I've seen that blurb on the short position in silver(posted it here once), but had the same thoughts you're having regarding fighting the hedge funds.
The one point that gave me hope for a short squeeze was that they've only shorted the paper on Silver, not the actual commodity which they don't possess.
According to that article, real silver is much scarcer, and future production much more difficult to increase/ramp up than the shorts would have us believe.
The beauty of silver as a hedge, vs Gold, is that it is indeed an industrial commodity as well as a relatively rare substance.
If the economy is bad, silver is a good hedge...if the economy is good, industrial consumption goes up. Seems to me it's a win-win for holders of actual silver.
The downside to all this does seem to be that the value of real silver seems to be predicated to some extent on the value of PAPER silver.
How this all finally plays out is too complicated for me to fully understand so far.
And although I have some silver, I'd much rather see the value of the dollar rebound. For both silver to rise dramatically AND the USD to rebound simultaneously would be wonderful. I just don't know if that's possible.
I'm going to chart the Oil index and compare it to silver like I did with silver/gold/dollar. I have a sneaking suspicion that they'll be a close match and that will be another clue to help decipher what's happening.
Get ready for that quiz! It's gonna' be a monster! And I recommend sitting next to Obama, not McCain. Your score will be much better.
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