Summary
The silver price is surging to record highs due to a combination of factors, including massive demand from central banks and traders, physical supply chain pressure, and a global shift in power dynamics led by China, which is challenging Western dominance and potentially setting the stage for a new monetary system.
Market Dynamics and Supply Strain
Silver price surged past $52/oz with London premium hitting $3 over NY futures, indicating deep supply strain and trust risk in paper markets.
Backwardation in silver market signals people want physical silver now, not trusting paper promises, as spot price exceeds futures price.
The LBMA system shows stress unseen since the 1980 Hunt Brothers era, with London spot silver at $3 premium to New York futures.
Government and Geopolitical Factors
US government reclassifying silver as critical mineral puts floor under price, driving surge alongside central banks and BRICS nations accumulating metal.
China positioning as major player through Shanghai Gold Exchange, offering physical metal settlement and encouraging central banks to store gold in Chinese vaults.
US government’s plan to devalue dollar by letting gold reach $7-8,000 aims to reshore manufacturing and grow out of global reserve currency problem.
Price Projections and Market Analysis
Silver’s cup and handle formation suggests target of $96/oz for next price increase, far below inflation-adjusted all-time high of $200/oz from 1980.
Geologic ratio between gold and silver at $591/oz is possible; if gold trades at $4140/oz, silver should be $100/oz but comes out of ground six times higher.
Silver market’s thin liquidity and high volatility make it susceptible to manipulation and explosive price movements, unlike larger $130 trillion dollar market.
Central Bank and Institutional Behavior
Central banks quietly accumulating silver with 85% of metal going into their coffers not reported to IMF, including China, Russia, Saudi Arabia, and India.
JP Morgan paid $920 million fine for spoofing silver market, suggesting much bigger story than mainstream narrative of airplanes returning silver and valuation concerns.
Physical Market Demand
Physical silver market experiencing unprecedented demand with dealers struggling to meet orders, potentially leading to shortages and delivery delays.