➡ Vince Lancy discusses the recent volatility in silver trading, suggesting that various entities, such as banks, industries, and sovereigns, might be shorting the market. He also mentions that Chinese demand for silver is increasing, possibly due to anticipated future shortages. Lancy predicts that silver could reach $70 in 90 days, but advises caution due to the market’s unpredictability.
➡ A major bank involved in silver futures failed to meet its margin call and was liquidated, causing the Federal Reserve to inject $34 billion into the banking system. This event, possibly triggered by relentless physical buying, is seen as a sign of the risks in the precious metals derivatives market. The situation is being closely monitored to prevent a potential industry-wide meltdown. However, it’s unclear if this will lead to a larger banking crisis.
➡ The silver market is experiencing a lot of activity, with Chinese nationals seeking finished silver in Latin America and the US trying to source silver to meet domestic and foreign demand. This has led to a shortage and increased prices. Some investors are being advised to wait out the market fluctuations, while others are taking advantage of the situation to make profits. Despite these activities, the silver market is expected to remain tight for some time.

It printed a high of 8,375 before getting slammed having a dip. Bought in classic slam and buy fashion. And now trading, excuse me, $76 down over $3.26. Welcome to this morning’s Markets and Metals with Vince Lancy where each morning he brings you the precious metals news to get you ready for your day. Now here’s Vince. Good morning, I’m Vince Lancy. It’s 8:05 Monday morning after possibly the biggest overnight trading range that silver has ever had, let alone recently. I’d like to do two things today. I’d like to go through that in order of what happened last night to give you a little blow by blow.

We’ll look at some charts as well. I’d like to give an observation without picking direction on what I think happened in a cursory fashion. And then I’d like to address a note that’s been circulating widely in our little community and refine what I think is actually going on without actually laying it at anyone’s feet. So let’s get started. One piece of business before we get into the main event. I have been threatening to make make gold great again hats and make silver great again hats and as far back as when Trump got elected. And so we have done that.

If you’re not familiar, the AU is for gold and the AG is for silver. The AU is in gold and the AG is in silver. Or a reasonable facsimile of it. There are four different designs to choose from. There is a, it’s an adjustable hat on the back and it’s on the Shopify store. We’ll actually include a link to that as well. They’re pretty cool, I think. There’s the homepage. Without further ado, a lot of stories on silver. Last night could have possibly been the most monumentally volatile evening in the history of silver trading and certainly in the last, you know, 20 years, possibly in any market as well.

Pretty interesting for something that just purported to be a, a pet rock. There is a 15 minute chart for you. Here’s the Sunday open, 6pm the market went from 79 for print up to as high as 83 and change. And then in the next 15 minutes, Tom, at 6:15 it printed a high of 83, 75 before getting slammed having a dip. Bought in classic slam and buy fashion now has worked its way lower and we’re trading, excuse me, $76 down over $3 and 26 cents. So I think, let’s say from 84 to 74 $10 range, that’s over a 10% range from high to low.

All right, let’s talk a little bit about the bigger picture and then talk about where we think it’s headed from here in terms of, in terms of behavioral and why we’re a little bit concerned. Here is the bigger picture as overlaid in last night. Somebody is short the silver market. I don’t know if it is a bank or banks. I don’t know if it’s an industrial that needs metal for work. I don’t know if it’s a sovereign that wants to buy it for collateral for the brics coming out party or sovereign. I just listed silver as a critical mineral and in doing so began accumulating it.

It’s probably a combination of all three. A perfect storm with regards to it’s a bank blowing up. I want to address that in more detail later on, but right now I want to address that up front. A short does not have to be someone who is short. Futures contract tracks. A short in trading terminology means anyone who needs to buy it. If you are a technology company and you need to buy it, you are technically a short. If you cannot use the futures because you are worried that you cannot get delivery because someone will pull it off the market, well, you are short and you need to get your physical immediately.

That is why companies like Samsung are now going to the source. Now, last night you could say a lot of things and there is no shortage of opinions out there. We will try not to have an opinion on price right now. That has to be saved for the end. What we are doing is laying out the facts and then you can decide for yourselves what to do now with regards to what is going on. Last night, London Spot, you could see the price action. I’ll put all the markets up there. But last night London Spot began to capitulate to Shanghai demand.

