ted butler says silver may be about to split from gold. it's hard to believe, given the metals 85% correlation, but he makes a compelling argument that the key difference is that the physical silver needed to cover shorts is nowhere to be had. the entire article is worth reading:

In the coming price relationship dissolution, silver will be the cause of the break up. That’s because it is the price of silver, relative to gold, that is out of line. Just like a spouse long-abused in a one-sided relationship, silver will be the one to blossom once the marriage is terminated. Certainly, I am not suggesting that gold has abused silver, as inert materials can’t possible abuse anything. The abuse of the silver price has come from the long-running manipulation. It is the coming end of the silver manipulation that will set silver free to begin its own new price life.

One of the irreconcilable differences in the gold-silver price relationship is something quite visible. Yes, both have been manipulated in price by the concentrated short selling of the big bullion banks on the COMEX. But the amount of short selling in gold never exceeded the amount of real gold existing in the world that could conceivably cover the short position. For example, the current total commercial net short position in COMEX gold futures sits at 20.4 million ounces (as of July 21). The net short position of the 4 largest traders is 16.1 million ounces. That’s a lot in terms of dollars, almost $20 billion and $16 billion respectively, but not so much in terms of the amount of gold bullion in the world (2 billion ounces). The total net short position in COMEX gold futures represents just 1% of the gold bullion in existence.

Half of the gold bullion in the world is owned by government entities (remember, I speak of gold bullion only, not the total 5 billion ounces of gold said to exist in all forms). The US government, alone, is reported to own 260 million ounces of gold. If the big 4 gold shorts really got into trouble, just 6% of the US Government’s gold stash could conceivably be used to bail them out completely and make delivery, if necessary. Let me be very clear here - I’m not saying this will happen. I am saying it could happen. If the US, or any number of other world governments decided that a gold short covering price fire must be extinguished, they could put it out with physical material if they chose. Not would, necessarily, but could.

This is not the case in silver. The 4 largest traders are net short 235 million ounces on COMEX futures. While that’s not very large in dollars, at just over $3 billion, it is enormous in terms of the amount of silver bullion in existence. The big 4 in silver are short more than 23 times what the big 4 are short in gold, relative to above ground bullion inventories. But here’s the kicker - there is no possible way for any government entity to extinguish a silver short covering price fire by actual delivery of government owned silver. That potential price smothering material simply does not exist in government hands. The US Government, the world’s largest owner of gold reserves, and formerly the largest owner of silver reserves, now owns no silver. For those that are convinced that there is government involvement in the gold and silver price manipulations, this is a difference worth considering.

This is not the only difference that will lead to a gold/silver price break up. The reason we have such a mismatch in the relative size of the short positions compared to world inventories, lies in the very nature of what silver has evolved into over the past century. Silver became a vital industrial material and its formerly large inventories have been consumed to the point where there is less silver bullion in existence than there is gold bullion. That one in a million of the world’s citizens know this fact, promises to make the gold/silver price divorce, when it occurs, as sensational as the most notorious celebrity split. Only instead of reading of racy details in a trashy tabloid, the specifics will be carried in the financial press and in price reporting. The growing awareness of the particulars of the divorce will drive many to want to buy silver.

http://news.silverseek.com/TedButler/1248708118.php