Huge Physical Buying Amid Pullback In Gold & Silver | Andy Schectman

Key Concepts

• Paper Price vs. Physical Buying: The discrepancy between the declining paper price of precious metals and significant physical buying activity.
• Delivery Months: The volume of gold and silver being delivered on futures contracts, indicating strong physical demand.
• Fiscal Irresponsibility: The US government's mounting debt and deficits, leading to currency debasement.
• Central Bank and Sovereign Wealth Fund Buying: Foreign entities accumulating gold and silver.
• LBMA (London Bullion Market Association): A key global market for precious metals.
• COMEX: A commodity futures exchange where precious metals are traded.
• Rehypothecation: The practice of pledging a client's assets as collateral for a loan, creating multiple claims on the same asset.
• Hit and Run: A severe car accident where the perpetrator flees the scene.
• Dumb Criminals: A humorous categorization of poorly executed criminal acts.
• Nvidia, Apple, Cryptocurrencies: Examples of assets that have defied gravity due to speculative interest.
• Commitment of Traders (COT) Report: A report detailing the positions of different types of traders in futures markets.
• First Day Notice: The initial period when contracts for physical delivery are made available on COMEX.
• Immediate Physical Delivery: Contracts bought during the delivery month that require immediate physical delivery.
• Algorithmic Trading: Automated trading systems used by hedge funds.
• Morgan Stanley and Bank of America: Large commercial banks that have recently shown increased interest in physical gold.
• Michael Hartnett (Bank of America): Analyst known for his "high price" newsletter and investment outlooks.
• 60/40 Portfolio: A traditional investment strategy of 60% stocks and 40% bonds.
• 60/20/20 Portfolio: A proposed shift from the 60/40, suggesting 60% stocks, 20% bonds, and 20% gold.
• 25/25/25/25 Portfolio: Michael Hartnett's suggested allocation of stocks, bonds, short-term treasuries, and gold.
• Debt to GDP Ratio: A measure of a country's debt relative to its economic output.
• Unfunded Future Liabilities: Future financial obligations that are not covered by current assets or planned revenue.
• SLV (iShares Silver Trust): A silver-backed exchange-traded fund (ETF).
• Naked Short Selling: Selling a security that the seller does not own or has not borrowed.
• Alistair Mcleod: A former bank director from the UK, known for his insights on currency and bond markets.
• SIPs (Cross-border Interbank Payment System): China's alternative to SWIFT for international payments.
• Yuan-to-Gold Conversion: The ability to convert Chinese Yuan balances into gold through the Shanghai Gold Exchange.
• Shanghai Gold Exchange: A platform for trading gold in China.
• Saudi Arabia Vault: A planned gold vault in Saudi Arabia, indicating growing international interest in gold.
• Dollar-Based System: The global financial system that relies on the US dollar as the primary reserve currency.
• Trust and Confidence: The basis of the dollar's value since 1971.
• Jeffrey Gundlach (DoubleLine Capital): A prominent bond investor who has commented on gold allocation.
• Valkami Combi Bars: Gold bars that can be broken into smaller units.
• Constitutional Silver (Junk Silver): Pre-1965 US silver coinage (dimes, quarters, half-dollars) containing 90% silver.
• Silver Rounds: Generic silver discs or coins, typically containing one ounce of silver.
• Silver Eagles and Gold Buffaloes: Official US Mint bullion coins.
• Barterability: The ability of a commodity to be used for exchange in a non-monetary system.
• Inelastic Supply: A supply that cannot easily increase in response to demand.
• Reckless Driving Statistics: Data on aggressive and unsafe driving behavior.

Market Dynamics: Paper Price Suppression vs. Physical Demand

The discussion highlights a significant battle occurring in the precious metals market, characterized by a declining paper price (futures market) juxtaposed with substantial physical buying. This divergence is presented as a critical indicator of underlying market strength and potential future price appreciation.

