Tariffs Send Silver & Copper Higher. Copper & Silver markets are sending us a message: Ignore it at Your Peril.
An estimated 4 to 6 billion ounces of physical silver contracts sold short in London cash market, stage is set for a potential market collapse as contract holders increasingly demand physical delivery
Recently I was interviewed by a popular silver and gold YouTube channel and I stated that we live among 5 types of wars.
1. Kinetic wars are boots on ground, troops, tanks, aircrafts, like you see in the movies
2. Information wars are where you see media spin trying to frame and usually justify the kinetic war. Recall the quote the first casualty of war is the truth.
3. cyber wars are the latest weapon. Simply disable your enemies power grid and they are crippled
4. Biological wars. Even Covid19 can be seen as Biological Warfare
5. This article is about Economic wars. US loves to weaponize the dollar with sanctions, rigging commodities, interfering with free trade so lets discuss Tariffs (unwise
As we approach Donald Trump's return to the White House, a storm is brewing in the copper and silver markets. The specter of his proposed tariffs has created a widening chasm between US and international prices, leaving traders and investors on edge. This disconnect isn't just a minor blip on the radar; it's a seismic shift that could reshape the landscape of metal trading for years to come.
The numbers tell a stark tale. Comex silver futures are commanding a premium of over $0.80 per ounce compared to London spot prices, while Comex copper futures boast a staggering $623 per ton premium over London Metal Exchange futures. These aren't just statistics; they're symptoms of a market gripped by uncertainty and anxiety.
Trump's potential trade policies are at the heart of this market turbulence. The mere whisper of universal tariffs on all goods from all countries has sent shockwaves through the industry. It's not just about China anymore; even long-standing allies like Canada and Mexico are in the crosshairs. This unpredictability is forcing traders to reevaluate their strategies and hedge against a future where protectionism reigns supreme.
But it's not just about trade. The broader economic picture is equally concerning. Persistent inflation, mounting fiscal debt, and the wild card that is Trump's economic agenda have investors scrambling for safe havens. Silver and copper, traditionally seen as barometers of economic health, are now becoming lifeboats in a sea of financial uncertainty.
The rush to capitalize on higher US prices is creating its own set of problems. As traders hurry to ship copper and silver into US warehouses, we're seeing the potential for shortages in other markets. This isn't just a US issue anymore; it's a global supply chain disruption in the making.
For those with physical metal to deliver, these price dislocations represent a golden opportunity. But for investors without tangible holdings, the risks are mounting. The widening gap between New York and London prices is throwing traditional arbitrage strategies into disarray, potentially leading to significant losses for the unprepared.
Perhaps most concerning is the looming threat of a silver squeeze. Years of global production shortfalls have already strained London silver stockpiles. Now, with the added pressure of US market dynamics, we could be heading for a perfect storm in the silver market.
As we stand experiencing this new era in metal trading, one thing is clear: the landscape is changing, and it's changing fast.
Traders and investors must stay nimble, informed, and prepared for a market where the only certainty is uncertainty. The copper and silver markets are sending us a message – ignore it at your peril.
The silver market is on the brink of a seismic shift, with the London market teetering on the edge of a physical delivery default that could trigger a global price shock. This looming crisis is the culmination of decades of market manipulation and a flawed price-setting mechanism established by the Bank of England, potentially coordinated with the Bank for International Settlements.
Recent developments have brought this precarious situation into sharp focus. TD Securities' Senior Commodity Strategist Daniel Ghali's interview on January 7, 2025, highlighted the increasing physical silver repatriation driven by fears of potential Trump tariffs. This repatriation is putting unprecedented pressure on London silver vault stocks, pushing the market towards what Ghali terms a "stock-out" or market failure.
The reality of London's available silver stock is even more dire than initially reported. While the London Bullion Market Association (LBMA) claims 828 million ounces of silver in London vaults as of December 2024, a closer examination reveals a much smaller amount actually available to the market.
After accounting for ETF holdings and privately held stocks, estimates suggest that as little as 10 to 50 million ounces may be truly available for delivery.
This scarcity is set against a backdrop of growing demand and persistent supply deficits. The Silver Institute projects a 1% decline in global silver supply for 2024, with production struggling to keep pace with escalating industrial demand.
The year 2025 is expected to see a further supply deficit of 250 to 500 million ounces, which will need to be met by drawing down already depleted global vaulted silver stocks.
The situation is exacerbated by the structure of the London silver market, which trades promissory notes in the cash/spot market, effectively destroying physical metal price discovery.
With an estimated 4 to 6 billion ounces of physical silver contracts sold short in the London cash market, the stage is set for a potential market collapse as contract holders increasingly demand physical delivery.
This impending crisis could have far-reaching consequences for major financial institutions. Blackrock, which manages $11.5 trillion in assets, saw a sudden 3.3% drop in its stock price on January 7, 2025, possibly linked to these market concern.
The potential liabilities faced by Blackrock and other bullion bank players in the London market could be massive, potentially destabilizing these institutions.
As the silver market approaches this critical juncture, it's clear that the current system, built on fraudulent price-setting mechanisms, is unsustainable. The coming "Great Silver Price Reset" may be attributed to various proximal causes, but the ultimate root lies in the flawed market structure established by central banking authorities.
This unfolding scenario underscores the importance of physical silver as a wealth preservation asset, especially in the face of current central bank, currency, commercial bank, and financial system instability - Jon Forrest Little
As the market moves towards an inevitable resolution, investors and institutions alike must brace for significant volatility and potential systemic shocks in the precious metals sector.