The spread narrowed. Shanghai had been trading $8 higher than London Spot. But that spread narrowed markedly by London being pulled higher. This has been what has been happening for the last two or three weeks, really the last two or three years. But specifically, Chinese demand, unable to be satiated locally beyond Shanghai futures and speculators, not just speculators, has been sourcing metal outside of its borders in anticipation of metal being difficult to get in the future. We saw evidence of that last night when Chris Marcus interviewed. I’m not sure how to say the company’s name. Kuru David Stein.

Chinese nationals had approached him, the CEO of a silver company operating in Peru for silver at $83 when spot was trading well below that on Friday. They were looking for finished metal, not concentrate, which is frankly not common. He doesn’t deal in finished metal. They were asking him in his company, which admittedly is not one of the bigger companies and generally does not get that kind of phone call unless the bigger companies have already said no. You also have a deadline for China where they cannot export any silver after the end of the year. What that really means is that a ban on exports is a mandate to import.

They’re not hurting us, they’re protecting themselves from what’s coming. For one reason or another, China wants to needs to buy more silver. In a situation like this, when nations are not talking specifically China and the US companies do, hence mercantilism. I believe that no matter what country you are in, if you need to buy metal, you’re going to find a guy who can get it for you. The biggest American bullion banks are the ones that can do that. And if they are involved now to satiate that demand and all the same time protect US Reserves at the same time protect US Reserves, I would not get in their way.

Now a brief history lesson for those of you old enough to remember. During the big silver squeeze after Covid, after silver did threaten to pierce the old high of $50 breaching $30 with a lack of physical going around. But that was, to use the words of the cftc, tamped down. It was tamped down by coordinating the exchange with the industry trade and with the analyst staff firms. You may remember that the morning silver started to crack lower and American bank downgraded all of its silver miners in Europe for good reason. They had no silver to hedge.

But the timing was very helpful to to anyone who wanted to tamp it down. As the CFTC admitted back then, these pieces add up to a market that could go $20 higher or $50 higher. But if it does, it’s not going to stay there long. Somebody is being enticed to bring scrap onto the market. The earth is being scoured for silver and it is not there, but it’s being found. Do I know that I’m right? No, I do not. But I have been wrong enough times to know when not to start chasing waterfalls. I believe this market has a lot higher to go.

Okay, the only target I have given is silver trading. $143 within five years. That was about eight months ago. If you want to buy it here, that’s on you. If you want to buy a dip that is also on you, just know that somebody is paying attention to the rallies now. When a world divides as much as ours has and hoarding commences or critical minerals become conflict minerals, either you work together or both nations suffer. I think we have seen the beginning of nations working together, at least on this front. Now don’t be surprised if you see China start raising margins more if they are.

If there are temporary suspensions of intake on ETFs, the US will not show that weakness. Other people will. We will just raise margins and find selling. Know this gold is money and you can always find more gold. Someone always has it sitting around that they can lend you. Silver is not just money, so be careful if you are looking for trading levels. Personally speaking, I think the market is going to be trading $70 in 90 days. I put that position on 90 days ago. If you were to tell me between now and 90 days whether silver will be $10 up or $10 down, I would say I do not know and I do not care right now.

What I do know is that there will be buying all the way down my physical players. The question is who is selling on the way up and if they are, they must have a lot of it or someone must have their back. So be careful. I’d like to address something circulating around Moving on to the current events Before I get into the actual price action, I’d like to address something circulating around in the metals community that has that was given to me from multiple sources yesterday. It is very important and I feel indicative of where we are right now and will possibly go from here.

It is intended to give you a framework for moderating your own trading and investing biases going forward. It’s not a prescription for action nor a solution to everything, but it is hopefully a candle that can shine some light on the dark corners of things that as they are now. Last night the note you see on your screen was forwarded to me describing a systemic bank blowing up due to a silver position liquidated. Here is the operative part of that note as this story is written. It is 11:01am Eastern US time on Sunday, December 28th. Reports have been coming in claiming a quote systemically important bank, a major player in silver futures, failed to pay its margin call by 2:00am and was liquidated by the futures exchange at 2:47am Eastern Time.

