➡ The global silver market is facing a severe shortage, with supply chains under pressure and inventories at their lowest since 2020. Despite rising prices, silver mining production is not keeping up with demand, and recycling only contributes a small portion to the total supply. This shortage is causing a significant issue in the derivatives market, as the illusion of deliverability evaporates when supply is thin. The increasing demand for silver in various industries, such as solar and electric vehicle production, is exacerbating the situation, leading to potential market instability.

➡ The dollar index, which measures the value of the U.S. dollar against other currencies, has been fluctuating and could continue to decrease due to increased spending and lack of debt reduction. This could lead to a rise in the value of gold. Meanwhile, the silver market is unstable, with more claims on silver than actual physical silver available. This could lead to a financial crisis if too many people demand physical silver at once. Additionally, the value of silver could increase due to monetary instability and its dual role as a safe haven and industrial commodity.

➡ The silver market is on the brink of a significant shift due to a combination of factors including dwindling supply, increased industrial demand, and unstable market conditions. This could lead to a sudden increase in silver prices, potentially reaching $100, as the market adjusts to the true value of the metal. However, this is not guaranteed and individuals should conduct their own research and consult with a professional before making investment decisions.

Foreign. You’re watching Silver News Daily. Subscribe for more. A team of economists at the ECB put out a note back on Monday, officially on the ECB website that said a lot of the stuff that you and I have been talking about for a decade, that’s what they’re alluding to, is that there’s counterparty risk and that counterparty, you know, these, these big banks have this massive exposure against higher prices because of the way they manage their books. And that, that actually is a threat to the finance. The European Central bank just broke its silence. And what it revealed has sent shockwaves through the financial world.

Behind closed doors, officials are panicking. Not over inflation, not over interest rates, but over silver. That’s right. According to their latest Financial Stability Report, the very structure of the silver market is cracking under massive unchecked leverage. Physical silver is vanishing, vaults are emptying, and yet paper contracts keep piling higher and higher. What happens when everyone demands delivery and there’s nothing left to deliver? We’ve seen echoes of this before. Moments when supply vanished, premiums spiked and paper traders scrambled to cover positions they couldn’t possibly fulfill. But never at this scale. This time, the ECB itself is warning of systemic counterparty risk, language they reserve for only the most severe market threats.

And they’re not alone. Industry giants and precious metals analysts are all sounding the alarm, but pointing to an explosive cocktail of physical depletion, supply chain paralysis and monetary instability. Silver has always played second fiddle to gold, but now it’s becoming the main act. It’s not just a hedge anymore. It’s a potential detonator. And as the market inches closer to breaking point, all signs are pointing to the same conclusion. Silver isn’t just going to rise, it’s about to erupt. So what’s really going on behind the scenes? And why are central banks suddenly terrified of a metal that most investors have overlooked for years? Stay with me because we’re about to uncover a market setup that could change everything.

Well, I. Let’s start by, you know, gold is not just a dot on a screen, right? I think a lot of folks, you know, when I read Twitter, you know, or even just see people on my site sometimes get confused with the futures price, which is just, you know, a price like anything else. It’s just a dot on a screen traded by Algos, but yet it’s a physical commodity. And that physical commodity is what backs up all those futures contracts. You know, and we had a note and it’s not like you could say it was. It’s not like the head of the ECB came out, you know, in a press conference and said, oh, we got to be careful about the counterparty risk, you know, in all these gold derivatives in London and New York.

So it’s not that. But a team of economists at the ECB put out a note back on Monday officially on the ECB website. But it said a lot of the stuff that you and I have been talking about for a decade, Elijah, about, you know, the, the leverage that’s supplied within the futures markets and the forward markets, you know, where one ounce gets hypothecated and rehypothecated and you don’t know how many physical ounces back up, you know, or how many contracts there are, how many digital ounces there are versus each physical ounce. And that’s what the ECB economists were warning about.

And so when you look at gold just as a dot on a screen and you go, well it’s, you know, every time it’s been this far above the 200 day moving average, it eventually pulls back, you know, and you start talking about, you know, some arbitrary price of, you know, 2800. It’s almost like some of these folks try to talk that into existence. The chart shows a fundamentally sound market that just keeps moving higher, you know, in a pattern of, you know, kind of two steps higher, one step back. We pulled back last week in tries to the 50 day moving average and held it for three days, which is exactly what happened in early April after the Trump’s tariffs announcements.

