SILVER Shorts Squeezed to Death, Prices 'We Can't Imagine' Ahead: Ed Steer

Key Concepts

• Manufactured Correction: A price decline in a commodity that is not driven by fundamental market forces but by deliberate intervention, such as by bullion banks.
• Structural Deficit (Silver): A persistent imbalance where the demand for silver exceeds its supply, leading to a drawdown of existing inventories.
• Bullion Banks: Large financial institutions that play a significant role in the precious metals market, often acting as market makers and holding large short positions.
• Commitment of Traders (COT) Report: A weekly report published by the U.S. Commodity Futures Trading Commission (CFTC) that shows the positions of different types of traders in futures markets.
• Short Covering: The act of buying back a previously sold short position to close it out, which can drive prices higher.
• LBMA (London Bullion Market Association): A trade association that sets standards for the London bullion market and acts as a clearinghouse for precious metals transactions.
• COMEX: A commodity futures exchange operated by the CME Group, where precious metals are traded.
• Lease Rates: The cost of borrowing a commodity, which can increase when supply is tight.
• Critical Minerals List: A list compiled by governments of minerals deemed essential for economic and national security.
• Fiat Currency: Currency that a government has declared to be legal tender, but it is not backed by a physical commodity like gold or silver.
• Remonetization: The process by which a commodity, like gold, regains its status as a medium of exchange or store of value.
• BRICS Nations: An association of five major emerging national economies: Brazil, Russia, India, China, and South Africa.
• Hegemony: Leadership or dominance, especially by one country or social group over others.

Manufactured Correction in Silver and Bullion Bank Manipulation

Ed Steer argues that the recent correction in silver prices was not a natural market pullback but a "manufactured one." He attributes this to bullion banks, who were heavily short the metal, panicking and using all their resources to suppress the price. This intervention, Steer believes, is temporary, as the underlying fundamentals for silver point to significant future price appreciation.

Key Points:

• Timing: The silver price began its ascent shortly after Steer's last conversation with Jesse Day on August 22nd, reaching a nominal all-time high of $54 before correcting.
• Catalysts for the Rise: The price surge was driven by a combination of factors including the U.S. debt exceeding $38 trillion, discussions of interest rate cuts, and general currency depreciation as the fiat currency system is perceived to be nearing its end.
• Expert Endorsements: Major financial institutions like JP Morgan and Morgan Stanley, along with figures like Ray Dalio, have recommended holding 10-25% of portfolios in gold, signaling a broader recognition of precious metals' value.
• Silver's Structural Deficit: Silver is in a structural deficit, meaning demand consistently outstrips supply, which is a fundamental driver for higher prices.
• Bullion Bank Intervention: Steer explicitly states that if "bullion banks and the whole bunch of crooks hadn't stepped in," silver and gold prices would be at "fantastic prices." The correction is described as a "manufactured correction" or a "wash, rinse and spin cycle."
• Short Squeeze Dynamics: The rally exhibited characteristics of a short squeeze, with significant short covering occurring. This is evidenced by the decline in gold and silver open interest.
• Data Limitations: The U.S. government shutdown prevented the release of Commitment of Traders (COT) reports since September 23rd, making it difficult to ascertain the exact under-the-hood market dynamics.
• Magnitude of Short Positions: Commercial traders, primarily bullion banks, are estimated to be short approximately $60 billion worth of silver in the COMEX futures market.
• Historical Context: Steer references Ted Butler's "The Bonfire of the Silver Shorts" article, suggesting a similar scenario where shorts are being squeezed.
• Recovery Potential: Despite the correction, Steer anticipates silver will reach new highs once this "managed correction" concludes, citing the persistent silver deficit. He notes that silver has nearly doubled in price since its April low of around $27 an ounce.

LBMA Silver Inventories and Supply Chain Strain

The discussion highlights a critical situation regarding silver inventories at the LBMA, indicating severe supply constraints.