I do not doubt that reports are concealing the name of the bank, but it is confirmed that overnight the Federal Reserve was forced to pump another 34 billion into the banking system through its emergency overnight repo facility. This 34 billion is on top of the 17 billion which had to be pumped in two days ago. On Friday morning, the bank involved is described as, quote, one of the biggest players in the precious metals derivatives market blew past every risk limit, breached every covenant and exhausted every line of credit. Now, this needs to be addressed properly. Because there is truth in this pattern.

If not, the claim was a systemic bank, somebody blew up. I don’t know who. Just to get some terminology out of the way, there are two different things going on here. A client or desk liquidation is not the same as a bank. Default and distinction is often lost outside the professional circles. I’m not throwing water on this. I believe this is true. I just don’t believe that it’s going to cause a meltdown of the whole industry. It would be interesting and it could, because we have seen what happened with the Bear Stearns silver position during the housing crisis.

Silver can cause a lot more pain than its little commodity can. All right, so I want to talk about this because it’s very important, contextually, of what’s going on now, because I think it’s actually truth being conflated with something else. A desk and its trading team may have done all those things in this note here. And the trading last night certainly feels very much like a bank being caught short and having its balls in a vice grip. But is it a systemically important bank? No idea. Is it a bank with a position that was too big for its capital base? Yep.

Was it a bank that had a risk manager not do its job or worse, do his job and then become complicit with the trading team’s problems? Possibly. Was it possibly spurred by real physical buying that was relentless, either by a sovereign, an industry or investment? Probably. Would all that be a logical progression to what has happened the past few years? Absolutely. As Warren Buffett says, when the tide goes out, you can see who is swimming naked short all along. Now, I want to put some context on this to tell you hopefully what is going on or at least give you a framework to make your own mind up.

When the world started splitting after Covid, the biggest banks knew this was a risk. JP Morgan disclosed its massive derivative book. HSBC literally closed its operations in the U.S. russian gold and silver were removed from Western warehouses. Shortages were seen to be coming. Then a game of musical chairs began, as my colleague Michael lynch diligently followed. We actually wrote a piece on it back then calling it Musical Chairs. Month after month, he and others noted that deliveries were made by bullion banks back and forth to each other and sometimes for their own books. Sometimes for their insolvent or solvent clients at risk.

But there was a frenemy behavioral situation, and frankly, it was a clusterfuck of decades of lies being slowly fixed. But now those entities, I would think, I would hope, have gotten most of their ducks in a row. And now those systemic banks can borrow from the Fed window, which is what they’re doing, while they request physical deliveries for buyers to be a little bit more patient with their silver demands. But inevitably, someone is always left holding the short bag, the hot potato, short contract, so to speak. However you want to frame it, the tide went out.

Staying with that analogy. And someone who was not deep enough to defer a delivery, had ignored risk parameters, had and played pot odds for years, played what’s called a Martingale trading strategy of extend and pretend, got liquidated. I’m not sure this is opinion, but that’s my guess. Otherwise it would have never been allowed to rise as it did. Why do I even have that opinion? Because early in my career, mid in my career, I was on the other side of a trade just like this in natural gas, A trade in which the desk trader was papering over losses by marking trades that I did with him.

I didn’t know he was doing that at the time. Massive trades in natural gas options as winners to his risk manager when they were anything but. And during the year that followed, a trade I had handicapped to be a dollar winner for every month for a year, ended up making, you know, a million dollars in one day. That trade was eventually caught, that trader was eventually caught. And I actually testified at a related deposition. And since then, have always been on the lookout for this type of behavior that this person is framing here. And I want to stay away from it.

Mediocre risk management and Martingale trading strategies always end up this way, having been on both sides of them. So when there is smoke, there is fire. And whether the fire is big or small, know that the players are looking to let it burn out. It’s burning out now, but they don’t want it to spread. Look, it’s bigger than us, okay? Somebody got taken out on a stretcher last night, probably in a body bag, too. And there will be blowback, maybe, maybe accusations. Look for capital controls, restrictions on investment until things calm down. And in general, the beginnings of a scandal will be discussed.

