Who's Buying All The Silver - Physical Market Dominating | Andy Schectman

Key Concepts

• Dollar Devaluation: The belief that the US dollar is losing value due to monetary policy and global shifts.
• Genius Act: A pending US law intended to synthetically lower short-term interest rates.
• Comex Deliveries: Physical delivery requests fulfilled through the COMEX (Commodity Exchange Inc.) silver and gold markets, seen as an indicator of real demand.
• East vs. West Price Discovery: The divergence in precious metal pricing between Eastern (primarily Chinese) markets and Western markets, suggesting differing valuations.
• Bank Positioning: The net long/short positions of US and non-US banks in precious metals futures, indicating potential market pressures.
• Rehypothecation: The practice of using collateral received for one transaction as collateral for another, raising concerns about systemic risk in the precious metals market.
• Physical vs. Paper Markets: The distinction between the actual physical supply and demand for precious metals and the trading of derivatives and futures contracts.
• Central Bank Activity: The role of central banks in repatriating gold and potentially influencing precious metal prices.

Precious Metals Market Update: January 12th, 2026 – Andy Schechtman & Kaiser Johnson (Liberty & Finance)

This discussion, featuring Andy Schechtman (Miles Franklin Precious Metals) and Kaiser Johnson (Liberty & Finance), analyzes the current state of the precious metals market, focusing on gold and silver, and the broader financial landscape as of January 12th, 2026. The conversation centers on the potential for significant price increases in precious metals, driven by factors including monetary policy, geopolitical tensions, and shifts in global power dynamics.

I. Monetary Policy & The Federal Reserve

The core argument revolves around the belief that current US monetary policy, specifically the desire for lower interest rates, is detrimental to the long-term health of the financial system. Trump’s potential replacement of Jerome Powell as Fed Chair is discussed, with the understanding that a new chair would likely push for lower rates. Schechtman argues this is counterproductive, as it perpetuates asset price distortions and misallocation of capital.

The impending “Genius Act,” designed to synthetically lower short-term interest rates, is viewed with concern. Goldman Sachs’ prediction that gold will go “parabolic” if the Fed loses independence is cited, reinforcing the idea that market confidence in the dollar is eroding. Schechtman believes the Act, combined with a lack of quantitative tightening, will further erode confidence in the dollar, leading to increased demand for alternative assets like gold and silver. He states, “Unless they’re going to embark upon yield curve control… it’s not a good thing.”

II. Global Shifts & The Decline of the Dollar

A significant theme is the growing movement away from the US dollar as the world’s reserve currency. Schechtman highlights the increasing trend of nations dumping US Treasuries and seeking alternative settlement routes. He posits that the devaluation of the dollar, coupled with continued suppression of interest rates and quantitative easing, incentivizes this shift. He emphasizes, “You’re silly to hold dollars. Its value is akin to a melting ice cube.”

The repatriation of gold by central banks, particularly from the Bank of England and the New York Fed, is presented as evidence of this trend. This reshoring of gold is seen as a strategic move to reduce reliance on the US financial system. The discussion also touches on the “BRICS plus” influence, suggesting that a coordinated effort by emerging economies to move away from the dollar will accelerate the divestiture from US Treasuries and into hard assets.

III. Precious Metals Market Dynamics: Silver & Gold

The conversation focuses heavily on the unusual activity in the physical precious metals markets, particularly silver. Record-breaking delivery volumes on the COMEX in December 2025 (376,000 ounces of gold and 64,730,000 ounces of silver) are highlighted as a key indicator of strong underlying demand. Schechtman notes that the December silver deliveries were the largest in COMEX history (since 1974). January 2026 is already showing similarly high delivery numbers, with 35 million ounces delivered in the first week of trading.

This surge in physical demand is contrasted with the paper market, where large banks are reportedly taking short positions. Schechtman explains that this dynamic creates a potential for a “short squeeze” and a rapid price increase. He states, “When that happens, the move will be fast and disorderly.” He also points out a temporary anomaly in the pricing of “junk silver” (90% silver US coinage), which has been trading at lower premiums due to strategic buying by companies like Miles Franklin. He believes this anomaly will correct as refiners clear backlogs and demand increases.

IV. Bank Positioning & Systemic Risk

A crucial point is the shift in bank positioning, as revealed by the latest CFTC Bank Participation Report. US banks are now largely net long in precious metals, while non-US banks are heavily net short. Schechtman connects this to a theory proposed by Tom Luongo, suggesting that Trump is intentionally creating conditions to destabilize European banks through a failure to deliver on short positions.

The discussion highlights the risks associated with rehypothecation – the practice of using collateral multiple times – in the precious metals market. Schechtman warns that a failure of a major bank could trigger a systemic crisis. He notes that the ratio of outstanding COMEX contracts to available physical silver is extremely high (approximately 15:1), raising concerns about the ability to settle all contracts.

V. Price Discovery & The East-West Divide

Schechtman emphasizes a growing divergence in price discovery between Eastern and Western markets. He notes that the Shanghai market consistently prices metals higher than Western spot and futures markets, indicating a stronger valuation based on physical demand. He believes this spread is a signal of tightness in the physical market and that the East is now driving price discovery.

He proposes a potential scenario where the US pegs the back end of the Treasury market to gold, allowing the dollar to devalue while keeping interest rates low. However, he cautions that this would require a significant increase in the price of gold, potentially leading to a loss of US gold reserves.

VI. Weekly Specials & Final Thoughts

Miles Franklin’s weekly specials are announced: 1oz Silver American Eagles at $8.80 over spot and 1oz Gold Eagles at $185 over spot (January 12th – 19th, 2026).

Schechtman concludes by reiterating his long-term conviction in precious metals, acknowledging the potential for volatility but emphasizing the underlying fundamental drivers of demand. He encourages investors to be cautious in the short term but to maintain a long-term perspective.

Miles Franklin Contact: 1-888-881-LIBERTY (1-888-881-54237) Liberty & Finance Website: libertyandfinance.com