VIDEO - Ed Steer: Silver Market on a Knife’s Edge

The silver squeeze first started making headlines more than two months ago, but the movement continues today, led by retail investors who continue to snap up physical metal.

Ed Steer of Ed Steer’s Gold and Silver Digest said that while he commends those who have been buying physical silver, there’s a reason their efforts haven’t led to a sustained silver price increase.

“They’re certainly having an impact … as far as the physical market is concerned, but as far as the short position that exists in the COMEX futures market, it doesn’t make any difference at all,” he said.

“The only way you can squeeze the shorts is by going into the COMEX futures market and doing that,” added Steer, who is also a director of the Gold Anti-Trust Action Committee.

The entities behind silver short position in the COMEX futures market have changed over time, but Steer said that currently he and silver analyst Ted Butler believe that the “big two” are Citigroup (NYSE:C) and HSBC (NYSE:HSBC,LSE:HSBA). Along with other large traders that are short silver, they stamped out the price rise that came when the silver squeeze was first gaining traction.

“The price explosion evaporated in just a few hours because they went in and shorted the market by as much paper silver as necessary to drive down the price,” he said.

Steer also spoke about current silver supply, saying that both the retail and wholesale markets are tight. In particular he discussed the Perth Mint and the topic of unallocated and pool accounts — click here and here for two silver articles on that subject that were written by Butler and recommended by Steer.

Of course, the question for many market participants is whether the COMEX short position in silver can be broken. On that point Steer was hopeful, but realistic.

“The signs are that this could be the year this is going to happen. Everything you see right now shows that things are on the very knife edge of breaking,” he said. That has been true in other years as well, but he’s optimistic that this time the wave of interest in silver will make a difference.

Watch the interview above for more from Steer on silver market manipulation.

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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article. 

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.