, six-cent difference between the near active May contract and the December contract, we have to have a fully bullish, buy-on-weakness bias for silver metal, silver futures and ETFs.

We simply cannot find anything of substance that argues with our thesis that the smartest and largest silver traders on earth are positioning as though they believe a sure-enough physical shortage of silver metal is developing, or about to surface.

Again all investors need to study the issues carefully and make their own investment decisions. With that firmly in mind, over the very short term silver may do just about anything price wise, given that so much of the silver short futures position on the COMEX, which largely influences the price, is controlled by just two very large and dominant U.S. banks. However, with the possible exception of 2002, we just cannot remember a time where silver looks and feels so downright bullish.

Always with the caveat of: If the world holds it together.

On balance the indicators this report follows demand that we either be long – with good trailing stop money management - or on the sidelines for gold metal, futures or ETFs.

Two weeks ago we once again adopted a fully bullish, accumulate-on-weakness stance for silver metal (if it can be sourced with reasonable premiums) and ETFs provided they are purchased without leverage, for longer-term investment.

We suggested then and we now strongly reiterate that silver can be bought into strong to very strong dips with a bit more confidence than normal and with more liberal than normal trailing stops to allow for more than usual volatility. If silver falls significantly, great, we can add some. If it rises from here that’s great too because we have some.

Larger, well-financed mining shares continue to track with gold over the past two weeks. Smaller, more speculative and more thinly-traded miners and explorers, such as the ones that reside in the Canadian S&P TSX Venture Exchange (CDNX) index, showed us a little more spunk since the last report, but unfortunately the emphasis is on the word “little” instead of “spunk.” At least so far the CDNX isn’t even close to what that index will be capable of when markets are more confident.

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