Silver futures continued the massive surge that's been occurring in the precious metals futures market for the past few days. Some believe that the pressure this increase is putting on those holding short positions may result in some traders liquidating their positions and pushing the market higher yet.
December silver came close to $30 per troy ounce today, with December delivery contracts rising $1.658 to trade at $29.09 per troy ounce. In the Indian markets – where a large portion of the world's silver is consumed – the white metal rose to an unheard-of 41,684 rupees per kilogram.
Gold futures also rose, with December gold climbing $18.90 to $1,422.10 per troy ounce. The rise in precious metals has partly been stirred up by the fears of inflation created by the U.S. Federal Reserve's quantitative easing program, but a burgeoning scandal in the U.S. financial markets has also played a role.
Bart Chilton, one of the commissioners of the Commodity Futures Trading Commission, stated last month that the silver markets had been the target of some attempted market manipulation. In the wake of that announcement, a number of professional traders, some with ties to banks like Goldman Sachs and JPMorgan Chase, have filed suits against JPMorgan and HSBC, alleging that these institutions used naked shorts and other techniques to suppress the price of silver.
Neither bank has offered comment on the allegations.
With the metal's price now soaring, anyone holding major short positions will be losing millions, possibly hundreds of millions each day in the markets. If traders with large short positions did liquidate them, they'd have to buy tons of expensive silver – putting even more impetus behind the rise of silver.
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