A Short Squeeze Could Be Unfolding In Silver Market (SLV)

After a correction that lasted for much of January, the silver market has come roaring back stronger than ever and is now sitting at new 30-year highs. The move off of the lows of late January has been stunning and the rally appears to be accelerating. On Friday, silver is a full 6% off of its lows from Thursday. Over the last month, the iShares Silver Trust ETF

has risen more than 12%. It appears that much of this rally may have been driven by short-covering as many traders have been waiting for the silver market to crack for some time now and have been caught on the wrong side of the market during the recent rally. It also would seem that supply disruptions are taking place in the silver market. The futures have now gone from significant contango to backwardation in a very short period of time, suggesting that near-term demand is outstripping supply. It also could be a sign of a major short squeeze.