Lots of nonsense floating around social media. Just to explain re futures: the performance bond amount (better known as Initial Margin) is there to protect the clearing house and ultimately the clearing members against the risk of a counterparty defaulting. Essentially the margin is there to cover someone’s losses if they fail to cover the market to market losses before they get stopped out of their position.
No, the initial margin is not 30%. It has gone up by 30% – the initial margin is around 7.5-8% of the contract value. That means you can still be 12x levered (although if you’re a retail trader your broker will almost certainly demand you put up more margin).
The margin should reflect two things: the price of the asset, and the volatility of an asset. Both the value of silver and its volatility have increased, hence IM has gone up. It’s not a huge conspiracy to drive down silver prices and it’s normal and expected. And they aren't going to cure the physical shortages with margin hikes.
Yes, a hiking of the margin did likely wipe out some late entrant speculators and contributed to the fall in price. But that’s a good thing. We don’t want late entrant speculators in now – we want them to be FOMO’ing in at the end of the bull run to be our exit liquidity.
And no, BAML / Citi / etc. are not ‘short’ 1 bn oz of silver or whatever nonsense. Even if one could find out how much a bank is net short or long in futures on their own desk (vs on behalf of their clients), one still have no idea what their actual position is. For example, they could be short the future and long OTC (there is no way of telling what this is). Also, just because someone is short front month silver futures doesn’t mean they’re losing money. They could be long the second or the third month futures, or they could be hedging an ETF position, or trading platinum vs silver, or doing a whole host of things that aren’t transparent to anyone.
On Dec. 29 it looks like COMEX et al took their best shot to lower the price of silver. And it retreated all the way to the Dec. 24 price. Wonder what they'll try next? More of the same, presumably. But this isn't a Hunt Bros moment.
The Shanghai Gold Exchange is maybe the best thing that ever happened to silver stackers. A market that only trades physical. A place where price discovery is rooted in reality. In the last 24 hours the SGE silver price rose 8%. It's 9.5% on the week.
The COMEX can slam the paper price all it wants. The disconnect from the physical silver price will only grow. That's not sustainable, if the COMEX wants to keep trading silver.
On the other hand, maybe they weren't defending $75 at all. It wasn't until the price topped $84 that a sell-off was triggered. With thin holiday trading, maybe the price drop they were looking for was amplified all the way to $71?
Every slam gets bought by physical buyers. Chinese nor Indians nor anyone else knowing this space care about that price anymore I feel. Any dip get bought up.
The only way they can derail this move is by crashing the stock markets (ie: the AI bubble). Which I wouldn't put past them!
The only reason the price of silver in Shanghai is meaningful to the West is because physical silver can still flow from Europe/USA to China.
However, if Europe and/or the USA imposes capital controls and bans physical silver outflows, "Shanghai" will be meaningless. Then, the COMEX/LBMA will decide what the price INSIDE Europe/USA will be. Unless you smuggle it out.
Just one phone call from the COMEX to Trump will do the trick.
Another interesting fact to consider is to acknowledge where the majority of the silver mines are located on planet earth: in The Americas (Mexico, Canada, Peru, etc.).
With an apparent new Monroe Doctrine being formulated by Trump, it is not hard to phantom that the USA is looking pretty with respect silver supply while China will be hard pressed.
Scottsdale Mint, First Majestic? Can’t be the US Mint…they source the silver blanks outside their purview… your point is valid. Who is going to refine all the metal in the Americas??
So basically trump threats tariffs on mexico and peru if they decides they want to sell to the highest bidder? Or the us owned refinery would for "national intrest" to not sell to the highest bidder? The shanghai exchange only meaningful becuae they trade in REAL asset while the comex runs a 100:1 ratio. Already 60% of the vault was claimed for delivery in early Dec and their vault is draining even faster with the paper slam
The US doesn't actually own South America, we just think we do. As in Africa, China has been showing up with infrastructure project plans and trade deals that qualify as reciprocal, while we show up with threats, bluster, slimy CIA operations, and mayhem.
Yeah, no kidding. Hope it goes better than the last few regime changes.
If I had lived through decades of the US’s ruinous sanctions on Venezuela, I would be ready for change no matter what.
AFAIK, no objective evidences for any of the US’s excuses for this action have public existence. That doesn’t matter, because the point of Trump’s ‘pivot to Venezuela’ was also the point of the sanctions, was always the point of our stance toward the country; largest proven oil reserves in the world. Can’t print that stuff, either.
Exactly, silver can’t be printed.,Quote of the day right there 👍 they can play all the games they want with their margins and paper. Industrial operations need metal. Serious backwardation ahead. I’m guessing a lot more data centers will be overheating too. Who do they really think they’re kidding with these middle school tactics.