Key Points:

• LBMA Ran Out of Silver: The LBMA experienced a situation where they "basically ran out" of silver that had no claims on it, meaning they had no readily available physical metal to deliver.
• Indian Demand: A significant factor contributing to the LBMA's shortage was a large purchase by India in September, which involved approximately 31 million ounces of silver, delivered in October.
• Lease Rates Skyrocketed: The scarcity of silver led to a sharp increase in lease rates, making it very expensive to borrow the metal.
• Emergency Shipments: To meet demand, silver had to be flown in from various locations, including Switzerland, the United States (COMEX), and even the Shanghai Futures Exchange.
• COMEX Inventory Shifts:
  • September: 27 million ounces shipped into COMEX, 14 million shipped out.
  • October: 10 million ounces shipped into COMEX, but over 58 million ounces shipped out, primarily to London to replenish LBMA stocks.
• Precarious Inventory Levels: Steer estimates the LBMA had only about 10-30 million ounces of "float" left after the crisis, and with the ongoing deficit, this will be quickly depleted.
• Silver Deficit: The Silver Institute projected a deficit of around 150 million ounces for the year, underscoring the fundamental supply-demand imbalance.
• Avoiding Default: The LBMA's efforts were aimed at preventing a default, but Steer believes this is merely delaying the inevitable due to the persistent deficit.

Retail Bullion Dealer Inventory Shortages

The conversation extends to the retail side, confirming widespread difficulties in obtaining physical silver.

Key Points:

• Product Availability Issues: Bullion dealers are experiencing problems getting product, with some describing physical silver as "going extinct."
• Royal Canadian Mint Restrictions: The Royal Canadian Mint reportedly sold its entire gold inventory to a large buyer and is now only producing Maple Leaf coins.
• Royal Mint (UK) Issues: The Royal Mint in England is facing similar supply challenges.
• U.S. Mint Delays: The U.S. Mint has been unusually slow in reporting its October sales figures.
• Retail Sales Surge: Retail bullion sales "went absolutely crazy" in September and October as prices rose, leading to inventory depletion for retailers.
• Keith Neumeyer's Experience: Keith Neumeyer of First Majestic Silver reported September as their biggest sales month ever, though his company, being a miner, has a more direct supply chain.

China's Tightening Export Controls on Silver and Other Metals

New export controls from China are discussed as a significant development impacting global metal supply.

Key Points:

• New Export Supervision Catalog: On October 26th, China's Ministry of Commerce announced that tungsten, antimony, and silver would be added to its key export supervision catalog starting November 2025.
• Quota Review and Joint Approval: Exports will now require quota review and joint approval, replacing the previous self-reporting system.
• Tightened Oversight: These controls represent a tightening of export oversight through 2027, not a relaxation.
• U.S. Critical Minerals List: The U.S. is considering adding silver to its draft critical minerals list, which could further influence export dynamics.
• China's Low Inventories: Steer notes that China's combined silver inventories on the Shanghai Futures Exchange and Shanghai Gold Exchange are at their lowest levels since Q1 2017.
• Confluence of Factors: This development, combined with low LBMA and Shanghai exchange inventories, and potential U.S. critical mineral designation, creates a powerful confluence of forces pointing to higher silver prices.
• Stockpiling Challenges: Steer questions where the U.S. would source silver if it decides to stockpile, given the global supply constraints.

Gold Market Outlook and Central Bank Accumulation

The discussion shifts to the gold market, drawing parallels with silver's price action and highlighting central bank buying.

Key Points:

• Gold's Price Trajectory: Gold also experienced a rapid rise to around $4,400 before a dip to approximately $3,900, which Steer views as a "blip on the radar" given strong fundamentals.
• Gold as "King of Money": Gold is described as the "king of money," with silver as the "queen."
• Central Bank Buying: Central banks globally are actively accumulating gold, with reports of 39 tons purchased in September alone. This is seen as preparation for the eventual end of the fiat currency system.
• COMEX Gold Inventory Drain: In October, a significant amount of gold was shipped out of the COMEX: 457,000 ounces received, but 2,562,000 ounces shipped out. This is interpreted as gold flowing to London.
• London Gold Inventory Concerns: While London claims ample gold inventories, Steer suspects these are also becoming "skinny" due to the strong demand and outflows from COMEX.
• Shift from Fiat to Hard Assets: The demand for gold has surged as investors move away from fiat currencies and towards hard assets.
• Potential for Gold Shortages: Steer anticipates that shortages in gold are not far off, mirroring the situation in silver.

Canada's Lack of Gold Reserves and Deliberate Policy

The conversation delves into Canada's unusual position of having no gold reserves at its central bank.

