Ed Steer Silver Futures Report - 2011/04/20

The situation has apparently changed from last week, according to Ed Steer's latest, and the banks appear to be doing some short-covering, driving the current powerful rally:

Silver's final open interest number for Monday was a shocker, as it showed a decline of 2,467 contracts. This was a hell of a swing from the preliminary open interest figure, which was a very chunky +3,693 contracts. This proves, without doubt, that there was massive short covering by JPMorgan et al in the silver futures market on Monday.

This big improvement, coupledwith the surprise improvement in silver's open interest in last Friday's COT report, shows that the bullion banks are covering their short positions as fast as they can...and that this current rally in the silver price is a short covering rally.

Ed also adds:

Even more impressive was what happened with silver backwardation yesterday. I was expecting the same old, same old...but that's not what happened. The settlements in the silver futures market yesterday showed that premiums had collapsed from about eight cents, all the way down to about two cents, in one trading day. Also of note is the backwardation between the May 2011 delivery month...and the December 2015 delivery month. It increased to 57 cents from about 49 cents on Monday. If these numbers actually mean anything, then it shows that the market is beginning to realize that physical silver is getting harder to come by once again. This is getting interesting.