I love how there’s ZERO charts on “physical demand”. Anyone know why? Because demand is down 2% YoY. And the projected 2026 model from Silver Institute is flat to +4%. And then people wonder the miner’s aren’t catching a bid. Then they say “My God. Why are banks short so much Silver!!!” Then COMEX raises margin to take away leverage and it falls. Folks, you’re looking at the wrong data. This will be dead $$ for a decade.
Seriously, you’re the author and this is your reply? An OTCBB Canadian company called Kuya Silver which is a penny stock miner who is in terrible financial condition makes an assertion that they are “being offered” +$8 over spot? Can you say pump and dump? I said show me a chart, you give me nonsense.
Fair enough, but where are you getting demand down 2% YoY?
Solar panel production is up significantly. AI datacenters need silver paste for GPUs. We didn't suddenly stop the green energy transition - or did I miss that memo?
Silver Institute numbers are what we've got, sure. They're also known for being conservative. But even taking those at face value, we're looking at 7 consecutive years of supply deficits. That's not exactly bearish.
Banks being short isn't the mystery you think it is. They're short paper. Physical is a different market.
On COMEX margin - honestly, I'd love to see them go to 100% cash requirements. Let the chips fall where they may. Would clear up a lot of confusion about what's actually backed and what's leverage.
Also, that Kuya chart you linked? Breakout, backtest, liftoff. That's textbook continuation, not pump and dump. But again, the company's chart pattern isn't the point - the premium being offered is.
What physical demand data are you looking at specifically?
I'm looking at twitter loosing their minds about where to actually get some silver. google trends is picking up, but nowhere near "full retail participation". Right now we're at the start. Like where BTC was around '20. Fun times. HUGE drawdowns, HUGE spikes.
For silver we're in uncharted territory, and the demand/supply picture just isn't working.
The KUYA angle is one small datapoint that confirms the Western benchmark starts to fail. True or not, I'm sure for that one datapoint, there are multiple miners that do backhand deals with the Chinese or Indians to supply them the metal directly. Same like what happened with that copper smelter that said "no way José" to the global price setting mechanism.
THAT's what happens. The paper price will be more and more ignored.
Just a rhetorical question (actually more my venting frustration):
I’m a retail investor who wants to allocate a small portion of my assets to metals for diversification. But most of my net worth is in tax deferred retirement accounts and residential real estate.
Obviously, my tax deferred retirement accounts don’t offer investments in physical metals (just paper). I keep only a small amount of cash in my taxable accounts, so I don’t buy physical metals with that money.
What are retail investors who have sizable retirement assets but smaller allocations of taxable cash supposed to do? I’m not about to incur taxable 401k and IRA withdrawals just to have cash to buy physical metals. And I’m not about to buy metals on margin or leverage my home.
Again, rhetorical question. I’m just venting frustration.
Thank you so much! I do have a self directed brokerage account for my IRA, but the 401k is limited in what I can invest in. I will check out your suggestions to see if I have those options for my IRA. Thank you and happy new year!
Most underratted Substacker in finance.
Lovely physical 80-100 while paper crashes.... oh look squirrel!
At this moment in China, the silver future price is $80.25, while the price for physical is $87.00 US$/oz.
Awesome write-up NO1!!!
Lots of nonsense floating around social media. Just to explain re futures: the performance bond amount (better known as Initial Margin) is there to protect the clearing house and ultimately the clearing members against the risk of a counterparty defaulting. Essentially the margin is there to cover someone’s losses if they fail to cover the market to market losses before they get stopped out of their position.
No, the initial margin is not 30%. It has gone up by 30% – the initial margin is around 7.5-8% of the contract value. That means you can still be 12x levered (although if you’re a retail trader your broker will almost certainly demand you put up more margin).
The margin should reflect two things: the price of the asset, and the volatility of an asset. Both the value of silver and its volatility have increased, hence IM has gone up. It’s not a huge conspiracy to drive down silver prices and it’s normal and expected. And they aren't going to cure the physical shortages with margin hikes.
Yes, a hiking of the margin did likely wipe out some late entrant speculators and contributed to the fall in price. But that’s a good thing. We don’t want late entrant speculators in now – we want them to be FOMO’ing in at the end of the bull run to be our exit liquidity.
And no, BAML / Citi / etc. are not ‘short’ 1 bn oz of silver or whatever nonsense. Even if one could find out how much a bank is net short or long in futures on their own desk (vs on behalf of their clients), one still have no idea what their actual position is. For example, they could be short the future and long OTC (there is no way of telling what this is). Also, just because someone is short front month silver futures doesn’t mean they’re losing money. They could be long the second or the third month futures, or they could be hedging an ETF position, or trading platinum vs silver, or doing a whole host of things that aren’t transparent to anyone.
