Short sellers profiting from the savage sell-off in silver futures could be in for a torrid time if silver returns to trading in line with gold, and the pair head north.
Silver suffered a brutal sell-off from mid-April to mid-May, triggered by short sellers and rumours that struggling commodity house Nobel Group had been selling its silver holdings in a bid to raise cash.
Throughout March, gold and silver traded higher in tandem, as both commodity prices generally do, while investors digested a slew of global geopolitical risks and emphasised the safe-haven trade.
But as appetite for gold waned in subsequent weeks, the collapse in the silver price was particularly dramatic.
In mid-April, silver's gain for the year to date had been 1.36 times that of gold. But as gold fell 5.1 per cent into mid-May, silver experienced a sharp 12.6 per cent drop.
Rumours that Nobel Group was unloading its silver positions and the particular way that short sellers are leveraged meant the tiny, i