As the year 2008 drew to a close, the price of silver futures plunged to new lows, falling to under ten dollars per ounce. During this brief time period, silver futures were valued at less than what it cost miners to take it out of the ground. This “reverse bubble” was created when large players, mostly financial institutions, began excessive silver short selling on the futures exchange.
Typically, the results of artificial decreases in asset prices are followed by equally extreme upside motion. In the case of 2008 silver, its spot price boomeranged from less than $9 per ounce in November of that year to a new high of nearly $50 by April 2011. May 2011 saw silver plummet to the low $30s after gaining more than 450%, during the previous 29-month long rally.
Large players, such as JP Morgan are, again beginning to sell silver short on the COMEX. Could this mean another jump in silver values? If this were to take place, at silver’s current price, the white metal could easily exceed $150 by 2014.
http://www.thestreet.com/story/11508655/1/the-silver-reverse-bubble-of-2012.html