On Dec. 29 it looks like COMEX et al took their best shot to lower the price of silver. And it retreated all the way to the Dec. 24 price. Wonder what they'll try next? More of the same, presumably. But this isn't a Hunt Bros moment.
The Shanghai Gold Exchange is maybe the best thing that ever happened to silver stackers. A market that only trades physical. A place where price discovery is rooted in reality. In the last 24 hours the SGE silver price rose 8%. It's 9.5% on the week.
The COMEX can slam the paper price all it wants. The disconnect from the physical silver price will only grow. That's not sustainable, if the COMEX wants to keep trading silver.
Quality article. I swapped ETCs for more physical yesterday and your articles helped give me the motivation and confidence to do so. Thank you!
just bought junk silver at $71 spot from sdbullion yesterday.
YOU ARE NOT ALONE—
WE ARE FAMILY!
The COMEX January silver future rose more than $7 today, currently at $77.375. The line in the sand they drew at $75 looks to be history.
On the other hand, maybe they weren't defending $75 at all. It wasn't until the price topped $84 that a sell-off was triggered. With thin holiday trading, maybe the price drop they were looking for was amplified all the way to $71?
Every slam gets bought by physical buyers. Chinese nor Indians nor anyone else knowing this space care about that price anymore I feel. Any dip get bought up.
The only way they can derail this move is by crashing the stock markets (ie: the AI bubble). Which I wouldn't put past them!
Front Month Comex Silver for January (new front month) delivery gained $7.3710 per troy ounce, or 10.53% to $77.374 today
Largest one day dollar gain on record
Largest one day percentage gain since Thursday, March 19, 2009
A new record high
Up six of the past seven sessions
Up 167.36% from its 52-week low of $28.94 hit Tuesday, Dec. 31, 2024
Rose 167.36% from 52 weeks ago
Up 165.74% from its 2025 settlement low of $29.116 hit Friday, April 4, 2025
Month-to-date it is up 37.08%
Year-to-date it is up $48.434 or 167.36%
All prices are calculated based on the settlement price of the current front month contract.
Source: Dow Jones Market Data, FactSet
Thanks for the info, super helpful!
It. Is. Different. This. Time.
Famous. Last. Words. 😂
The only reason the price of silver in Shanghai is meaningful to the West is because physical silver can still flow from Europe/USA to China.
However, if Europe and/or the USA imposes capital controls and bans physical silver outflows, "Shanghai" will be meaningless. Then, the COMEX/LBMA will decide what the price INSIDE Europe/USA will be. Unless you smuggle it out.
Just one phone call from the COMEX to Trump will do the trick.
Another interesting fact to consider is to acknowledge where the majority of the silver mines are located on planet earth: in The Americas (Mexico, Canada, Peru, etc.).
With an apparent new Monroe Doctrine being formulated by Trump, it is not hard to phantom that the USA is looking pretty with respect silver supply while China will be hard pressed.
In such a case, who would process the US-controlled supply?
Scottsdale Mint, First Majestic? Can’t be the US Mint…they source the silver blanks outside their purview… your point is valid. Who is going to refine all the metal in the Americas??
So basically trump threats tariffs on mexico and peru if they decides they want to sell to the highest bidder? Or the us owned refinery would for "national intrest" to not sell to the highest bidder? The shanghai exchange only meaningful becuae they trade in REAL asset while the comex runs a 100:1 ratio. Already 60% of the vault was claimed for delivery in early Dec and their vault is draining even faster with the paper slam
https://youtu.be/Qzp705qWjcI
The US doesn't actually own South America, we just think we do. As in Africa, China has been showing up with infrastructure project plans and trade deals that qualify as reciprocal, while we show up with threats, bluster, slimy CIA operations, and mayhem.
Guess who they'll follow 😉. They'll say yes in the US' face, but backhand deal with the one that treats them like a partner instead of a slave.
Your comment got old quickly, lol. Trump now "owns" Venezuela.
Yeah, no kidding. Hope it goes better than the last few regime changes.
If I had lived through decades of the US’s ruinous sanctions on Venezuela, I would be ready for change no matter what.
AFAIK, no objective evidences for any of the US’s excuses for this action have public existence. That doesn’t matter, because the point of Trump’s ‘pivot to Venezuela’ was also the point of the sanctions, was always the point of our stance toward the country; largest proven oil reserves in the world. Can’t print that stuff, either.
So, today Ag climbed the wall of worry on CME spot to $77.70 at the moment (day not over yet), whose buying all that fake paper...lol!
Next up: Jerkolists spewing slop about how everything's normal, just move along...
As someone that saw this coming in 2004, all I can say is...It's about time!
No1, Is there a 'silver lining' to this story? (sorry, couldn't resist, aka /s)
That we're in the innings of a bull market. Turbulence is normal. Expect turbulence² with silver. This is a system fighting for survival.
