it wasn't a signal failure in the sense that the shorts weren't completely overrun. but this is the first time open interest contracted while the silver price continued to climb. that means at least one of the silver shorts was hurt badly enough to have to cover, driving the price even higher.

the rest of the commercial shorts aren't doing so well either. in one month the price of silver went up about $3, and the commercial traders were short about 354 million oz. as of last week, so they lost $1 billion, at least on paper. ted butler said the commercials attacked a week ago monday and drove the price down $1 but there was little liquidation, and the price snapped right back the following day.

that squares with the view from gata, which is that new players have entered the silver market, and they have strong hands. unlike the momentum traders who cut and ran whenever the market moved against them, these traders have the buying power to take on the shorts.

i don't know who will win this time around, at least in the short term as silver has been consolidating near $20, but the shorts won't go quietly. in the past couple of days silver and gold diverged because the cbot raised the margin requirements on silver contracts by 50%. like i say, they won't go quietly.