Spot prices decoupling from mining equities

While physical spot prices for gold and silver continue to surge, some of the mining shares are stagnant, which prompted me to take partial profits in SLW yesterday <click here> .  One possible reason is that the big money hedge funds are long the metals, but short the mining shares as a hedge.  These shorts put a cap on the prices of mining equities.

It may work for a while, but with any arbitrage, if the market wakes up to the reality of higher profits for mining companies going forward, the shorts will be carried out in a body bag.  In other words, this separation between the physical and equities markets is only temporary, and mining equities may not only catch up to the spot markets, but slingshot past the physical markets in the event of a huge short squeeze.