Enough silver linings for me 😉
Great article @no01 as usual.
Love the margin calls to crash the paper prices while physical remains sold out. Bravo to the weak hands who sold yesterday.
Exactly, silver can’t be printed.,Quote of the day right there 👍 they can play all the games they want with their margins and paper. Industrial operations need metal. Serious backwardation ahead. I’m guessing a lot more data centers will be overheating too. Who do they really think they’re kidding with these middle school tactics.
CME/COMEX is about to, or already has, declared force majeure on delivering physical silver.
Hopefully the weak hands understand what that means & convert to the Ag physical, otherwise they'll be played for fools over & over again...
Let the paper burn, the speculators twist in the wind ~ Invest in physical -or- nothing = We Win.
Got Ag?
I love how there’s ZERO charts on “physical demand”. Anyone know why? Because demand is down 2% YoY. And the projected 2026 model from Silver Institute is flat to +4%. And then people wonder the miner’s aren’t catching a bid. Then they say “My God. Why are banks short so much Silver!!!” Then COMEX raises margin to take away leverage and it falls. Folks, you’re looking at the wrong data. This will be dead $$ for a decade.
I doubt you're right. See: https://substack.com/@no01/note/c-193739349?r=17w5dj&utm_source=notes-share-action&utm_medium=web
Seriously, you’re the author and this is your reply? An OTCBB Canadian company called Kuya Silver which is a penny stock miner who is in terrible financial condition makes an assertion that they are “being offered” +$8 over spot? Can you say pump and dump? I said show me a chart, you give me nonsense.
https://finance.yahoo.com/quote/KUYAF/
Fair enough, but where are you getting demand down 2% YoY?
Solar panel production is up significantly. AI datacenters need silver paste for GPUs. We didn't suddenly stop the green energy transition - or did I miss that memo?
Silver Institute numbers are what we've got, sure. They're also known for being conservative. But even taking those at face value, we're looking at 7 consecutive years of supply deficits. That's not exactly bearish.
Banks being short isn't the mystery you think it is. They're short paper. Physical is a different market.
On COMEX margin - honestly, I'd love to see them go to 100% cash requirements. Let the chips fall where they may. Would clear up a lot of confusion about what's actually backed and what's leverage.
Also, that Kuya chart you linked? Breakout, backtest, liftoff. That's textbook continuation, not pump and dump. But again, the company's chart pattern isn't the point - the premium being offered is.
What physical demand data are you looking at specifically?
"What physical demand data are you looking at specifically?"
Probably just another crypto bro panicking because their little pyramid scheme has maxed out...
If he had *actual* physical demand data, he would have linked it.
From all appearances, Ag is flying off shelves faster than it can be replenished, there's the data...
Got Ag?
I'm looking at twitter loosing their minds about where to actually get some silver. google trends is picking up, but nowhere near "full retail participation". Right now we're at the start. Like where BTC was around '20. Fun times. HUGE drawdowns, HUGE spikes.
For silver we're in uncharted territory, and the demand/supply picture just isn't working.
The KUYA angle is one small datapoint that confirms the Western benchmark starts to fail. True or not, I'm sure for that one datapoint, there are multiple miners that do backhand deals with the Chinese or Indians to supply them the metal directly. Same like what happened with that copper smelter that said "no way José" to the global price setting mechanism.
THAT's what happens. The paper price will be more and more ignored.
Instead of asking me where I got industrial demand 2% down year over year you can ask your favorite AI or looked at this chart here: https://seekingalpha.com/article/4856136-dont-you-dare-short-silver
London Skeptic, Your pants are on FIREEEEEEEEEEEEEEEEEEEEEE!
Another excellent article! Thanks No1.
Just a rhetorical question (actually more my venting frustration):
I’m a retail investor who wants to allocate a small portion of my assets to metals for diversification. But most of my net worth is in tax deferred retirement accounts and residential real estate.
Obviously, my tax deferred retirement accounts don’t offer investments in physical metals (just paper). I keep only a small amount of cash in my taxable accounts, so I don’t buy physical metals with that money.
What are retail investors who have sizable retirement assets but smaller allocations of taxable cash supposed to do? I’m not about to incur taxable 401k and IRA withdrawals just to have cash to buy physical metals. And I’m not about to buy metals on margin or leverage my home.
Again, rhetorical question. I’m just venting frustration.
Again your posts have been very illuminating.
PSLV / PHYS / PGLD are generally allowed inside an IRA? It’s not the same as holding bars, but it’s not paper gold either.
Maybe check if you can use the "self-directed brokerage option" and allocate to those? or you can do an in-service rollover?
Thank you so much! I do have a self directed brokerage account for my IRA, but the 401k is limited in what I can invest in. I will check out your suggestions to see if I have those options for my IRA. Thank you and happy new year!