• Key Observation: When the paper price of gold and silver is driven down while there is immense physical buying, it signals an unusual market condition that should be "eye-opening."
• Delivery Month Significance: The current delivery month (October 2025) is projected to be one of the top three largest delivery months ever for silver. This is occurring simultaneously with the metal being "hammered" in the paper market.
• COMEX Deliveries: In October, nearly 39 million ounces of silver have been delivered to the COMEX. This figure is almost triple what was posted for delivery on the first day notice, indicating a significant number of contracts are being exercised for physical acquisition.
• Gold Deliveries: Gold deliveries for the month are 93% higher than what was posted on the first day notice. This includes contracts bought during the delivery month that are intended for immediate physical delivery, making them harder to analyze via the Commitment of Traders report but bullish in sentiment.
• Example of Engineered Price Drop: Between October 17th and 20th, 6,000 gold contracts were written for immediate physical delivery, with each day setting records for that point in the delivery period. This suggests a deliberate effort to drive down the paper price of the December futures contract while simultaneously standing for immediate delivery in October.

The Mechanics of Price Manipulation and Institutional Involvement

The transcript details how large players may be manipulating the paper price of precious metals, often through actions taken during periods of low liquidity.

• After-Hours Dumping: On a specific Thursday night, the price was driven down after New York trading hours and into the Asian session, a period of "virtually no liquidity." This is described as an irrational act for a rational trader to dump "copious amounts" of metal.
• Purpose of Price Suppression: This action is believed to be specifically designed to "drive down the price to guarantee the absolute worst settlement." Mainstream reporting often omits the timing of these dumps, which would invalidate the rationale of a natural price correction.
• Institutional Buying: Despite the price suppression, significant physical buying emerged. Michael Lynch's report is cited, noting that Morgan Stanley and Bank of America entered the market as "big buyers of physical" as the December paper contract price was driven down.
• Record October Deliveries: These banks issued October immediate delivery contracts, which were setting records for "massive amounts."
• Shifting Institutional Stance: This institutional buying is significant because analysts like Michael Hartnett (Bank of America) and chief investment officers at Morgan Stanley have recently been advocating for increased gold allocations. Morgan Stanley suggested a shift from a 60/40 portfolio to a 60/20/20 (stocks/bonds/gold), while Hartnett proposed a 25/25/25/25 allocation.
• Covering Shorts or Taking Possession: The recent buying by these large banks, which have historically been sellers of gold, is interpreted as either covering short positions, taking physical possession, or attempting to influence market sentiment.
• "Done for Effect": The price manipulation is described as being "done for effect," rather than a natural market correction.

Fundamental Drivers: Debt, Deficits, and Currency Debasement

The long-term case for gold and silver is strongly linked to the fiscal irresponsibility of the United States government.

• Enduring Fundamentals: As long as the fundamentals of debt, deficits, and currency debasement persist, the long-term case for precious metals remains intact. This is a consistent message echoed by market analysts.
• US Fiscal Irresponsibility: The US government's fiscal condition is described as "off the charts" and characterized by "non-stop continued deterioration."
• Government Shutdowns: The continued shutdown of the government is cited as a visible manifestation of this fiscal irresponsibility.
• Debt Accumulation: The US government added $1 trillion to its debt in just 71 days, bringing the total debt to approximately $38 trillion.
• Interest Costs: Interest payments on the national debt are becoming the largest budget item.
• Unfunded Liabilities: The massive and "disgusting" unfunded future liabilities are seen as unpayable without further currency devaluation.
• Debt to GDP Ratio: The US debt is rapidly approaching 130% debt to GDP, a level from which few countries (other than Japan) have recovered.
• Global Reserve Currency Status: The US's position as the world's reserve currency holder is seen as a factor that allows for a higher debt-to-GDP ratio than other nations, but this privilege is not limitless.
• Foreign Divestment: Foreign holders of US bonds and dollars are actively divesting their holdings and acquiring physical gold. This is a deliberate program to move away from US treasuries, executed at a pace that avoids spooking the market.
• "On the Down Low" Offtaking: The physical offtake from exchanges is being done subtly to avoid causing a market panic. This includes off-exchange acquisitions directly from miners and refiners.