And so I think this, this notion that gold’s gonna swoon through the summer, you know, and pull back, you know, and oh, it’s you know, all the way back under 3,000 or something. For people that are waiting to buy the dip. I, man, I don’t think that’s coming. I think the opposite’s true. I think we’re gonna rally beginning as soon as the calendar flips. Heck, it looks like we’ve already started. And I think new all time highs are coming sometime the next 60 days. Silver is now pressing against one of the most important price ceilings in the market.

$33 an ounce. And every time it gets close, the tension builds like a coiled spring. Right now silver is trading in a tight consolidation band between $30 and $34. And that kind of setup doesn’t last long. When markets coil this tightly, the they break out violently. And this isn’t just a random technical pattern. It’s a signal that the big players are positioning themselves for a move they know is coming in Q2 of 2025 alone, silver has already jumped 14%, outperforming gold. And the reason is clear institutional accumulation. You can see it in the buying patterns, the COMEX contract volumes and the surge in silver ETF inflows.

The $30 level has become a fortress of support, and every dip is being swallowed whole by commercial hedgers and sovereign buyers. Citi is forecasting a 35 to $30 range by Q3, and some traders are whispering targets as high as $40 if the $34 resistance gives way. But the chart only tells part of the story. The reason this technical setup is so powerful right now is because it’s underpinned by a perfect storm of fundamentals. This isn’t just momentum. It’s momentum built on scarcity, fear, and a rapidly closing window of opportunity. And behind that 30 thriller ceiling line lies the psychological threshold.

The moment when investors across the board realize that silver is no longer a slow forgotten asset, but the most explosive trade in the market. Because the last time silver built a base this strong was back in 2010, and within months it had surged from $18 to nearly $50. History may not repeat perfectly, but when silver starts moving, it doesn’t tiptoe, it erupts. That’s what they’re alluding to is that there’s counterparty risk and that counterparty, you know, these, these big banks have this massive exposure against higher prices because of the way they manage their books. And that, that actually is a threat to the financial system.

I mean these are all things that again, I’m like reading this going, is this guy a subscriber to my site? I mean, we’ve been talking about this for 10 years and so we’ll say just that. You know what it reminded me of? Because gold, there are a lot of things that have been driving price higher this week, right? The downgrade of the US debt late, late last Friday after the markets close, spiking long term global interest rates. You know, this passage of this big beautiful bill, it doesn’t have any deficit or debt reduction at all. You know, people thought, oh, you know, austerity and you know, they’re going to balance the budget and doge and all that, all that’s out the window, okay? And so there’s a realization now that’s building that all that is out the window and that’s what in the bond market is seeing that.

So there’s a lot driving price this week. But I, when I saw that and I’ve seen the rally since, it kind of reminded me Remember back in about Valentine’s Day, Elijah, there’s that article that appeared in the Financial Times about delivery delays in London, remember that one? And we already kind of knew this was happening. It was this big wide spread between spot and futures and you know, metals going all over the place and they’re, they’re talking about, you know, was related to tariffs. Allegedly, allegedly. But when it got codified, if you will, in a mainstream source like the Financial Times, everyone, whoa.

You caught, you know like mainstream hedge funds and financial advisors and other mainstream sources kind of off guard. Like wait a second, I had no idea. How is this happening? We didn’t know this, but here it was the Financial Times. And I kind of thought in a similar sense that’s what that ECB note was. I mean I, a lot of us, you know, that follow gold intently and discuss it, you know, and have for years talk about that risk because it’s really, it’s a fractional reserve system and the risk that if you just keep deleting the physical, you know, what did China import last month? Officially, like, I mean unofficially, because it’s all mainly, you know, through shades, not China’s buying the PBOC.

It’s just everywhere. It’s like 100 some odd tons. If you keep taking all this medical, medical metal out from underneath the system, it forces a de leverage. And so anyway, like I said, I think that ECB note was just kind of a slap in the face, kind of like that article in Financial Times was. And that’s kind of helped spark all part of what was driving gold higher this week. The problem isn’t just that silver is being bought, it’s that it’s running out. Global supply chains are under enormous pressure and the physical silver needed to back the mountain of paper claims simply doesn’t exist anymore.

