Paper Silver Markets Are Breaking (SLV Short Fees Soar To Record High)

Summary

The Smart Silver Stacker discusses the growing concerns in the paper silver markets, particularly the rising cost to borrow shares of the SLV ETF, which could trigger a short squeeze. He highlights the importance of owning physical silver as the only true asset during times of market turmoil. The video explores the factors contributing to the soaring borrowing fees and their potential to create upward pressure on the price of SLV. The speaker also emphasizes the impact of retail investor behavior on market dynamics and encourages stackers to avoid costly mistakes in their bullion investments. Ultimately, he suggests that physical silver and gold will be key in navigating a collapsing paper market.

Takeaways

• 😀 Silver's price movements show signs of an Elliott wave pattern, with a possible correction before rising to new highs.
• 😀 Copper's strong performance, up 3%, is a bullish indicator for silver, given their close correlation as industrial metals.
• 😀 There's a growing concern in the paper silver markets, especially with the skyrocketing cost to borrow shares of the SLV ETF.
• 😀 The current rise in borrowing fees for the SLV ETF could trigger a short squeeze, driving the price of silver higher.
• 😀 Short positions in the SLV ETF could face escalating daily fees, pushing traders to close their positions and buy back shares.
• 😀 The rise in borrowing costs for the SLV ETF is partly driven by a shortage of available shares, due to retail investors selling their positions.
• 😀 A potential short squeeze in the SLV ETF could expose cracks in paper silver markets, possibly causing retail investors to lose confidence.
• 😀 If a short squeeze occurs, the SLV ETF may be halted or manipulated, similar to what happened in the nickel market a few years ago.
• 😀 The price suppression in silver markets could come to an end if investors shift focus to physical silver, especially in the wake of manipulation being exposed.
• 😀 Lease rates for both silver and gold have soared recently, signaling distress in the physical metal markets, which could further impact the paper silver markets.
• 😀 Stackers (investors in physical silver) should stay informed about market conditions, as owning physical metal may prove crucial if paper silver markets collapse.

Q & A

What is the significance of the skyrocketing cost to borrow shares of the SLV ETF?

The skyrocketing cost to borrow shares of the SLV ETF is significant because it indicates distress in the paper silver markets. This surge in borrowing fees could potentially lead to a short squeeze, where traders holding short positions are forced to buy back shares, which could drive the price of the SLV ETF higher.

What is a short squeeze, and how could it impact the SLV ETF?

A short squeeze occurs when the price of an asset rises unexpectedly, forcing those with short positions to buy back the asset to cover their positions, which further drives the price up. In the case of the SLV ETF, a short squeeze could cause its price to surge, leading to increased volatility and potential market disruptions.

Why might the borrowing fees for the SLV ETF have risen recently?

The borrowing fees for the SLV ETF may have risen due to a reduction in the number of shares available for borrowing. This could be because retail investors have been redeeming their shares in the ETF, which decreases the supply of shares and increases borrowing costs.

How does the cost to borrow shares of the SLV ETF affect traders holding short positions?

Traders holding short positions in the SLV ETF must pay daily borrowing fees. As these fees rise, the cost of maintaining short positions increases. If these fees become too expensive, traders may be forced to close their positions by buying back shares, which can drive the price of the ETF higher.

What is the potential impact of rising borrowing fees on silver's physical market?

Rising borrowing fees and a potential short squeeze in paper silver markets could increase market uncertainty and loss of confidence in paper silver derivatives like the SLV ETF. This could drive more investors to seek physical silver, leading to increased demand for the tangible metal and further price increases.

How does copper's market behavior relate to silver?

Copper and silver are both industrial metals, meaning they often move in tandem. When copper experiences a bullish breakout, as seen in the video, it suggests positive market conditions for silver as well. Both metals are affected by similar industrial demand, so bullish trends in copper often signal positive prospects for silver.

What are the implications of the recent surge in lease rates for physical silver?

The surge in lease rates for physical silver suggests increased demand for borrowing physical silver, which could be due to supply shortages or growing interest in the metal. This mirrors the rising borrowing fees in the SLV ETF and indicates that silver's market is under pressure, both in paper and physical forms.

Why is it important for stackers to be aware of developments in the paper silver market?

Stackers should be aware of developments in the paper silver market because these markets influence silver prices and investor confidence. If the paper silver market faces disruptions, such as a short squeeze, it could have wider implications for the physical silver market, making it a crucial time for stackers to be informed.

What does the video suggest about the relationship between gold and silver markets?

The video suggests that the gold and silver markets are often linked, as seen in the rising lease rates for both metals. When gold experiences price or borrowing issues, silver tends to follow, indicating that both metals are affected by similar economic factors, including demand, inflation concerns, and market uncertainty.

What should investors focus on according to the video’s conclusion?

According to the video’s conclusion, investors should focus on accumulating physical silver. The video emphasizes that when disruptions occur in the paper silver markets, tangible assets like physical silver will hold more value, making them a safer investment during times of market instability.