Ted Butler Quote of the Day 09-02-15

There are other factors on the COMEX to talk about, but it still amazes me how so few acknowledge the unprecedented physical movement of silver in the COMEX warehouses, as this movement stands out like a sore thumb as an indicator of wholesale tightness. Delivery intentions for first notice day on the September silver contract were announced and indicate a light number of 167 deliveries being issued and close to 2,000 contracts or so still open.

While that number of contracts still open is not large by historical standards, it was hard to ignore the pronounced tightening in the spread differentials between the now spot month of September and the now lead trading month of December in COMEX silver. Over the last three days, the September to December spread differential tightened by 2.7 cents to end at only 1.5 cents at yesterday’s settlement. To my mind, this is one of the tightest spreads I can remember on a first notice day.

I don’t want to confuse anyone with esoteric details which matter little in the end. While this may be a fleeting indicator, what can be said about the tightening is that there was pronounced aggression on the part of those wishing to buy the September contract on a spread basis with December. Since this has occurred as September has become active for actual delivery of silver, it can be concluded that more were either interested in taking delivery of silver or not having to make physical delivery. In either case, it’s considered a sign of potential physical tightness. By itself, it may not matter much, but taken with all the other signs of tightness in silver, it makes this old spread trader sit up and take notice.

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