As of May 2025, COMEX registered inventories have dropped to 120 million ounces, the lowest since 2020. That’s not just a dip, that’s the systemic depletion that’s starting to cripple the entire market structure. Mining production is failing to fill the gap. Despite rising prices, over 60% of primary silver miners are still operating at break even levels or worse. With production costs exceeding $22 per ounce and new supply just isn’t coming online fast enough. Mexico’s Penasquito mine, one of the largest in the world, cut output by 18 million ounces last year alone due to ongoing labor disputes. Recycling is stagnant, contributing just 22% of total supply.

And with demand accelerating the deficit is growing larger by the month. The Silver Institute now projects a 210 million ounce deficit for 2025, the biggest in over five years. Industrial stockpiles that once covered 14 weeks of demand and are now down to just 8. This isn’t a temporary hiccup. This is a structural shortage and it’s breaking the back of the paper silver system. The more the market relies on future supply to meet present delivery obligations, the closer it moves toward collapse. And here’s where it gets dangerous. Because this shortage isn’t just a mining issue, it’s now a derivatives issue.

The paper silver market depends on the illusion of deliverability. But when supply is this thin and buyers start asking for physical metal, that illusion evaporates. And when that happens, prices don’t just rise, they detonate. Oh, it’s pretty clear to me watching this stuff for 15 years, you know, that there are hands that move price at certain points both up and down. I mean, you can go back a couple years ago when the banks were actually getting net long in silver and it was the hedge funds that were short. And you can see, I mean you can see these things because especially in silver where it’s a tiny market.

But that, I don’t think in this case that’s, I don’t think that’s what we’re, what we’re driving at, Elijah. It’s just the, the structure, if you want to just paint it as normal business operations, you know, in the, we don’t make directional bets that the banks have, you know, in their vaults, whether they hold it themselves in London or for somebody else. And then they hedge that, right? That’s, everybody says, you know, they hedge that on the futures market versus a physical position in London at the end result of that. How many times have those same ounces in London been hedged and sold forward? Because again, you know, the London tries to tell you they got all these tons, you know, in their float, you know, and what saved them back in March? Well, central banks coming in and leasing gold in the market.

Well then how many times has this happened in the past? And how many times have those ounces been released, you know, and re loaned? And it’s this kind of like, not necessarily like a pyramid scheme or a Ponzi scheme, it’s just, it’s this fractional reserve, okay? There’s a certain amount, there’s a certain float, there’s a certain amount of ounces that backs up this whole pyramid of derivatives on top of it, futures contracts and forwards contracts. And as you shrink that supply, it just stretches the leverage even farther. And I, you know, it’s like we remember when I wrote my macro cast this year, we, you know, we always do a call and talk about, you know, what was in there.

And I always tell you I write those for myself so I can go back at the end of the year and go, what did I get wrong? You know, in 2024 I thought well, gold will probably go to 2300 or so, maybe 2400, you know, which was still going to be a good. But it just kept going and now it’s continued to go this year. And I thought what did I miss? I think the main thing I missed, and this is noted in that ECB piece from earlier this week, central bank demand and constantly being on the bid is depleting that western supply that underpins that system is what, 3,400 or 3,500 cumulative tons of net demand from central banks in 22, 23 and 24.

Well unless they’re leasing it back and most of them aren’t, then that’s just metal. That’s just, you know, shrinking that bottom part of the pyramid. And that’s what the ECB is warning about that, that eventually that creates really a systemic risk to those banks and they’re urging other banks be paying attention to this so they don’t get caught flat footed if you know, within that, you know, this counterpart, counterparty daisy chain of all their different obligations that there aren’t stresses coming for the banking system there and here. Just before we get going, we just launched the official Silver News Daily Telegram.

To kick things off, we’re running a 10 ounce silver giveaway. Yes, real physical silver, not a voucher, not digital credits, actual bullion. This telegram will be our new home for real time silver discussions, market insights, collection picks and everything. Precious metals. It’s where the community truly comes alive. Here’s how to enter the 10 ounce silver giveaway. Be subscribed to Silver News Daily on YouTube. Turn on the notification bell comment 10 ounce giveaway on three separate videos. Be an active member of the Telegram group and say hi. Once we hit 500 Active Telegram members, we’ll pick one lucky winner to receive 10 ounces of silver shipped directly to you.