And if it does not get tamped down, then. Then it will be a systemic bank. That’s what’s going on, at least in my little world. Thank you. Now, let’s go to the actual charts. Have a quick conversation about those. Okay, let’s pull them all up. We have four charts there. Top left hand side is gold. Lower left hand side is Gold. Shanghai Futures. Top right hand side is silver. Shanghai Futures. Lower right hand side is silver. So I guess what I should be doing here is putting up two charts. Gonna have to adjust my screen a little bit here and we’ll just focus on silver here.

All right, so there’s your daily chart. What you’re looking at on the left is us. I want you to think of it as Western hemisphere silver and Eastern Hemisphere silver. Okay? What you’ll see is that the high in silver in the west was 83.75 spot. The high in futures in the east was this is rounded, right? So we’ll call it 89. All right, so let’s call that 84 and 89. That’s a spread of $5. So on the very tippy, top highs in both contracts, the spread went from $8 to $5. And that’s because someone in London got their ass handed to them or someone who needs to buy physical and London couldn’t provide it.

Got their ass handed to them and they had to chase the physical up. Could have been a tech company that said, oh shit, I need my silver. Could have been China saying, oh shit, I need my silver. Because remember, as I said, restriction on exports is really a mandate to import. It could have been someone in the US that had a desk that was blowing up. But I think the most obvious thing is when you have American bullion banks sourcing metal from Latin America, pulling it to the US and you have Chinese shorts covering on their own exchange while JP Morgan is pulling metal out of restricted, I mean out of eligible.

Out of restricted into eligible. You have a situation where you have multiple shorts and they’re tripping over each other and you have a real demand for silver. Which brings me to the thing, the point that I made earlier in the week or later, last week, and that is the US geopolitically is shutting China out of the Americas. I’m not alone in this opinion. Right? Eric Young and I have talked about it. We’ve noted Venezuela, he noted Venezuelan oil goes to China. Okay? We’ve noted that silver concentrate, which has largely been pulled by China for the last five years, is no longer going there.

And at the same time, Chinese nationals are going into Latin America looking for finished silver. This is what’s going on. Maybe the US and China aren’t handling it, maybe they’re not talking, but somebody is sourcing silver. To cover shorts into the us that’s either for physical demand domestically, it’s for Chinese demand, foreign demand that’s coming through the us or it’s from a bank, maybe someone as big as hsbc, who knows, that’s just getting carried out on the stretcher because they couldn’t extend and pretend anymore. This is a sign of a blow off top, okay? Not because it’s over, not because the fundamentals changed, didn’t change, there’s still not enough silver.

Maybe they found some scrap and it came out at that price. Maybe they had to let the market breathe just enough to shake out the nervous short. Because look, when you have two types of shorts, an industrial short, right? And then you have a bank short who’s not really that important, the industrial short can be bought off. Could you wait 30 days? Yes. I’ll give you a discount, I’ll give you a free toaster, I’ll give you free checking. You can raise the prices on your iPhones to your customers. Can you just wait three? 30 days, 60 days, 90 days? And the customer says yes, because I don’t want to disrupt the market because I depend on this market and I trust my bank.

The rogue player, that’s what he’s going to be called, right? The rogue player. The guy who’s short kept rolling his shorts, kept deferring his losses, kept buying from the Fed window, right? That short is probably been carried out on a stretcher and at least one of them is in a body bag financially and God forbid, whoever’s managing the risk on that desk when you shake out the weak shorts, which is someone with a derivatives position, whether it’s Chinese or American, I don’t give a shit. It’s real and that person got stopped out and now the market can go back to being fundamental, or at least they hope.

So assume that it will be bought all the way down, assume that it will be capped and sold up top again. And assume that this is going to go on for some time, but there will always be tightness in silver. Because of that, there will be selling in silver above. But now it’s a matter of time. I’m an American bank and I’m backed by the Fed and I need to find silver. If I can’t find the silver, I go and talk to my clients and I say, please wait, maybe it’s Samsung. I say please wait, I’ll get it to you in 90 days.

