➡ Silver prices have been dropping for the past two to three months, but there’s a chance they could rise again due to increased demand in China and changes in ETF flows. Despite the drop in prices, silver remains valuable, especially compared to last year. The amount of silver in trusts has remained steady, but there’s been a decrease in the amount of silver being sold. This, combined with a decrease in the short position of banks, could potentially lead to a rise in silver prices in the future.

We’re in the midst of a two-month bear market in silver since the war began, or you could say even a three-month bear market since the price dropped from $121, yet while the extreme tightness continues in China, something going on with the ETF flows where if we see a rally, watch out! Well hello there my friends, Chris Marcus here with you for Arcadia Economics on an exciting Wednesday, April 22nd, where the prices of gold and silver are both up, and we’ll look at that in a moment, although we are going to dig into a very subtle thing that is happening in the silver market, yet it’s quite intriguing in terms of the metal flows and could have a big impact on the price, the medium term, or even our immediate future, so we will dig into that and a whole lot more, although let us start with a quick look at the pricing.

Yesterday the prices of both metals got pounded pretty thoroughly, here we see the gold futures rebounding $27 up to $47.47, while the silver futures having a nice little day there up a buck $35 to $77.85 on the futures, I get it they’re below $80, yet still not too far below $80, and still a very healthy silver price if you think back to where we were this time last year, and in case $77.85 still isn’t enough for you, we could look at the price of the futures in Shanghai which are about $10.64 higher today at $88.55, which more than anything whether silver’s $80, $90, $70, while you still have that spread there, that’s what I would pay attention to because that actually is the number one smoking gun piece of evidence of silver tightness in China, of course you could just look at this article that we talked about on Monday in case you missed it, that’s why you want to hit that subscribe button and the notification bell down there, because you would have seen in case you weren’t reading Bloomberg how China’s silver imports jumped to a record on solar and retail demand, yet they didn’t just jump to a record, we’ll take another quick look at the chart here, and this isn’t even the ETF flows, this is just Chinese demand, see how that orange line spiked here, and then you see that group of other lines, so basically these are all the data monthly data points for the last 10 years, and then March, in the midst of the increased premium, plus I hear there’s a war going on, a straight close, something like that, that I think we’re starting to see more of the impact filter through, we’re getting the early results here, we’ll touch on that before we wrap up here today, so you will certainly want to stick around for that, but in the midst of all of that, we have this rather stunning surge, and there could be a competitor for some of that metal, now some of this could be related to a rebate expiration that is upcoming, yet that’s more than a rebate that we’re looking at there, so anyway, we will get into the silver in just a moment, quick look at the oil price, up two bucks today, two and a half, but not a big move, also of note, yesterday we had a big jump in the 10-year yield here in the US, pretty flat today, just as a reminder, here is where we were right before the war broke out, you see the low was 394 of the cycle, so 37 basis points higher right now, had gotten up to almost 4.5 at 448 there, and certainly that will be one to keep an eye on in terms of activity, a little bit quieter on that front today, Brent oil rises above 100, after Iran sees as a container ship, well the US maintains a naval blockade, Iran says it has seized two ships in the Strait of Hormuz after the US extends the ceasefire, we’ll leave all that aside today, duking it out with some critics who don’t like the political talk, although that’s all right, but anyway, we’ll leave that aside, I did have a video on another figure that is quite stunning in its own right, I think as an investor I’d like to be aware of some of these things, but we want ruffle feathers today, and just point out that the government thinks maybe they should bail out Spirit Airlines, seems like some things are happening, but we will move on and get to the key highlight here, because if we look at the silver and the ETFs, you can think SLV and there’s a whole host of other ones, I think if we click here, there’s some way to, daily splash, some way to get the list, oh there we go, so here you go, SLV, PSLV, ZSIL, Aberdeen’s Trust, a whole bunch of other ones, SLV is the biggest one, you can see 491 million ounces, PSLV next, so if you look at all of that data, that’s what gets you to here, and we can see how much silver is going in or out of the trust, I understand the school of thought, if you don’t hold it, you don’t own it, and people wonder, well does SLV really hold what they say they hold, I would think there’s more of a risk at times of double counting, rather than in the SLV vault, there’s just absolutely nothing, and we’ll leave that aside, but if you look at the last three months, I was checking this out this morning, and pretty flat, especially because if you go back out to the