So get in early, stay active. The silver shortage would be bad enough on its own, but demand is doing the opposite of cooling off. It’s going vertical. Silver is no longer just a hedge against inflation or a play on monetary chaos. It’s a core industrial metal and the world is waking up to just how Irreplaceable. It really is. In 2024, the solar industry alone consumed 160 million ounces of silver, accounting for a staggering 20% of global demand. And that’s just the beginning. The US Inflation Reduction act is throwing billions at solar infrastructure. And installations are projected to grow another 25% this year.

In China, government mandates now require silver rich components in data centers powering the nation’s AI push. These aren’t speculative trends. These are locked in policy decisions, driving consumption at breakneck speed. Then there’s the EV sector. Battery contacts, inverters, charging systems. Silver is embedded in nearly every layer of electric vehicle production. Year over year. Silver use in EVs has jumped 32%. And that number is expected to climb even faster as manufacturers race toward electrification. Add in 5G networks, smart grids, and the massive rollout of AI hardware and what you have is a demand surge. The supply side simply cannot meet.

What’s worse for the paper market is that this demand is non negotiable. Industrial buyers need silver to complete their products. They’re not speculating, they’re consuming. And when manufacturers are forced to compete with investors for the same dwindling supply of metal, prices don’t just rise, they get bit into chaos. This is what makes the current setup so explosive. We’re not dealing with a demand spike driven by hype or retail speculation. This is foundational, industrial and accelerating. And it’s squeezing the market from the bottom up. The result? A runaway freight train of demand crashing into a brick wall of supply limits.

And when that collision hits the derivatives market, the fallout could be historic. See, that’s the thing. That’s what the ta. You know, and just the regular, you know, professional traders and stuff are missing. It’s not just a dot on a screen, okay? It’s not just, you know, the scroll across the bottom of the screen price that you see on cnbc. It’s this physical commodity that underpins all of those futures that are used to determine that price. That’s what’s getting depleted. That’s what’s becoming more and more scarce. And the demand for that physical commodity is what’s doing it.

And so when you, all these folks are sitting there, you know, and they come up with all these. It’s like all this discussion last month about. Oh, or even earlier this month, I guess. Oh, it’s a crowded trade. No, it’s not. I mean, I. By what definition? I mean, even the most recent surveys, we see what 5% of all financial advisors have their clients with even just A tiny position in the precious metals. Whereas how is it crowded? Even by the commitment of traders reports as of last week we had the smallest cumulative speculative long position in gold since February of last year before price even broke out.

So how is it crowded? Or is it crowded because well, price is in the 3000s so it must be crowded, you know what I mean? Are you trying to talk it into exit? Well, it’s overbought. Well by what measure? The monthly RSI maybe, but everything else, especially after the pullback and not overbought. So I look what I think is going to happen now. Gold rallied like crazy as the dollar was falling from February 1st until middle of April. I think it was April 22nd. It bottomed out at about 98 on the dollar index that day gold hit 3500.

Well then it bounced the dollar inevitably it’s gonna, it’s not like the dollar index is going to zero, there’s gonna be bounces. It got up through its 20 day and on my side we’re like okay, now we’ll watch because it’s going to go to its 50 day and there’s all kinds of resistance at about 102 where the 50 day moving average was a downtrend line, horizontal resistance, all that stuff. And it’s exactly where it failed. And it rolled down, never got above the 50 day. Took out the 20 day early this week and now it’s a little bouncing again as we record this on Thursday.

But what if the dollar index now just continues down because all this profit spending and no debt reduction and you know, concern, you know Jack, maybe Japan comes in and sells Treasuries because they got to support their own bond market. So they sell Treasuries, take those dollars, sell those dollars and buy yen so that they can go support their own bond market. What are the dollar index goes back down to 98 and then keeps falling over the next couple months goes to 96, 95. Think gold’s not going to rally? Of course it is. Like I said, the last time was at 98.

Gold is 3800. So I, I think or 3500 I think, I think what’s coming over the next couple months is going to catch a lot of people by surprise because again they think it’s just a dot on the screen. It has to correct. It’s got to pull back, it’s overbought. It’s a crowded trade. And when it goes to 3700 or 3800 over the next two months it’s going to catch everybody by surprise. And then, you know, and then it’ll be due for another pullback. Behind the scenes of this industrial boom lies a far more fragile reality.

