Menu Close

Large commercial traders are positioned for higher metals prices

By Clint Siegner

Physical silver bars continue to drain from COMEX and London warehouse stockpiles. Lower spot prices are contributing to this.

Larger investors who hold deliverable bars aren’t throwing in the towel and dumping them back into the market. Instead, they continue to stack, much like retail investors buying the smaller coins, rounds and bars.

An attempt by Reddit users to create a “silver squeeze” in early 2021 marked the beginning of the year-and-a-half long trend of steadily declining bar inventories. The grassroots movement was an attempt to break the crooked price discovery scheme in silver.

Buyers were encouraged to purchase silver and take possession. The hope was that the tiny inventory supporting a mountain of paper derivative metal would disappear. Shorts would have to bid more and more for available bars in order to exit their positions and end the pain.

The buzz around the “silver squeeze” faded from the headlines over a year ago, but the draining of inventory continues.

As available stocks decline, the prices paid for deliverable bars in the cash market keep getting higher versus paper silver futures.

The mismatch in prices between the two markets is way outside of normal and should serve as a warning.

Buyers are paying up to get physical metal, and they are bearing the cost of storing large bars.

So far, traders on the short side don’t seem bothered by these troubling underlying fundamentals.

The past few months have been profitable for those making leveraged bets on lower prices.

What makes this setup interesting is that it is the speculators, not the commercial banks, who are heavily short. (Perhaps traders went to the Hamptons this summer and the trading algorithms they left on autopilot aren’t programmed to watch inventory levels.)

Futures market speculators are also not too quick on the uptake — generally speaking. Bullion bankers have a long history of total domination against them in futures trading.

Normally it is bankers and commercial hedgers who are short and specs who are long. The current positioning may be backward, but you can expect the winners will be the same people – those classified as the large commercial traders.

Commercial traders tend to position themselves correctly ahead of the next trend – and right now they are positioned for the silver market to turn up.

Clint Siegner is a Director at Money Metals Exchange, a precious metals dealer recently named “Best in the USA” by an independent global ratings group. A graduate of Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals’ brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.

Article: Large commercial traders are positioned for higher metals prices

Leave a Reply

Your email address will not be published. Required fields are marked *

(UN General Assembly, 1948) The Universal Declaration of Human Rights: 1. All human beings are free and equal 2. No discrimination 3. Right to life 4. No slavery 5. No torture and inhuman treatment 6. Same right to use law 7. Equal before the law 8. Right to be treated fair by court 9. No unfair detainment 10. Right to trial 11. Innocent until proved guilty 12. Right to privacy 13. Freedom to movement and residence 14. Right to asylum 15. Right to nationality 16. Rights to marry and have family 17. Right to own things 18. Freedom of thought and religion 19. Freedom of opinion and expression 20. Right to assemble 21. Right to democracy 22. Right to social security 23. Right to work 24. Right to rest and holiday 25. Right of social service 26. Right to education 27. Right of cultural and art 28. Freedom around the world 29. Subject to law 30. Human rights can’t be taken away