Gold & Silver Price Crash As London Shortage Eases

Key Concepts

• Gold and Silver Price Decline: Significant drops in the prices of gold and silver.
• Silver Lease Rates: The cost of borrowing silver, which has seen a substantial decrease.
• Market Squeeze: A situation where demand for a commodity outstrips supply, driving up prices.
• COMEX: A commodity futures exchange, a major marketplace for precious metals trading.
• LBMA (London Bullion Market Association): An association that sets standards for the London over-the-counter (OTC) gold and silver markets.
• Spot Price: The current market price for immediate delivery of a commodity.
• Leasing of Metal: The process of borrowing physical metal, often for short-term use in trading or hedging.
• Free Float: The amount of a commodity that is readily available for trading in the market.
• Open Interest: The total number of outstanding derivative contracts (e.g., futures, options) that have not been settled.
• Above Ground and Below Ground Silver: Refers to existing silver reserves (mined and stored) and potential future silver extraction from known deposits.

Current Market Conditions for Gold and Silver

The video opens with a stark observation of significant price drops in both gold and silver. Gold is reported to be down "under 129 bucks," and silver is down "under $2." The presenter notes that these prices were even lower about an hour prior, indicating a slight recovery.

Analysis of the Silver Market Squeeze

A key headline discussed is the "silver lease rates plunge as historic market squeeze eases." The presenter explains that when the spot price in London was higher, there was a movement of physical silver away from the COMEX. This involved "people literally putting metal on airplanes and shipping it across." The weight of silver is highlighted as a factor, with reports of some metal leaving China, though the quantity is not considered substantial.

The primary question raised is whether the outflow of approximately "26 million ounces" from the COMEX is sufficient to resolve the market squeeze, especially considering the LBMA's daily turnover of around "250 million ounces" and a reduced free float of "153 million ounces." The presenter suggests that this outflow might be "rookie numbers" or simply a tactic to "buy some more time."

Market Size and Open Interest

The presenter emphasizes the substantial size of the silver market, stating it is "a lot larger than these equity markets." This is further elaborated by a "quant" perspective, which considers the "total amount of open interest of silver including both above ground and below ground." This metric aims to capture the entire potential supply and demand picture for silver.

Information Source

The presenter directs viewers to "goldensaily.substack.com" for a recap of the day's events, noting that this particular recap has been made free for access.

Conclusion

The video highlights a significant downturn in gold and silver prices, accompanied by a notable easing of a silver market squeeze. The outflow of physical silver from COMEX is analyzed in the context of the broader LBMA market and available free float, with questions raised about its long-term impact. The sheer scale of the silver market, encompassing both existing and potential future supply, is underscored as a critical factor in understanding market dynamics.