The entire silver market is built on a house of paper. And that house is cracking. The paper to physical ratio on Comex has now surged to a staggering 85:1. That means for every ounce of actual silver in storage, there are 85 claims written against it. In other words, the vast majority of traders holding silver are holding nothing but promises. Promises that cannot be kept if too many decide they want the real thing. And the cracks are widening fast. J.P. morgan, one of the largest players in the silver derivatives market, settled 92% of their silver contracts in cash last year.

That’s not a sign of efficiency, that’s a signal that physical delivery is no longer realistic. Meanwhile, the LBMA’s own vault data shows that 35% of all stored silver is now leased out to back derivative positions, further limiting what can actually be withdrawn. This is where the ECB’s warning becomes critical. In May 2025, their financial stability report didn’t just highlight inflation or sovereign debt. They pointed directly at the precious metals markets, calling out historic levels of derivative leverage and specifically naming silver as a systemic counterparty risk. This isn’t some fringe blog post or retail fear mongering. This is central bank language.

And it means they see the danger that too few others are willing to acknowledge. Because in a fractional reserve system built on promises, confidence is everything. The moment too many players ask for physical delivery, or the moment one major counterparty fails to perform, the illusion collapses, contracts get settled in cash, prices spike uncontrollably and a liquidity panic begins. One that could cascade across the entire commodities complex. This isn’t just about silver anymore. It’s about the credibility of an entire financial structure that has treated silver like a limitless abstraction. But silver isn’t abstract, it’s finite. It’s vanishing.

And when the truth hits the market, the correction won’t be gradual, it’ll be a shockwave. Yeah, you know, it’s been in a box for about five weeks between about 32 and 34. And this happened as well back in, I think it was February and it was in a box, a $2 range for about a month. Then finally in a, you could then granted the dollar was falling, right. Begin dollar really started to fall at beginning about the first of February. So I mean there’s other things that drove this, but it began to move up for a short term technical indicator, the 20 day moving average moved up and bullishly crossed the 50 day moving average.

That drove a lot of momentum traders with the falling dollar and it rallied four bucks and it went from 30 to 34, 35. Well we’re sitting at that spot right now. I mean it’s starting to move up, the dollar starting to fall and that 20 day is like 10 cents away from crossing up. It becomes kind of self fulfilling. If it can rally, price can rally. Well, it’s only the last 20 days of price that’s in that moving average. So you kick one out, you put the new one in and things starts to move higher. So we’re about to get that cross again.

I really want to, to trade some silver. I want to venture into the Comex casino and buy some calls. But as long as we’re still in that box, gonna stand by. We get that little breakout not only above 33, but maybe more important 34 and hold there for a day or two and get that bullish cross of those short term moving averages, I think we go to 35, 35.50, those old highs and then through there 38, 39. So then to get back to your premise, the first part of your question, Gold, silver ratio maybe stays at 100, gold goes, gold catches everybody by surprise over the next 60 days and goes to 3800 and silver goes to 3839.

As if the industrial demand and structural leverage weren’t enough, silver is now being turbocharged by something even more explosive. Monetary instability. The Federal Reserve may have paused its rate hikes, but the damage to global currency systems is already underway. The dollar index has slipped from 98 to just under 97 in recent months. And real yields are hovering below 1%. A perfect setup for precious metals to thrive. But it’s not just the US anymore. In Europe, the ECB’s own financial stability report warned of a currency debasement feedback loop. And that language should terrify anyone paying attention. It means the central banks themselves are losing control.

With the euro under pressure, the dollar weakening, and Japan offloading treasuries to stabilize the yen, we’re witnessing a coordinated unraveling of fiat credibility across the board. And silver, it’s responding exactly as expected, correlated negatively to the dollar index at nearly 0.8 since the Fed paused rates, silver is becoming the go to alternative for investors fleeing paper assets. It’s portable, it’s liquid, and unlike fiat currencies, it doesn’t need a central bank’s promise to hold value. This is why central banks themselves, once allergic to silver, are now getting involved. Russia is reportedly preparing to acquire over half a billion dollars worth of physical silver over the next three years.

