“Conspiracy theorists” try to get listeners to imagine scenarios that CPM Group suggests are quite far fetched. Popular among them is a situation where all investors demand delivery of the silver they hold through ETFs, banks and futures contracts.

While CPM Group admits that this “unlikely phenomenon would obviously push prices higher,” the firm also points out that such a scenario implies a situation where the market is devoid of sellers.

“This is why every bubble has burst, because at some point, those buyers become sellers.”

The firm warns that extreme scenarios concocted by silver marketing groups should never be the basis for rational investing.

Short-term silver outlook

Seasonal strengths in investment and fabrication demand pushed prices higher in January and some other factors could drive prices up later in February. But they are minor and do not represent convincing justifications for expectations that prices will rise significantly higher in the longer term, the firm believes.

Between now and March, prices could reach the $34 to $36 level. CPM Group notes that there is often an elevated level of congestion in the market ahead of COMEX March futures expiry, a result of seasonal demand strength.

“Should a run up in prices occur before this period, silver prices could drop shortly thereafter, possibly toward $26,” the firm said.

 

Securities Disclosure: I, Michelle Smith, do not hold equity interests in any of the companies mentioned in this article.

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CPM Group: Lower Prices and the Potential Bull Trap from Silver Investing News

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