one year, you can see a lot of metal has come in, that’s just over 1.1, about 1.125 billion ounces were held in the trust, that got over 1.35, so it’s about 250 million ounces were added in the space of a year, and that was during that big rally that we had, and the middle that went into the trust, that even though the rally, which you can see here, is the gray line, so it started in early 2024, was rising, but it wasn’t really until, let’s call it February of 2025, when metal started going into the trust, that had a lot to do with how the market broke when we had a shortage in India last October, which led to a shortage in London, and then metal had to come from the COMEX, and China over to London to address their shortage, but has left China in somewhat precarious situation, they did have some metal go back in there yet, in other case you had metal keep going in here, and basically reached a peak in the first month of 2026, right before the silver price soared to 120, now what’s interesting is that they started taking metal out right before that peak in price, and see it was right around 80 bucks when you hit the peak, and metal has come out constantly since then, except it’s slowed down quite a bit since March, let’s call it, so I mean it’s still gone a little bit lower, but you see the exodus has slowed down, which makes sense, I’m sure there were people who wanted to sell when the price was high, yet anyway here we are a little bit later, and we haven’t seen any big flows here, but there’s a few things when you connect, A, it’s interesting we looked at this last week, here is the bank short position, you can see they’ve gotten, let us get a longer term, we’ll take the two year here, banks have, they’re not flat, they’re not long, but they’re a lot less short, here was the record for largest all-time short position by the banks, that was in July of last year, and they’ve been reducing that substantially, I’m not saying that they are net short this entire thing, but still the correlation of when they get less short, which often coincides with the funds getting less long, so basically we’ve also had this sell off since the war began, now if the oil price goes back over 120 bucks, you’re probably going to see more oil sell off, but if we’ve seen the end of the oil price spike, which I don’t think actually is the case yet, you have like a little bit of a launching pad here, you have the banks getting less short, you have a lot of that metal has come out of the ETFs, and then in the end if you look over here, here are the silver institute numbers, and you see in 2024 they said 138 million ounce deficit, but if you add in the ETFs becomes 205, last year they say the deficit came out to 40.3 million only, so a big drop from the previous year, yet if you add in what went into the ETFs, that brought you to what would have been a record deficit, so here rather than saying 278 would go in in 2026, they’re suggesting 30 million ounces would go in, and certainly from the start of the year you could make a good case that that makes a lot of sense because metal was coming out, although did we do have a surge from here, and this often is indicative of the institutional order flow, so if Warsh gets in and starts cutting interest rates, or if there’s any sort of movement, again we’re now going on two months of a bear market in the silver market, so usually what happens is this is price sensitive, so let’s go back to our silver price here, just so you can see this nice and clearly, let’s take these six months, so here’s silver the night after the war breaks out, here’s the sunday night, it was up, or no, we’re, i’m sorry, we’re over here, here is where that one, and it got over 96 dollars, there they say 97.30, and that was back on march first, so we have march, april, which we’re almost at the end of here in the 22nd, so almost a two-month bear market for silver, you could even say going back to the end of february, call it three months, so that would also make sense whether it happened before we got to the actual peak in price here, that as the prices come down since then, even if the metal started coming out before the price started coming down, that as the price continued to come down, you would expect metal to come out, although, all right, now we’ve had our sell-off, silver has gotten down as low as 61.20, where is the low point going to be, we’ll find out, although basically if silver starts rallying again, you can expect there’s a good chance metal will start going in again, which also means this deficit that was already forecast despite everything last year to be bigger, and then if you start adding in the ETF flows, then the net deficit becomes even bigger at a time when China, the industrial center of all of this, just set a record with a massive, I mean it wasn’t like, you know, we’ve had 200 to 400 tons per month over the past decade or so, and you got 450, I mean, it went up to 836 in March, and here let’s see, the peak was 432 one year, and you see right there, so it wasn’t exactly a double, but pretty darn close, and again, hey, it’s possible the price could go lower, yet if it does go higher, you want to watch out on these ETF flows, because then you’d have to have them sourcing metal at the same time where the Chinese market is experiencing several issues, which we’ve documented here quite a bit in the past, and we will leave it at that for today, so hopefully that helps to put it in context, what is going on with the ETFs.