Why? Because they see the writing on the wall. The global financial order is shifting and those who aren’t anchored to something tangible are going to be swept away. Monetary chaos has always been a catalyst for precious metals, but this time the silver is carrying a dual identity. Part safe haven, part industrial super commodity. And when central banks start raising red flags and buying silver at the same time, it tells you all you need to know. The system is blinking red, the escape routes are narrowing, and silver is quickly becoming the last train out. My experience with silver now again, this dates back to the last time it really took off, you know, in 2010, 11.

It’s kind of price is kind of self fulfilling in creating its own momentum. Every, all the traders, you know, and everybody that wants to, you know, really profit from it are like what I just said, like me, yeah, I’m not going to do anything until it takes off. I’m going to wait till it takes off. I’m going to wait for it to break out. And then everybody, once it does, then everybody starts to rush in and it creates its own momentum to the upside. I mean, that’s how it went. I mean we went from 18 to 48 and like what, a hundred days or something in 2011 of this, just this accumulation.

Well, now it’s 32 and that’s good, 35, 38. And it just builds on itself. And so that’s, so it tends to just sit there, like I said, in this box like it was in February and in this box like it is now. And then it takes off on its own. I still, you know, my forecast this year, I thought we could get maybe up 40 or 41 and then pull back, finish the year 37 or 8. You know, everyone’s like, geez, you know, I’m waiting for it to go to 80, like I read somebody on the Internet said.

Right. And so when I say this, there’s going to be people in your comments that say, I can’t wait any longer. I’ve been waiting long enough. What do you mean next year? It’s always next year. I think it’s next year. So everyone, I mean, hang in there with me on this if you want to really get that momentum going again. Right. We need just more than you and I talking about it. And we need the institutions, we need the family offices, we need the hedge funds. When everybody’s starting to pile in and really kick off that momentum trade this happened in gold last year.

It broke out on the quarterly and the annual chart. Okay, got out, got above and that, that’s got everybody’s attention. And gold’s now gone from 20, 20, 100 or so to what, 3,300. So it’s rallied 50 some odd percent. Okay. I was hoping we’d get that annual chart breakout at the end of last year. We might even have talked about it in kind of a year watch silver can it get above 31, 32 and you know, have post its highest annual close and it didn’t pretty good chance that’s going to happen this year. So I, if that happens, if I’m right, you know, we finish the year even if it’s just 35 or 6, anybody can look at then this really long term chart and go whoa.

I mean there’s still trades within the year, you know, a wick sticking out the top of the candle that go to 48, you know, back in 1980 and 48 back into it. But in terms of finishing the year at a breakout and again the longer term chart, the better. Quarterly and annual, that’s the one everybody will see. That’s what will really get a lot of people’s attention as we go into next year. So could happen this year. Look, I’m not rooting against it by any stretch of the imagination, but I think the silver, you know, if for the people that say oh it’s going to 80, 100, you know, all these numbers, if you’re going to get a look at that, it’s going to come after you get some big massive indicator like that kind of annual breakout, most likely that’s going to happen.

Have to happen first. The silver market is no longer just unstable, it’s teetering on the edge of a historic rupture. Everything we’ve discussed, the tight technical setup, the vanishing supply, the industrial supercharged, the leveraged paper pyramid and the growing storm of monetary chaos is converging right now. And at the center of it all sits a metal most investors still treat like an afterthought. But not for long. Because the ECB’s warning wasn’t just academic. It was a signal that the paper silver game is reaching its breaking point. When physical silver disappears and the market is left with only contracts and promises, the illusion collapses.

And when it does, we won’t see silver climb gradually. Will see a vertical spike, a short squeeze so violent it forces the entire market to reprice what silver is truly worth. Analysts are already predicting prices of $37, $40 even $50. But if the paper market truly implodes and a run on physical begins $100 silver won’t be a wild prediction. It’ll be a necessary recalibration, a reset of value, a moment when silver finally breaks free from decades of artificial suppression. So where does that leave you? If you’ve been waiting for confirmation, this is it. The signals are flashing, the cracks are visible, and the fuse has already been lit.

Make sure to subscribe if you want to stay ahead of the curve, because the next few months could reshape everything we thought we knew about the silver market. And remember, this is not financial advice. Always do your own research and speak to a licensed professional before making investment decisions. SA.
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