SILVER PRICE ALERT! Will We See $100 Silver In 2026? - David Morgan

Key Concepts

• Silver Market Dynamics: Discussion of current price movements, historical precedents, and factors influencing silver prices.
• CME Silver Delivery Rules: Explanation of the CME's regulations regarding deliverable supply and position limits.
• Buffett's Silver Purchase (1999): A historical case study of a significant silver accumulation and its market impact.
• Short Squeeze: Analysis of whether the current market conditions constitute a short squeeze.
• Physical vs. Paper Silver Markets: Distinction between the actual silver available for delivery and futures contracts.
• Chinese Silver Market: Emerging role and potential influence of the Chinese market on global silver dynamics.
• Base Metal Mining and Silver Production: The impact of silver being a byproduct of base metal mining on its market control.
• AI Impersonation: Warning about AI-generated content mimicking the speaker's voice and likeness.

Silver Market Dynamics and Historical Context

The discussion centers on the recent surge in silver prices, with the price surpassing the $56 and approaching the $57 mark. This upward pressure is attributed to significant buying activity. To understand the current situation, the conversation revisits Warren Buffett's silver purchase in 1999. At that time, Buffett accumulated silver gradually. Subsequently, a massive move occurred, leading to Buffett's acquisition of approximately 130 million ounces of silver off the COMEX. Of this, about 90 million ounces were delivered immediately, while 40 million ounces experienced delays. These delays caused lease rates to spike until the delayed silver was delivered to London. This event led to the initiation of the SLB (Silver Lending and Borrowing) through JPM with 130 million ounces of silver. A rule was subsequently implemented limiting deliveries to 3,000 contracts (approximately 15 million ounces), though this limit's duration is unclear.

CME Silver Delivery Rules and Deliverable Supply

A key point of discussion is the CME's rule regarding deliverable supply. According to the CME, in the spot delivery month, no single trader can hold or control more than 25% of the CME's estimated "deliverable supply" of silver. Deliverable supply is defined as the sum of "registered" silver (ready for immediate delivery) and "eligible" silver in CME-approved warehouses. The "registered" amount is crucial as it represents silver that has been inspected and is available for delivery. The "eligible" silver is also available for delivery but requires the owner to consent to its sale, often through an electronic process.

The allowable deliverable position is dynamic and fluctuates with the total amount of silver in these two categories. If the warehouse supply shrinks, the maximum allowable deliverable position also shrinks. For instance, if the registered category has 150 million ounces, 25% of that is the limit. In the subsequent month, if the registered amount decreases to 100 million ounces, the limit becomes 25% of 100 million ounces, which is 25 million ounces. This means the allowable deliverable amount can decrease month over month. The speaker notes that the registered silver has been below 30 million ounces on several occasions, which is considered a small amount and could potentially lead to a squeeze. Historically, when registered silver dropped below 30 million ounces, it did not remain low for extended periods; significant imports of silver would typically replenish the registered category.

Current Market Speculation and Delivery Capacity

The conversation addresses rumors of a large buyer acquiring 100 million ounces of silver and taking delivery. The question arises about the percentage of this purchase that can be taken for delivery under the CME's 25% rule.

As of the discussion, the "registered" category of silver is 138 million ounces. Therefore, 25% of this amount is approximately 34.5 million ounces (calculated as 138 million * 0.25). This is the amount that could theoretically be taken for delivery in the current month. If this amount is taken, the remaining registered silver would be around 103.5 million ounces (138 - 34.5). In the following month, 25% of this reduced amount would be the new limit. The speaker recalls instances where the registered silver fell below 30 million ounces, and this situation persisted for a couple of months, raising concerns about a potential squeeze. However, eventually, silver was imported, and the registered amount increased.

The total amount of silver currently in COMEX warehouses is approximately 450 million ounces, which is noted as being significantly larger than the average. This data can be accessed on websites like Nick Lar Lar's Gold Charts R Us.

Sustainability of Price Increases and Potential Corrections

The sustainability of the current vertical price movement in silver is questioned. The speaker expresses a general caution regarding prolonged vertical moves, as they often lead to exhaustion and a subsequent correction. Historical data from 1975 to the present shows significant spikes followed by declines, such as in the 1970s-1980s and around the 2008 financial crash.

The recent price surge, particularly in the last few days, is partly attributed to the end-of-month rollover of futures contracts. During this rollover, professionals move their positions to the next delivery month. This time, it appears that a significant portion of short positions were bought back to mitigate losses, contributing to the upward price pressure. The speaker characterizes this as a technical short squeeze, but questions its long-term sustainability.

The speaker emphasizes that for the market to stabilize, the physical market must clear and meet demand. Reports suggest that the Chinese market is currently low on silver, and new facilities are being established in Hong Kong and Dubai, potentially shifting the clearing integrity away from London and COMEX.

Control and Fairness in the Silver Market

A significant concern raised is the control and fairness of the silver market. Approximately 70% of silver production comes from base metal miners, where silver is often a byproduct. Large conglomerates like Rio Tinto and BHP are perceived as not prioritizing silver, treating it as a minor accounting entry. These companies are described as being in partnership with bullion banks, allowing them to manage their silver supply. This dynamic raises questions about who truly controls the fairest market. The speaker surmises that London likely holds significant influence in this regard.

The speaker expresses concern about a potential scenario where silver prices spike to $65 per ounce and then rapidly decline within weeks, creating a significant correction. This uncertainty puts pressure on individuals who follow market analysis and trust experts in the field. The decision of whether to exit positions during a spike is difficult, and the speaker admits to not having a definitive answer.

Conclusion and Future Outlook

The ideal scenario for silver market stability would involve clearing the market, achieving price stability, and the physical market meeting demand. However, the current situation does not appear to be heading in that direction. The speaker acknowledges that the market can surprise anyone, even seasoned observers.

The conversation concludes with a recommendation to visit The Morgan Report website (themorganreport.com) for genuine information, as there are concerns about AI-generated content mimicking the speaker's voice and likeness. The speaker also mentions having control over their Twitter account, which should contain legitimate information.

Disclaimer and Contact Information

The video includes a promotional segment from Michael Pachone of Can-Am Bullion, highlighting their services as a precious metals dealer, authorized dealer of the Royal Canadian Mint, and their commitment to customer service, evidenced by a five-star Google rating, Shopper Approved seal, and an A+ BBB rating. They offer free, no-obligation consultations.

David Morgan can be reached via his website, themorganreport.com, and by signing up for their free email list. He also advises caution regarding AI-generated content impersonating him.