COMEX is the futures and options exchange where the price of many commodities is set, including silver.   Since peaking at 138.5 million ounces in August 2008, the COMEX silver inventory dropped sharply for nearly three straight years and bottomed in June 2011 at 98 million ounces.  This rapid drop led many silver observers to believe we were on the precipice of a severe supply crunch in silver that would lead to a skyrocketing silver price

However, beginning in July 2011, the COMEX silver inventory began a dramatic rise.  Since then, the inventory has increased by 46% and now stands at143.1 million ounces, 5 million ounces higher than it's peak level in August 2008. Year-to-date the price of silver is down 2.2%, and we've had extreme volatility in the price so far this year.  It's impossible to say if the price drop is because of the increase in supply demand or just large traders pushing the price around.  I do think the huge build inventory is a negative and probably reflects the slowdown in the economy.  I suspect silver will have a difficult time sustaining gains through 2012. 

Price of Silver
January 1, 2012 => $28.78
June 4, 2012 => $28.12
YTD Return => -2.2%



Disclosure:  I own positions in silver bullion