Volume vs Open Interest

[Arcturus87]

Many blogs are suggesting hundreds of millions of ounces of silver are being dumped on the market in a period of hours. While it is clear that there is a lot of speculation and volatility in the price of silver, many of the reports are focusing on the amount of "volume" that is traded, which after yesterday's FOMC announcement amounted to over 100,000,000 ounces of silver. While this is interesting, my understanding is that this is somewhat irrelevant. What really should be focused on is "open interest", or the total number of positions open. According to CME data, yesterday open interest on silver futures actually declined by 92 contracts (460,000 ounces) even though daily volume amounted to 52,698 contracts (263,490,000 ounces). Open interest is only reported daily, but this would indicate that there was not a substantial amount of naked shorting going on in the silver futures market yesterday. The same data also indicates that there are currently 111,730 open positions (558,650,000 ounces) so it is obvious that there are very positive fundamentals behind silver and there are likely a huge number of naked shorts out there. There are many derivatives of silver, and the futures market is just one, there are likely billions of ounces of paper silver out there. The ability to easily take physical delivery of a large number of these positions would indeed overwhelm the market as was seen by the Hunt Brothers over 30 years ago. I do not recall you mentioning open interest before, would you mind commenting on the above information?