Interesting - Physical Silver Contracts May Go Unfilled

[Naperville]

Silver and gold are used in manufacturing things: solar panels, EV autos, electronics, ...and many countries are buying silver and gold.

Silver and gold's price are not going up actually, the US Dollar is falling in value.

I am not sure what will happen. There are a lot of people guessing what will happen, and I did not link to any of those videos because it's anyone's guess. Wiemar Germany comes to mind and you may look that one up.

I asked Google AI, "Given current events are silver or gold contracts for physical commodities in danger of not being filled?"

Google AI response:

Due to a historic and ongoing supply crunch, there are significant concerns and increased risks regarding the fulfillment of
physical silver contracts, with reports of critical delivery delays and soaring premiums. While the gold market is also tight, the situation is most acute in silver, though the overall physical market for both is under stress.

Silver Contracts
The physical silver market is currently in a severe structural deficit, meaning demand has consistently outstripped supply for several years. This has led to a situation where:

Delivery Delays: There are reports of significant delivery delays for physical silver.

Depleted Inventories: Global stockpiles at major exchanges like the COMEX and London Metal Exchange (LME) have fallen to historic lows.

Risk of Cash Settlement: Market observers have raised concerns that if the COMEX or other exchanges cannot source enough physical metal, they might be forced to settle contracts in cash rather than physical delivery, which would cause significant disruption, especially for industrial buyers who need the actual metal for production.

"Paper" vs. Physical Disconnect: The large volume of "paper" silver traded in derivatives markets vastly outweighs the available physical metal, leading to an imbalance that could trigger a major short squeeze and challenges for contract fulfillment

[SpyderEdgeForever]

Exactly. And all these people with physical metal think they will magically prosper while others starve. Silly. Noone but the government has the vaults and guns to secure such a situation.

[Naperville]

Exactly. And all these people with physical metal think they will magically prosper while others starve. Silly. Noone but the government has the vaults and guns to secure such a situation.

YES!

If the economy crashed due to the US Dollar taking a dump, silver might go to $500+ per ounce, and you would MAYBE be able to exchange silver for food for a while at some exorbitant valuation.

It is all very confusing.

The US government would have to step in and print new dollars, possibly backed by silver or gold.

The US Government has value. The USA has value.

The US Government has the best military in the world. We have all of these assets, so things would never quite go to zero.

[zhyla]

A very myopic view of macro economics Naper. I think I would look at more than just one good before declaring the economy is in danger and worrying about currency collapse.

[RustyIron]

A very myopic view of macro economics

Dood! You're cracking me up tonight. Nobody comes to the Spyderco Forum seeking sound economic advice. Around here, the idea of a diversified portfolio means having knives from Golden, Seki City, and Taichung.

[zhyla]

A very myopic view of macro economics

Dood! You're cracking me up tonight. Nobody comes to the Spyderco Forum seeking sound economic advice. Around here, the idea of a diversified portfolio means having knives from Golden, Seki City, and Taichung.

This is the most astute observation I’ve read here today.

[Naperville]

A very myopic view of macro economics Naper. I think I would look at more than just one good before declaring the economy is in danger and worrying about currency collapse.

I did not post the videos that I had listened to. Some say silver MAY have a problem, and then they will demand all contracts to be paid for with gold and silver. I did not want Taz to cancel the thread.

It is anyone's guess what will happen.

What WILL HAPPEN is mines will open up to produce silver and gold. But until that happens nobody knows.

[SpyderEdgeForever]

A very myopic view of macro economics Naper. I think I would look at more than just one good before declaring the economy is in danger and worrying about currency collapse.

I read and see all these claims about the collapse of society and the dollar but here is the fact I believe. Those with the world wealth and power, such as China, USA, the big bankers, big tech, etc do not want the societal Mad Max scenario that all these preppers and invest in metal commercials fantasize about.

I agree: putting some money in supplies and so called rare metal is fine.

