Silver's nearly 3% surge in trading in Asia may indicate that the long expected short squeeze may be underway. Bullion banks with very large concentrated short positions may be being forced to buy back their short positions – propelling silver higher.
This could see silver surge over the record nominal high of $50.35/oz in short order.
At the same time caution is merited as silver has risen nearly 10% in April so far and over 33% year to date. Speculators need to be very cautious as margin requirements may be increased again and profit taking could lead to sharp falls in price. Leveraged speculation is extremely high risk and should be avoided by investors and savers.
Those looking to buy bullion coins, bars and certificates need to focus on the long term and remember that they are buying financial insurance and not to make a profit or a return. Dollar, euro and pound cost averaging into silver is worth considering given silver’s recent sharp rise in price.
While silver is overvalued in the short term, the concentrated short positions and the strong fundamentals could propel it much higher sooner than most expect.
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