Butler: Silver Shorts Moving to SLV

Ted Butler's latest comments on the silver short position, especially the growth in shorted shares at SLV, from Ed Steers 6/28/11 bulletin:

"The latest short figure for shares in SLV was just released. As of June 15, the short position for SLV rose by 4.2 million shares (ounces), to a new record of more than 37 million shares. The SLV short position now constitutes more than 11.6% of all shares outstanding. This is truly an obscenely large short position for any stock; so large that it is inherently fraudulent and manipulative to the price of SLV from a size point alone. In turn, the price of silver itself is also manipulated given that SLV is the largest inventory of silver in the world. It also means that there are more than 37 million shares of SLV in existence that have no silver backing, as required by the prospectus. There is no question in my mind that BlackRock, the Trust's sponsor is negligent for this continuing fraud and manipulation in SLV and will, hopefully, be brought to justice."

"So large is the short position in SLV, that it seems impossible that the largest COMEX short, JPMorgan, is not somehow involved in it (and every other manipulative dirty trick in silver). To my knowledge, there is no disclosure as to the identity of short sellers in stocks. As I previously indicated, it seems patently unfair that large long holders in stocks must publicly identify themselves over certain thresholds, but no such rule applies to shorts. My suspicion is that JPMorgan is involved in the SLV short in conjunction with its big COMEX short position. On the one hand, the concentrated COMEX short position has come down significantly; but on the other hand, the short position in SLV has grown to levels never seen. Is there a connection here? I think so. I did privately ask (at the highest levels) that the CFTC inquire into this with the SEC, but asking and getting are sometimes two different things. But given the unusual price action in silver, both at the beginning of May and late last week it would seem reasonable for the regulators to see if there is a connection between the COMEX and SLV short positions. These are very unusual circumstances."

"It is precisely these unusual silver short positions on the COMEX and in shares of SLV that contribute to silver being very special. These short positions exist for a very basic reason; there is not enough real silver available for sale at current prices. That makes it necessary for shares of SLV to be sold short, as not enough silver is available to issue new shares legitimately and in accordance with the prospectus. That makes it necessary for additional COMEX contracts to be sold by existing short holders even though they can't economically justify their existing large short positions."