The real danger is more control and centralization.
They will make sure the economy survives to keep in the money and power.

[Naperville]

A very myopic view of macro economics Naper. I think I would look at more than just one good before declaring the economy is in danger and worrying about currency collapse.

I read and see all these claims about the collapse of society and the dollar but here is the fact I believe. Those with the world wealth and power, such as China, USA, the big bankers, big tech, etc do not want the societal Mad Max scenario that all these preppers and invest in metal commercials fantasize about.

I agree: putting some money in supplies and so called rare metal is fine.

The real danger is more control and centralization.
They will make sure the economy survives to keep in the money and power.

I don't know SEF. The USA is losing badly right now. There are exchange systems for world trade that are coming up that will disrupt dollar dominance. 20 to 50 years ago the US dollar was the undisputed king for trade, and the countries that antagonize The West want to unseat the US dollar's standing.

These countries compete with their Olympics teams, militaries, economic systems, and if anyone falters and their system crashes, their dollar crashes, the opponents would be none the happier!

We always seem to be playing some kind of international game. The opponents hate the USA.

[SpyderEdgeForever]

I notice that, too, Naperville.

It is sad. Yes, there have been historical abuses of power and racism and corruption, but it is not right how some people hate America, after all the people of the USA have done to help people.

Someone who has visited various nations as a tourist told me he tells people he is a Canadian because he is afraid to say he is from the USA.

Do you think it only gets worse going forward?

[zhyla]

it is not right how some people hate America, after all the people of the USA have done to help people.

I imagine a few Venezuelans would like to file a complaint about the USA, if they were still alive.

Only a child believes the USA is some altruistic saint of a country.

[shunsui]

In before the close.

[Naperville]

In before the close.

I hope that the thread does not get closed. That would be silly.

I support my country, the USA, over every other country but the gripes that I have with the USA are significant. Yet, nobody cares. I complained to hundreds of reporters, agencies at the state and federal levels, posted my story all over Twitter/X. One response by email. Nothing done. I am out $100,000 cash, a wife, and a girlfriend who was to be my second wife. Career totaled.

I'm single and retired now. The only thing that I want is to live in a crime free area, have good healthcare, and not be homeless. Nothing that happens in the USA surprises me.

[SpyderEdgeForever]

Naperville, it seems like a catch 22.
To own silver as paper investments, the govt can take those away. If the person owns physical silver it is more secure but then they have to have good watching to keep it safe.

[shunsui]

We're still live. Happy New Year, Naperville

[Naperville]

@SpyderEdgeForever @RustyIron @shunsui @zhyla

I used to work at the Chicago Board of Trade so I follow the markets a bit. I am not a broker and never was.

I just wanted to let those of you who are not following this in the news, silver and gold are not being bought up by preppers, they are being bought up globally by nation states for their reserves in a drive to protect themselves from the collapsing US Dollar. They want to replace the US Dollar in the global market and they are fortifying their central banks with silver and gold. This isn't me saying it, it is all over the news and Google says so:

GOOGLE QUESTION: what nation state banks are buying up the silver and gold
GOOGLE RESPONSE:

GOLD
Several nation-state central banks are actively purchasing gold, while only a few have recently started acquiring silver for their reserves.

Gold Purchases
Central banks have been net buyers of gold for over a decade, with purchases accelerating in recent years due to geopolitical uncertainty and a desire to diversify away from the U.S. dollar.

Major purchasers include:

Poland (National Bank of Poland): The largest reported buyer in 2024, continuing into 2025, with a target of increasing gold to 30% of its total reserves.

China (People's Bank of China): A consistent, significant buyer, though market experts believe its actual purchases may be much higher than officially reported as part of a de-dollarization strategy.

Turkey (Central Bank of Turkey): A major accumulator, using gold to stabilize its currency amid high inflation.

India (Reserve Bank of India): Has been consistently adding gold to its reserves, driven by diversification goals and high domestic demand.