And then I talk to my Latin American producers and I say, give me every molecule and atom of silver you have and then I watch what happens and what happens is somebody gets screwed and the people asking for the silver are the ones who got screwed. So there’s your daily chart. I’ll bring up the 15 minute chart. I don’t know that they’re synced. No, they’re not synced. They’re not synced. But here you go. Here’s, here’s. While the U.S. while the Western hemisphere silver was dropping, Eastern hemisphere silver was rising. Okay. There’s, this is a position being unwound.

Okay. Physical was getting sourced and futures were getting closed. I don’t know exactly what’s happening, but that is what’s happening. Look, if you want to, if, if, if you want to trade this, I mean, I’m actually shooting myself in the foot here because we’ve picked up, you know, a lot of subscribers and we’re here, we’re here to give you insight on what to do if you want to chase the waterfall, go for it. I’m not going to stop you. But people who know me who have been subscribers for a long time know that I prepare and then afterwards we try and close and move on.

Right now I’ve been selling my speculative position into this rally all the way up and I have been out for about two weeks. People, founders, Gold Fix founders also know that when gold had its, what was it, like a four, eight week run, ten week run, I was out after seven weeks and just giggling because I could have made so much more money. The point is I want to be able to buy the dip. If I want to buy the dip. The point is I want to be able to not be handcuffed if the market drops.

So do what you want. There’s been a lack of research coming out about metals now and that usually happens when banks have orders to buy physical. So keep that in mind, be careful. And let’s go back to the rest of the broadcast. Where are we? All right, about last night. This is what we put out in the last three, two days in silver. And for gold fix silver reckoning, the US is squeezing China out. I just gave you a tease of that. That’s probably our most popular post in the last three years. The timing is important and it’s pretty much accurate.

Zero Hedge has also given us some front page time on that. We’re very thankful for that. Silver exec says China approached him Friday to buy at $8 over spot. That’s the interview that I jumped in on a call with Chris Marcus last night at Arcadia. Hi to the guys there and it was Good, because we got to see the market out of the gate. And he had a very special guest on describing what that headline is. I would encourage you to to click on that, find the link to the video and then go watch the video.

Special Precious Metals Weekly ahead Week ahead Prep. That was a recap of what happened and what could happen. Founders, please read the intro. Completely different topic. The 2005 Mexican silver remonetization play. That’s a story from 2005 when Mexico tried to remonetize silver. Keep that in mind. Keep that in mind. If you’re Mexico and you’re friendly to the bricks and you don’t have a lot of gold but you got a shit ton of silver, you’re going to the bricks right now saying I want silver to be collateral in our product. And China says, yeah, it’s a good idea.

I think I’ll buy some too. And there’s your collateral from gold to silver. And it’s always dangerous to remonetize silver. Founders 2026 top commodity trade ideas in four charts. There’s that data on this week, this last week of the year. Pending home sales 10am today. Case Shiller Home Index on Tuesday and the Fed meeting Wednesday. Jobless claims New Year’s holidays on Thursday and nothing is scheduled on Friday. Looking at the markets now, we’re going to end with the markets now. Gold is down 78 at 44.53. Spot silver is 74.59 down $4.73. Copper is 560, down 16 cents.

WTI is 58.27 up a buck 20. Natural gas $4 and 5 cents up a penny. Bitcoin down 600 and change. Ethereum down 21. On the financial side, 10 year yields are down one and a half. The dollar is 9807 up 2. The S P 500 is 69 10, down 18. The NASDAQ is 25514 down 130. And the VIX is unchanged. No, I’m sorry. Up, up a percentage. Up, up. Vols are up 1.2% which is almost a 9% move. Take a look at that board. This is the King Kong Godzilla fight. Do you want to get involved or do you want to watch it? That’s your call.

I’m watching it right now. I’m Vince. Have a great day. Well, thanks for watching this morning’s Markets and Metals with Vince Lancy. Sure hope your week is off to a great start. Start and then we’ll see you again tomorrow.
[tr:tra].

See more of Arcadia Economics on their Public Channel and the MPN Arcadia Economics channel.