International Shifts and the Yuan-Gold Connection

The global financial landscape is shifting away from the dollar-based system, with China playing a significant role.

• China's Financial Plumbing: China is actively building its own financial infrastructure to circumvent the US dollar system, which is no longer trusted.
• SIPs System: China's cross-border interbank payment system (SIPs) is seen as the "rails" for a new global financial order, already used by over 185 countries.
• Yuan Convertibility to Gold: A crucial aspect of SIPs is that yuan balances earned by countries (e.g., from selling oil or soybeans) can be converted into gold bars through the Shanghai Gold Exchange. This creates a "yuan-to-gold back door."
• Alternative to Dollar System: This system effectively offers an alternative to the dollar-based system, which since 1971 has been backed solely by trust and confidence.
• Slipping Confidence: Confidence in the dollar is seen as slipping on multiple levels.

Market Anomalies and Special Offers

The discussion touches on specific market anomalies and presents special offers from Miles Franklin.

• SLV Short Position: There is a significant short position on SLV, with over 83.86 million shares (representing 15% of outstanding shares) being naked short. This is seen as an attempt to drive down the price of the ETF.
• Contradictory Movements: The market is described as "very interesting, hard to decipher" due to the simultaneous paper price suppression and massive physical deliveries.
• "Eye-Opening" Movements: The combination of paper price drops and tremendous physical buying is presented as a clear signal of underlying strength.
• Miles Franklin Weekly Specials (October 27th - November 3rd, 2025):
  • 1oz Gold Valkcami Combi Bars: $215 over spot. These bars are designed to be broken into 1/10th ounce pieces, offering utility and popularity. Swiss gold bars are becoming expensive due to import threats.
  • 90% Constitutional Silver: 30 cents over spot per ounce. This is highlighted as an exceptional buy, especially compared to prices seen from 2020-2023 (over $9 over spot). It's considered the "smartest thing you can buy right now" in silver due to its barterability and potential for premium spikes. Dimes have ~1/14th oz silver content, quarters ~1/5th oz.
  • Assorted Silver Rounds: $2.99 over spot per ounce. This premium is considered unusually high, indicating a pricing anomaly.
• Value Comparison: The 90% constitutional silver is presented as a far better value than the silver rounds, silver eagles (over $8 over spot), or gold buffaloes (over $200 over spot), due to mint production limitations and high demand from "big money."

Conclusion and Final Thoughts

The conversation emphasizes the disconnect between the paper and physical precious metals markets, driven by fundamental economic issues and a global shift away from the US dollar.

• Synthesis: The current market conditions, with paper prices being driven down while physical demand surges, are indicative of a deliberate manipulation strategy. This is occurring against a backdrop of escalating US debt and deficits, which are eroding the dollar's value and prompting foreign entities to seek alternatives. The emergence of systems like China's SIPs, offering yuan-to-gold convertibility, further underscores this global shift.
• Actionable Insight: The extreme value offered in 90% constitutional silver at 30 cents over spot is presented as a rare opportunity, significantly outperforming other silver products and general market conditions.
• Final Warning: The unsustainable debt levels and fiscal irresponsibility of the US government are presented as a critical long-term risk, suggesting that the current market dynamics are a precursor to larger systemic changes.
• Personal Reflection: The host, Dunigan, shares a personal experience of a severe car accident, highlighting the fragility of life and the importance of treasuring each moment. This personal anecdote serves as a reminder of the unpredictable nature of life, mirroring the unpredictable nature of financial markets.
• Future Outlook: The rapid pace of events suggests that there will be ample topics to discuss in future market updates.