“There’s two components — there’s the difficulty of getting silver for the SLV and also the COMEX,” said Nick Barisheff of BMG Group.
Silver surged into mainstream headlines in late January as the “silver squeeze” narrative took hold, but what’s happened to the white metal in the weeks since then?
Speaking to the Investing News Network, Nick Barisheff, president and CEO of BMG Group, said the story is still alive and well. In his view, there are two key points silver-focused investors should be aware of.
“I think the thing that people should understand (is) there’s two components — there’s the difficulty of getting silver for the SLV and also the COMEX,” he explained.
The COMEX is a futures and options market for a variety metals, including silver. Barisheff noted that typically 90 percent of futures contracts on the COMEX settle in cash and not physical delivery — but that could potentially change soon, as March is a month where delivery can be requested.
“The problem the COMEX has is they have (by) some estimates 100 contracts for every ounce of silver. So if everybody stands for delivery, then we have a big problem at the COMEX,” he said.
“In all the ETFs, the trustees or the custodians don’t go out and buy silver as investors buy shares. They have authorized participants, which are typically the big banks and brokerage houses. They contribute a basket to the ETFs — in the case of gold, it’s 400 ounce bars; in the case of silver, it’s 1,000 ounce bars. That’s where the difference lies,” said Barisheff, who is also the author of “10,000 Gold.”
“The thing is that … central banks purportedly hold 30,000 tonnes of gold in various central banks. So the authorized participants typically can borrow gold from a central bank and they contribute it to the ETF. But central banks don’t hold silver, and there’s a limited amount of physical silver in London. So if more and more people buy shares (of SLV), they could effectively run out of silver.”
Watch the video above for more from Barisheff on the status of the silver squeeze and what investors should know during this interesting time in the space.
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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.