So if the banks are hedged 1 to 1, unless they have taken ownership of some of the silver that went to the COMEX, that means there’s about 7.5 million ounces in the free float available in London. Well, hello there, my friends, and good afternoon. On Tuesday, June 10th, Chris Mark is here with you for Arcadia Economics and a rather exciting story to dig into on the silver side as you’ll find out momentarily that the banks and their silver short position has once again set a new record for second place, very close to the first place record set back in June.

We’ll be right back in July of 2016, coincidentally, right as silver had reached 21 after rallying from 14 earlier that year, then as the bank set that record short position, the price tumbled after that and we will dig into all that and more because as has been happening quite a few times in the past three quarters of a year, that short position has gotten pretty big and we’ll take a look at that. Although quick look at the gold and silver pricing where here we see gold down to 33.41, down 13 dollars on the day. I know what is going on.

Why is gold not up today? Here we see a week ago up at 34.24, so about 80 bucks lower. And we’ll see when the next leg of the rally continues or if, although I think that in some ways is very healthy just to see gold price been going sideways for the better part of since the end of April. See right there up at 34.20 back in April 21st, so almost two months ago now and to the degree that things don’t normally go up in a straight line. And also the fact that unlike the teens decade where, you know, when you would see a correction in 2016 or 2017, you had the opportunity and pleasure of feeling that one for a couple weeks, months or years it felt like.

So anyway, gold hanging in there and silver down to 36.60 after really a big past week. Here you see back on May 30th, just a week and a half ago, down 32.98 was the close. So had touched $4 higher, got over $37 recently. In fact, that was just yesterday. First time since I believe February 29th of 2012 that silver has been over $37. And also just quick thought here. Take a look back. We’ll leave that 2011 for now, but I know people like to say, well, silver is still for a while was half or less of its 1980 high at 50 bucks.

Although again, a lot of unusual things happening in this scenario. And keep in mind that the silver price was only at that level for about two days. So that was a very brief spike. Yes, obviously the liquidation only had a lot to do with that as well. But I wonder sometimes if like in terms of what we’re thinking of what silver really functions at with its true supply and demand profile. If this was a liquidity event and certainly there were liquidity elements involved in 2011 as well. So I don’t know is comparing it to $50 when we can see here that we’re really from early 1970 to 2000 silver was around four or five dollars.

So again, and you know, obviously I think there was concern certainly by the Hunt Brothers and others about what was happening after a decade of stagflation. Yeah, I don’t know is this similar to comparing nickel to the spike high when there was a short squeeze, which is not to say that it’s not an important data point and that didn’t happen but either case. Interesting when we see this here. We’re in rare territory and this spike goes higher but only the third time that we have ever been there. And as I know I’ve been highlighting for our main event here.

See how the short position can affect that quick look at the dollar index back over 99 still under par and treasury yields continue to sit around that 450 level. Let’s take a basically almost a year now we’ve had some diversions and certainly someone recently after the reciprocal tariffs. But anyway, there is the 10 year yield at 447, which even Jerome Powell has born. You might see that higher. Think when you look at the big beautiful bill, the fact that Elon came in to cut spending walked out saying the bill was Joe. Good chance you’re going to see those yields higher at some point unless the Fed just buys everything in which case we’ll continue to see the dollar go lower.

Might also add that it’s not just me saying dollar lower. I mean, most everyone in the Trump cabinet has alluded to it in some form or another, let alone Stephen moron’s paper that 41 pages talking about the overvaluation of the dollar along with evidence that some of those parts of that plan that he wrote up there could be getting implemented. Anyway, we’ll see how it goes. The bond market or the dollar, that’s the choice which will they sacrifice. I say they keep the bond market nominally functioning, but the dollar do what they say they want it to do and have the ability to do.

And I imagine will do, which is to get the dollar lower, which does not necessarily mean that it won’t be the reserve currency. And you may even be able to buy an equal amount of euros, yen’s or fill in your other favorite paper currency. Yet in terms of the goods you can buy, that’s the different questions. And now on to our main story, which we can see here as yesterday’s solar did break $37 and perhaps equally more or less significantly is that as you see here, the bank short position. Has grown to its second largest level.

Here is the obviously there’s the zero line so below here and that was 49,609 contracts short in July of 2016. That’s just under 250 million ounces at 5000 contracts per ounce. And then you can see basically this is the fourth time we’ve set a new second place entrant since late last year. I think that first one was September. So the banks have been getting very short silver slightly different picture in gold where they have come off the highs. And as you may remember, a couple of weeks ago, I mentioned how it had come in right there.

