The silver squeeze is far from over. Here’s a bit of the silver squeeze explained.
The near-total media blackout on this topic ever since the COMEX price of silver tanked supports the notion that something real is happening that “they” don’t want anyone to pay attention to. Press coverage has mostly fizzled, and somehow it seems like nothing is happening.
But as this chart from Zerohedge shows, the spot market (the market for physical silver) is telling a different story.
Premiums are sky high and they are not coming down. In fact, never before have premiums been this high above spot.
Clearly, something is happening.
What Will This Lead To?
There are a number of ways the #silversqueeze could play out.
COMEX silver futures have been hammered over the last few weeks, down to $25.21 at the time of writing from a peak near $30 in late January/early February.
Many forms of physical bullion, however, are still sold out in many forms across many dealerships. Premiums are still sky-high, barely tapering off from their peak in early February. Many silver coins can only be found at premiums of around 30% above spot.
Squeezing a commodity market like silver is a much more significant event than squeezing thinly-traded equities like GME or AMC. It has to involve the physical metal, not just related securities.
It looks like this may already have begun.
The question is: is there enough capital and conviction to see this through? Will it get to the point where retail investors buy so much silver in small quantities that investment-grade 1,000 oz. bars will have to be melted down to meet the demand for smaller bullion such as rounds and coins? Will people demand delivery on COMEX contracts?
To answer one of those questions, it appears that demand has become so strong that it has spread to investment grade bullion. From Zerohedge:
#SilverSqueeze spreads into the 1,000 oz wholesale silver bullion bar market.
Check out this fresh video report from various physical bullion industry players (the biggest of which has to stay, unnamed).
The world has watched the retail demand for #Silver spike over the past 2 weeks.
But now the outsized silver bullion demand tightness has spread into the 1,000-ounce wholesale silver bullion bar market.
Will all of this amount to nothing? Will it collapse the fraudulent manipulation of metals markets? Will it lead to a “systemic event,” where banks get bailed out by the government? Or will this end in a total collapse of the global financial system, shutting down every market in the world?
In a recent poll I conducted on LinkedIn, 44% of participants chose the answer “nothing but crickets” when faced with the question “what will happen with the silver squeeze.”
A few selected other answers, like “global financial crisis,” but the largest answer by far was crickets. No one seems to take this seriously, and you can’t really blame them.
Silver Squeeze Explained: Paper Silver vs. Physical
The paper silver markets, including some miners like First Majestic Silver (AG), have been getting hammered. This might only be a temporary setback. There’s every reason for miners to keep rallying, and even the physical-backed ETF, PSLV.
SLV raised their margin requirements in response to this #silversqueeze movement, another indication that big things are happening. Mike Maloney of GoldSilver.com has covered this and other related developments in detail.
The raising of margin requirements by SLV caused a drop in most all related securities, a demonstration of how the big players control the game by changing the rules whenever it suits them.
This is only a minor example, though. Sometimes they even control entire markets.
We now know that banks like JP Morgan actively manipulate precious metal markets in an illegal fashion. Last year, JPM was fined nearly a billion dollars for this criminal activity.
They do this by “spoofing” markets through naked paper shorting of the COMEX futures. Basically, by creating sell orders for silver they do not have, they create the illusion of selling pressure, driving prices lower.
Over eight years, 15 traders at the biggest U.S. bank caused losses of more than $300 million to other participants in precious metals and Treasury markets, according to court filings on Tuesday. JPMorgan admitted responsibility for the traders’ actions. The Justice Department filed two counts of wire fraud against the bank’s parent company but agreed to defer prosecution related to the charges, under a three-year deal that requires the bank to report its remediation and compliance efforts to the government…
The New York-based lender will pay the biggest monetary penalty ever imposed by the Commodity Futures Trading Commission, including a $436.4 million fine, $311.7 million in restitution and more than $172 million in disgorgement, according to a CFTC statement. The CFTC said its order will recognize and offset restitution and disgorgement payments made to the Department of Justice and Securities and Exchange Commission.
Breaking their potential for this manipulation is part of the goal of the #silversqueeze – through the mass buying of physical silver, paper markets might be overwhelmed at some point, bringing the charade to an end.
Of course, we’ve heard this all before.
In 2011, Max Keiser was responsible for a similar campaign called “buy silver, crash JP Morgan.” This combined with the first quantitative easings of the Federal Reserve to bring silver to its all-time high of $50 per ounce.
Over the coming years, that price would steadily fall to under $15, and even under $13 during early 2020.
So, it should come as no surprise that the paper markets have gotten hammered.
All it took was one or two trading days to knock the futures price back down to where it was a week before this whole thing began. Fast forward to today, another four weeks later, and COMEX silver is still at a 1-month low, right about where it was in January, despite a lot of ups and downs.
Metals or Crypto?
Some market observers, like Max Keiser, believe that “all roads lead to bitcoin.” This could be true in the end, but silver and gold are likely pitstops along the way.
Everyone is slowly realizing that fiat currencies are approaching their end. The mother of all safe-haven panics has only just begun.