Again, in case you don’t always get notifications on YouTube, and you want to stay posted on these things at arcadeeconomics.com, you come over to a homepage and put your name and email there, do send out an email, which with each one of these shows, so you can stay posted in, when it’s a fast-moving market, and also, we’ll touch on this, I would imagine, tomorrow, but here’s Hank Paulson, basically, this is the former Treasury Secretary, he was there during the collapse of the housing bubble, and along with Ben Bernanke, they were never concerned back then as the whole thing imploded, yet he’s saying that US authorities should prepare a backup plan to avert a potential future collapse in demand for Treasuries, resulting from long-running concerns that he helped accelerate over the federal debt load in an event that he warned would have vicious effects.

So, you know, I know I’m just the silver bug here, and now there’s Hank Paulson saying it, we’ll touch on that probably tomorrow, maybe Friday, but anyway, we will come back to it. Now, I know also that some people are thinking, hey, well, you know, straits closed, what’s the big deal? Here we have fortress China shows cracks as Iran wars strains supply chains. China’s supply chains are beginning to show signs of acute strain as the war in Iran tests the limits of Xi Jinping’s efforts to prepare the nation for shocks, and in case you’re wondering what specifically, it’s all the raw imports, particularly anything that might be imported, or where there’s already a tight supply.

What do we have here? Reuters mentioning, let’s get, we have Russia was experiencing issues in helium, so they’ve imposed temporary export controls. I’m not a helium or chip making expert, although I hear you’re not making many chips without your helium, and there’s some evidence of tightness in that supply chain. This one was interesting. China copper smelters made press ahead with production curbs amid acid export ban, and that is relevant because we see here a smelter, copper smelters will likely press ahead with plans to trim output as Beijing’s ban on sulfuric acid exports, which we did talk about last week.

They’ve, as you see there, put a ban on the exports, which is relevant to silver because about 25% of your silver supply comes from copper mines, that 75% comes as a byproduct, only about 25% comes from primary silver producers, and now you have an impediment to the copper supply. So we’ll see how all that shakes out. A lot of tension on the supply chains, certainly things affecting silver, although in terms of a couple other things that have come up, here’s Bessin saying Chinese banks have been warned about Iran’s sanction risk, and then at the same time they’re sanctioning them.

Bessin says China has been an unreliable partner by hoarding oil during war. Seems a little odd that if any time we’ve had the current administration in office, they’re sanctioning China, trying to do trade deals that stick it in their face, and then you wonder why they’re not a reliable partner, and siding with Iran, who is one of their partners, and seeing the division between the east and west continue to grow, which I guess if that’s what you want to do, then if you want to do empire, do empire, but I find it odd that they act confused, and say look at how he hit me back first, although anyway it’s unfortunate in my opinion some of the things that are happening there, although just wait until you see these things impact the gold price.

I know we’ve had a two-month wait here, and largely seeing the prices go down. I’m still of the firm belief that over time you’ll see that plenty take care of itself, and certainly that is one of the reasons why people are looking at some of the mining stocks, which at least the way I think of it, is that if you have the gold price, stay where it is, the same for silver too, or go higher. I mean for example we have our sponsor today, Fortuna, and they announced record earnings, record free cash flow, in the fourth quarter.

They actually increased their production in the first quarter versus the fourth quarter, and you’ve had a higher gold price, so if they had record earnings, now they produce more gold, and the price was higher. That is one of the reasons why I’m excited about their earnings release, which comes out going to be released after the close on May 6th, and they’ll have a conference call at noon eastern, May 7th. I believe we will have Jorge Canosa joining us on the show, most likely in the afternoon, May 7th. It will be great to get his update on how things are looking.

They’re getting incredibly close to a construction decision at their Diamba Sood Gold project, which is due in the second quarter, and we’re more than halfway through the second quarter, so also they did have some news at this week where they have renewed their share buyback program. This is something they’ve done several times. They did again here, and an average of 15.2 million common shares representing 5% of Fortuna’s outstanding 304 million common shares as of April 10th have been authorized for repurchase commencing on May 4th. It’s interesting, I remember back last year when Fortuna was doing one of their share buybacks, I think the average buyback price was about $4.30, and here you can see their US price up to $10.37, so they’ve continued to support their stock, and they’ve continued to produce gold.

They produced more gold in the last quarter, and in just a couple weeks, we’ll talk with Jorge. Geez, May 7th, that’s actually closer than I was thinking. That was still about a month away, but that’s only another two and a half, three weeks away, so it’ll be great to hear how things are coming along at Diamba Sood if we are any closer to that decision. Although fortunately, Lot was shared during that last call we did with Jorge, and to find out more about what he was saying then, so that you’re prepared when he comes back on, well just click on the video, coming your way now.

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