Got back down to 20,000 contracts short and it has blown out since then as the price has risen. And I’ll give the full perspective here because there’s two different schools of thoughts. One is that short position grows so that then you can hammer the price, buy it back cheaper, which I might add, as you’ll see in a moment, is what Bart Scholten confirmed. Former CFTC commissioner who was presiding over an investigation during that time period that would later lead to JP Morgan getting fined $920 million. Now, the other school of thought is that, well, that’s how the COMEX works.

The funds are buying someone has to sell. So they open the contracts, the banks get short and the price rises if the funds are buying, pushing it up. So as the price goes higher, they’re naturally going to be left with that short position. And yes, there is certainly truth to that, although as is the case with many things in life, lots to be said for the nuances. So let me give a quick snippet of a younger looking Chris here talking with former CFTC commissioner Bart Scholten. And you can hear for yourself what he had to say.

Again, I appreciate you mentioning the spoofing. I’m curious because my understanding of how some of the manipulation has occurred is that Silver is trading $20.05. There’s a lot of stop orders placed around the $20 handle. So often if the price can get pushed a little bit, then you get a lot of those high frequency algorithms kicking in. And then you’ll see a drop with many feeling that people kind of nudging a little are then able to buy lower. Does that sound like a reasonably accurate portrayal to put it in perspective to folks or would you phrase it differently? Well, it’s a good portrayal, but it’s actually it’s a very good portrayal.

But it’s actually also a reflection of what I was just speaking, speaking about of how trading has changed. And I’m going to fast forward here because he goes through the dynamics and basically describes what we learned, what they called spoofing. But many silver market viewers would call hammering the bids or in either case, talks for about two minutes describing how it works. And then I’ll just play this last summation he has here. So the difference in your description is that today when a market moves because of a spoof, it can move a lot more. And I’m sure that’s something that people can associate with.

And we’ll show an example because there’s a few things and what has happened in this process. Again, I don’t have the trading records. I don’t know which bank trader did what yet. If we take a look down here, you know, we had this short position before the record that was set on Friday had gotten to a new record here. You might add that was right as Robert Gottlieb, former J.P. Morgan Precious Metals managing director, mentioned that swap dealers positions for the CFTC are extremely alarming and someone may be taking a huge position and be very exposed.

Maybe it was a coincidence, but silver is at 35 bucks at the time of the reciprocal tariff announcements a week later. And so right after the former J.P. Morgan Precious Metals managing director said positions are really large. Someone may be exposed if that was indeed the case. And they got bailed out when silver went from thirty five dollars to about twenty eight dollars and twenty six cents within a week on news that was largely priced in. So anyway, if we go back up here, you can see after that the banks covered a lot of contracts position got down to just about thirty thousand contracts.

And since then, including on last Friday’s C.O.T. report, about sixty seven hundred net short combined the longs that were subtracted. Net shorts added comes to about a sixty seven hundred contract increase in the net short position, which brings us back up here to our current total of forty five thousand and seven hundred six contracts, which again is just short of the record of forty nine thousand six hundred nine contracts in July of 2016. Speaking of which, let’s take a look at that chart here, because here is the silver price. You see, it’s fourteen bucks in December of twenty fifteen into the beginning of twenty sixteen.

As the price goes up, here is where the record short position was hit right at the top there. So now I know Robert and others mentioned that this is just offsetting the physical positions in London. And so this is all hedged for what it’s worth just pointing out here. When you had the green line got to its peak, negative reading happens to coincide right there. So that could have fit the description that Bart mentioned when we saw silver breakthrough twenty. I think actually the number I used in my example, but let’s say that Robert’s correct and that this is hedge one to one.

That raises another interesting question, because if you look here now, obviously, we know that a lot of silver left London and has gone to the COMEX. Now, maybe the banks are owning some of the metal in the COMEX. But aside from that possibility, you see here’s total LBM a London silver holdings. The gray is what’s accounted for by the ETFs. The green is what’s left over. So sixty six hundred ninety two tons that comes out to two hundred thirty six million ounces in the free float as of the end of April. But if the bank short position, which is now forty five thousand and seven hundred six contracts short at five thousand contracts an ounce, ounces per contract rather, that would mean that their hedge would represent two hundred twenty eight point five million ounces, theoretically leaving the free float at seven and a half million ounces.

