by Eli
Silver futures are sinking, as the buying spree among small investors that lifted prices near eight-year highs appears to fizzle out following a margin hike by the Chicago Mercantile Exchange.
When the Hunt brothers cornered the silver market on "Silver Thursday" March 27, 1980, they owned nearly one-third of the world's supply and drove the price up 713% over three weeks.
According to Goldman Sachs, to replicate the same feat, the WSB subscribers would need to own roughly 4,600 toz of silver each and work in a coordinated fashion. But even then, given the current regulations around position limits of 7.2 million toz, to corner the exchange inventory on the COMEX, the position would need to split 53 ways with each position valued at $217 million.
It is now nearly impossible for someone to corner the silver market.
In the current environment, a co-ordinated surge in investment by retail traders into the silver market would simply raise volatility and generate small regional dislocations in supply-demand dynamics.
Moreover, with ample physical supply, such an attempt to "short squeeze" the market would prove effective, with enough physical metal ready for delivery to satiate retail investor demand. The only shortages facing silver on COMEX or LME are the logistical challenges of getting the metal to exchange.