I wanted to talk about the Wall Street Bets Silver Short Squeeze and physical silver shortage that has plagued the precious metals markets for much of the past year, The recent move in silver has a lot of people’s attention and no I don’t mean us. I mean the real movers and shakers who have never noticed Us, We the People for decades. We have watched GME begin to unwind after delivering a nearly $8.8 Billion dollar blow to some of the most powerful people in the world.
the CME Group announced it was raising margins on Comex silver futures by 18% after futures surged to an eight-year high, the exchange said in a statement.
Margins will rise to $16,500 per contract from $14,000, effective Feb. 2, according to the exchange. “The decision is based on “the normal review of market volatility to ensure adequate collateral coverage,” it said in a statement.
Silver dropped 2% on the news, falling from just above $29/oz to just below, overall we’re sitting much higher than we were the other day and It’s likely the move would have been more pronounced if it hadn’t been for so many thinking this was a trick.
Another factor about the precious metals market is these banks are liars and don’t really have the metal. They utilize naked shorting strategies to spoof the markets to play the margins all day and sometimes this leads to huge drops which costs all precious metals investors.
While the margin hike has predictably pressured the price of paper silver lower, the disconnect between paper and physical just hit a record high as insatiable demand in the physical space is being offset by attempts to depress paper prices. We showed this in the delta between the price of one American Eagle coin and one Silver future, which reached a record 30%, or almost $14 per ounce. The lack of physical supply of silver is putting a hurting on their system as more is revealed the more demand continues to wreck the system. This could be suggestive they are manipulating the price of silver hard right now and a price closer to $100 makes more sense in relation to inflation.
The other thing is the bullion dealers have a lack of inventory we do know since they are changing margin rules they do fear a systemic event possibly as a result of the Wall Street Bets Silver short squeeze. I’m sorry how is this wrong it’s people all taking risks on risky assets like retailers during the great contraction happing in the commercial real estate market.
A great example was compiled by Zerohedge
The shortage of physical silver is exposing a tear in the precious metals market unlike any we have seen before.
As we detailed below, various executives from bullion dealers have explained that huge demand has left them with no supply (and no source) for physical silver.
And while silver futures prices (paper silver) have ‘stabilized’ modestly during the day…
Physical silver prices remain at extremes…
And, as the chart below indicates, that massive premium is unprecedented…
Simply put, the establishment can print all the paper silver it wants, but there is no physical supply… and that likely ends badly for those attempting to suppress reality for too long.
As we noted over the weekend, online bullion dealers saw such huge demand for silver ahead of today’s moves as ‘Reddit-Raiders’ prepared to take aim at the precious metals markets.