Silver Remains In Backwardation, Indicating Short Squeeze Isn't Over

Here's a summary of the YouTube video transcript:

Key Concepts

• New Orleans Investment Conference: A gathering of investors and industry professionals.
• Gold and Silver Markets: Discussion of current pricing, supply/demand dynamics, and market sentiment.
• London Silver/New York Silver Spread: An indicator of silver market tightness.
• COMEX Withdrawals: Significant amounts of silver leaving the COMEX exchange.
• LBMA (London Bullion Market Association): A key player in the global precious metals market.
• Central Bank Gold Buying: Increased purchases of gold by central banks.
• Shanghai Futures Exchange (SHFE) Gold Stocks: Growing gold holdings on China's futures exchange.
• IRS Tax Code: Discussion of its voluntary nature as per IRS manuals.

Conference Overview and Market Sentiment

Chris Marcus is reporting live from the New Orleans Investment Conference, noting a different and optimistic vibe compared to his last visit in 2019. He attributes this shift to the current pricing of gold and silver, which has alleviated some investor doubts about the metals' performance over time.

Gold and Silver Pricing Update

As of the recording, gold futures were trading at $39.43, and silver futures at $46.90. The spot price for silver was $47.17. Both metals were down for the day, having recently approached higher highs (gold near $4,400, silver spot touching over $54).

London Silver/New York Silver Spread and COMEX Withdrawals

A key focus is the London silver to New York silver spread. The spread had previously blown out to nearly $3 (backwardation, where spot price is higher than futures) due to a shortage of silver in London. While it normalized briefly last week, it has since returned to backwardation.

Since October 9th, approximately 40 million ounces of silver have been withdrawn from the COMEX. Additionally, Reuters reported that 100-150 tons (3-5 million ounces) of silver left China about two weeks prior. In total, an estimated 45-50 million ounces have moved out.

Marcus highlights that with a free float of around 150 million ounces available to the LBMA and a daily turnover of about 250 million ounces, the removal of 45-50 million ounces creates a significant shortfall. This is occurring amidst a market deficit, suggesting the issue is not resolved.

Robert Gotautle, former Managing Director of JP Morgan's gold and silver desk, estimated that London needs an additional 100-150 million ounces of physical silver for the market to normalize, indicating a current shortage of at least 50 million ounces.

Recent Price Action and Historical Precedent

Silver's spot price reached a peak of $54.50 but has since declined by about $7. Marcus compares this sell-off to a similar one in April following reciprocal tariffs, where silver dropped from over $35 to under $28 before soaring shortly after. He suggests that while this sell-off is significant, it doesn't necessarily mean the underlying conditions that drove the price higher have been resolved. He points to the rapid rise from $38 on August 18th to over $54 by October 15th (a nearly 50% move in less than two months) as evidence that such sharp declines can be followed by recoveries. He also recalls silver falling to under $12 in March 2020 and then soaring to $29 a few months later.

India's Silver Demand and Potential Pent-Up Demand

Marcus mentions a private communication indicating that the silver supply issue in India has been mitigated. He plans to investigate further. He notes that India was buying silver at a time when they traditionally don't due to elevated prices, and then they ran out. He posits that this scarcity could lead to pent-up demand once silver flows resume to India.

China's Export Restrictions and Central Bank Gold Buying

Vince Lanci reported that China has tightened its grip on silver exports. Announcement 2025-68 from the Ministry of Commerce of the People's Republic of China imposes stringent conditions on the export of tungsten, antimony, and silver for the period of 2026-2027.

Separately, Money Metals reported that central bank gold buying reached its highest level of the year in September. So far in 2025, central banks have acquired 634 tons of gold, with an estimated annual pace of 844 tons. While this might be lower than the 1,000+ ton additions of the previous three years, it remains elevated compared to the pre-2022 average of 400-500 tons.

Shanghai Futures Exchange Gold Stocks

Marcus highlights a significant increase in gold stocks on the Shanghai Futures Exchange (SHFE). From just over 2.5 tons a year ago in 2024, holdings have risen to 87.015 tons in 2025, indicating substantial activity in China.

IRS Tax Code Discussion

Marcus briefly mentions a popular video titled "Why the IRS Manual Repeatedly Calls Its Own Tax Code Voluntary." He notes its high initial viewership and recommends it for those interested in government policies, suggesting it contains information of significant interest that governments may not readily share.

Conclusion and Framework for Decision-Making

Marcus concludes by reiterating that the situation with the London silver market is not over, despite recent price pullbacks. He offers a framework for investors: consider the long-term outlook (5-10 years) for gold and silver prices given current global events. This long-term perspective, he suggests, can help inform decisions about buying or selling in the short term. He expresses optimism about the conference and the insights gained.