The problem with offering 30% bonuses to settle in cash is that word gets around. Everybody and all their buddies want the same deal or better the next time around. Offering premiums to settle in cash only increases the general awareness of silver shortages. March delivery saw major fireworks, but Blythe and friends made it to April without a default. With the start of May deliveries only 3 weeks away, speculation of COMEX silver shortages and default will soon be with us once again. Our guess is the cartel may be able to make it through one more delivery month without default, setting up a possible climax during the September delivery month. In order to pull this off however, Blythe will likely have to substantially increase the cash settlement premiums offered. March saw a total of 62,581 outstanding contracts, and we already have 69,555 contracts open for May silver.
If May sees another 8-10 million oz standing for delivery, the cartel will have a major issue on their hands. Keep an eye out for major SLV inventory draw downs in the next few weeks for a clue as to whether the COMEX is acquiring any additional silver from the fraudulent silver ETF. Add in the potential for a major leg down in the dollar this summer, and we have the potential for major events shaping up in the silver market.