So if the banks are hedged one to one, unless they have taken ownership of some of the silver that went to the COMEX, that means there’s about seven and a half million ounces in the free float available in London. You can see which one of those assumptions is incorrect. Maybe Robert. I think Robert, I don’t think he’s lying, and I think there are hedges yet. If they were all hedged, why would he be concerned and find the swap dealers positions for the CFTC extremely alarming? And why would someone who had taken a huge position be very exposed if they’re hedged? So I would assert and based on the people I’ve talked to, I’m not saying Robert is wrong.

I don’t know. I would bet against it being a one to one hedge. And I might also add that after the silver squeeze back in twenty twenty one, the LBMA wrote a report then where they said fears emerged as to whether there was enough silver should demand continue at this pace. That had demand and had the demand continued at that frenetic rate would have only been a matter of weeks before London’s existing stock was used up. Since then, we’ve run yearly deficits. We’ve seen metal leave London, and these are the numbers of what would be in the free float if that position is hedged.

And ultimately, perhaps most importantly, you know, why I showed this example of how the market reacted in where did it go? Twenty sixteen, because that’s a pattern that if you look through the charts, you’ll see that play out over and over again. There have been some diversions yet. Ultimately, you have this large short position and it was fascinating. Jeff Christian put out a video someone sent me yesterday and he was talking about what caused the spike in 2011. Matches matches what we’ve had Craig Hemke say on here before. And I’ll link to that one at the end today, but talks about how you had a large open interest.

There were a lot of people who were short silver going into that contract expiration. So that drove it higher. Well, a lot of people are short silver now and certainly the bank position, second largest in history, which ultimately let’s get our one month chart of silver. When you see silver go up four bucks in a week, to some degree, it’s wise to at least be prepared for a pullback, especially when the bank short position is at the extreme end like it is right now. That would increase the probability of that happening. Could we have something like 2011? Well, the conditions are the same as what Jeff described in the video.

So they’re somewhat in place. I don’t know that that’s necessarily going to happen, but either case is why it makes it a darn exciting time to be a participant in the gold and silver markets, which I know there were some rough years, but certainly action packed this year. Anyway, hope you find that helpful. As always, you can find our daily column at goldandsilverdaily.substack.com, where we’re writing something like this once a day and trying to just not terribly long, but just easy to read. Hopefully enjoyable. So I’m told I’d like to think. And I have been told that, and I do also like to think they’re enjoyable.

That’s the point. But if you’re not spending five hours a day reading financial research, but want to be kept up to date on some of these significant trends going on in the gold and silver markets, well, goldandsilverdaily.substack.com. And before we wrap up, I would like to mention that Rick Rule Symposium is just around the corner. And this is held Monday, July 7th through Friday, July 11th down here in Florida, pretty close to where I am over in Boca Raton. And many of you have been to the conference before. I will be there this year. We’re going to have a media booth.

We may have a happy hour the night before. So A, if you’re thinking about coming and would like to join us, leave a comment. And I think we are going to set that up. But also, obviously, quite an extensive lineup of speakers and experts in the gold and silver markets. Grant Williams, who I’d very much love to hear speak this year, and we’ll sit in on that one, Jim Rickards. Maybe we’ll see if we can get an interview with Jim. Certainly a lot of interesting research. There’s an old friend, Scott Melby. There is Rick, Adam Taggart, who many of you know.

And as you can see, quite a list of speakers. There’s Adrian Day, who we’ve had on the show a couple of times. Also, if you’re a mining stock investor, then certainly that is really the focus of this. A lot of gold and silver content as well. But either case, I will be there for a couple of days filming and also just hanging out and saying hello to people, learning. And seeing what’s going on. And again, I think we will have a Sunday night happy hour somewhere nearby. But we’ll keep you posted on that. Either case, the link, if you would like to register for this, is in the description field below.

Again, it’s July 7th through 11th. So just a month from now. And if you haven’t been down to Florida lately, come on down. We’d love to see you and say hello. And either case, I appreciate you watching our show and being a part of our audience and going to be fun to at least see some of you there like we did last year. And anyway, we’ll wrap up for now. But like I mentioned, I did do that call with Craig Hemke. I think that was last year where we talked specifically about what he felt drove silver last portion of that spike in 2011.

And that one is coming your way now. Thank you. [tr:trw].

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