Key Points:

• No Gold Reserves: The Bank of Canada holds no gold, and Steer believes there are no plans to acquire any.
• Vassal State Status: Canada is described as a "vassal state of the US," implying its policies may be influenced by American directives.
• Past Holdings: Canada previously held 660 tons of gold, which was sold off in the 1980s and 1990s.
• Nationalization Unlikely: Steer does not foresee Canada nationalizing gold mines due to its democratic institutions.
• Government Stake in Mines: A possibility is the government taking a stake in gold mining companies or mandating sales to the government.
• Deliberate Policy: Steer asserts that Canada's lack of gold reserves is a "deliberate policy," not a result of ignorance. He believes policymakers are aware of global central bank accumulation of gold but choose not to participate.
• Currency Devaluation: The Canadian dollar's weakness against the U.S. dollar ($1.41 CAD to $1 USD) is cited as evidence of the country's deteriorating economic situation.

The Fiat Currency Experiment and the Decline of the U.S. Dollar

The discussion broadens to the global fiat currency system and the future of the U.S. dollar.

Key Points:

• End of the Fiat Experiment: The fiat currency system, in place since 1971, is seen as unsustainable and nearing its end.
• U.S. Dollar's Declining Role: While still the world's reserve currency, the U.S. dollar's value and importance have been declining for decades, a process that is now accelerating.
• Gold's Remonetization: Gold is becoming the second-largest currency globally, surpassing the Euro, indicating its remonetization.
• BRICS and Gold-Backed Currency: The BRICS nations are working on alternative payment systems that will heavily involve gold, with China leading the charge.
• U.S. vs. BRICS: The U.S. has declared "war" on BRICS nations, engaging in actions against Venezuela, Nigeria, and Russia. This is framed as a conflict between a declining West and an ascending East and Southern hemisphere.
• West's Losing Battle: The U.S. and its allies are fighting a losing battle to maintain their hegemony, a struggle that will ultimately lead to the West's decline and the East's ascendancy.
• Consequences for the West: The U.S.'s desire to remain the "indispensable nation" will come at a significant cost to the West.

Authoritarianism, Debt, and the Collapse of the System

The conversation explores the link between rising government authoritarianism, unsustainable debt, and the potential collapse of the current monetary system.

Key Points:

• Tipping Point: The current situation is characterized by untenable government debt and unfettered fiat currency creation, suggesting a tipping point has been reached.
• Authoritarian Tendencies: Governments are becoming more authoritarian as currencies debase and economies decline, potentially as a means to control populations before a systemic collapse.
• Historical Precedent: No fiat currency in recorded history, not backed by a tangible asset, has survived long-term.
• Gold and Silver as Safe Havens: Despite government actions, gold and silver are seen as international currencies that will allow holders to survive and thrive through the impending crisis.
• Ugly Ride in the West: The transition is expected to be "very ugly" for the vast majority of people in the West.

Geopolitical Conflicts and the Dying Empire

The discussion touches upon current geopolitical conflicts and their connection to the decline of Western powers.

Key Points:

• U.S. Involvement in Conflicts: The U.S. is involved in various conflicts, including Russia-Ukraine, Israel-Palestine, Venezuela, and threats against Nigeria.
• Motivations: These actions are driven by a combination of factors: a dying empire's struggle for resources, maintaining global superpower status, and the broader East-West conflict.
• Losing Battle: The U.S. is engaged in a losing battle to maintain its hegemony, a war it has already lost, with the only question being how long it can prolong the inevitable decline.
• Historical Parallels: The decline of the U.S. is compared to the fall of the British Empire and other past empires.
• Prolonging the Inevitable: The period between now and the ultimate "rock bottom" is expected to be "very ugly."
• Citizen's Survival Strategy: The only recourse for citizens is to protect themselves by acquiring precious metals and holding on through the turbulent times.

Ed Steer's Gold and Silver Digest

Ed Steer promotes his publication, "Ed Steer's Gold and Silver Digest."

Key Points:

• Subscription Details: The digest offers approximately 260 columns per year, five days a week, for $100 USD.
• Free Sample: A free sample column is available on his website.
• Website: Readers can find his website by Googling "Ed Steer Gold and Silver."