So, the iShares Silver Trust just added 572 metric tons of physical silver to its portfolio, which, according to one report, brings its gross holdings of the precious metal above 10,000 tons. This is a completely legitimate investment under U.S. law.
Suppose Cargill or ConAgra hoarded an equivalent amount of grain, or Exxon Mobil did the same with crude oil. My guess is that there would be federal investigations aplenty into whether an effort to corner the commodity was occurring, something that the law clearly prohibits.
In both cases, locking up large quantities of a commodity can cause available supplies to decline and prices to rise. In some situations, like gold, add the amounts being squirreled away by central banks and the impact can be magnified. Then, consider what would happen to prices if all large holders were to sell at once.
This, it seems to me as a non-economist, is a spooky situation for the average investor. Statistics on industrial use become virtually meaningless when a significant share of supplies is accumulated for other purposes. The dedicated (single-commodity) exchange-traded funds are unlikely to dump their holdings unless redemptions (if possible) occur. But (back to gold), central banks have more freedom and might sell if, for example, another financial crisis happens.
The Commitments of Traders Report issued regularly by the Commodity Futures Trading Commission shows part of the picture, but until supplies in the hands of investment vehicles and financial institutions are centrally and prominently reported, it will be nearly impossible for market participants to assess supply and demand in a useful way.