Kazakhstan (National Bank of Kazakhstan): Frequently adds to its reserves, often buying from domestic production.

Other notable buyers in 2024-2025 include Uzbekistan, Brazil, the Czech Republic, and Bulgaria.


Silver Purchases
Central banks have historically been absent from the silver market because the International Monetary Fund (IMF) does not officially recognize it as a reserve asset. This is beginning to change as some nations see a strategic need for the metal. The following nations have recently begun acquiring silver or making it an official part of their monetary policy:

Russia: Became the first nation to explicitly announce silver purchases for its state reserves as part of its federal budget for 2025-2027, a groundbreaking move in modern central banking.

India: Made silver eligible as collateral for loans, similar to gold, signaling a shift in its view of silver's monetary role.

Saudi Arabia: The nation's central bank has reportedly begun acquiring exposure to silver, though it has done so through exchange-traded funds (ETFs) rather than direct physical purchases.

These moves, particularly in silver, are often motivated by a desire to reduce dependence on Western fiat currencies and safeguard against geopolitical risks.

[Naperville]

A very myopic view of macro economics

Dood! You're cracking me up tonight. Nobody comes to the Spyderco Forum seeking sound economic advice. Around here, the idea of a diversified portfolio means having knives from Golden, Seki City, and Taichung.

I'm just posting stories that are in the news. They are all over the news and a Google search will tell you I have not made anything up.

Guys, please, if you do not think I have correctly followed what is happening in the news then post links saying:

- the US Dollar did not drop 8% to 10% last year
- central banks across the globe are not buying silver and gold

Everyone kvetches about the price of Spyderco Knives but nobody wants to know why the prices may go up or down.

[SpyderEdgeForever]

Naperville, so what is your advice to everyday people?

[shunsui]

We're just not as passionate about it as you are.

A friend of mine calls it enlightened apathy.

Back to your subject however, an interesting thing is New Basel III proposed regulations, have further encouraged banks to hold physical gold by reclassifying it as a "Tier 1" asset, allowing it to be valued at 100% on balance sheets. The US is still thrashing all this out, but it will be interesting to see if an effect would be to change the way gold is taxed which is currently as a "collectable". That might encourage even more people to jump on the gold bandwagon.

However since banks aren't too concerned about the price of gold as they concentrate on buying more (driving the price up ?), one has to think of that timely concern about Bubbles. It'll be interesting to see what happens if the gold bubble bursts. All those Tier 1 assets on the banks' balance sheets would suddenly be diminished which would probably tick off the regulators.

[Naperville]

Naperville, so what is your advice to everyday people?

When I worked at the Chicago Board of Trade(early 80's) there were large pits where hundreds of brokers bought and sold contracts. This is all done by computers now. I was in the exchange in 2017 on the floor, and it is all desks for traders now. I worked for brokers to hold decks, charted for them, called customers interested in commodities and was a runner. I was not a broker or manager on the floor.

I am just discussing what is happening, not as an investment strategy. I might have $600,000 in my pocket come 01/12/2026 and I am not going to touch any of this with a 10ft pole. The prices for these precious metals are very high right now, and it is too risky to buy any of them. It's almost like buying Bitcoin, it is a very risky thing to do. FOMO or fear of missing out is NOT a good investment strategy!

I say do not buy into it. If something happens and I miss out on vast potential so be it. I just like looking at the dynamics of this playing out and wanted to chat with someone about it.

You have to speak with your investment broker and see what they think is going on with the economies globally. Then look into it yourself. Then make a decision if you are serious.

If you are extremely wealthy and do not care if the prices for silver and gold fall by 40% to 50%, then buy some physical silver and gold. They say 8% to 10% of your investments should be in physical precious metals, but I think buying at the top is not wise.

I think that the prices should come down, and that is what I am waiting for before I buy. Cooler heads should prevail. But how much will they come down, that is the question. If you look at the 1 year charts, the prices for silver and gold have marched steadily upward. I think they may drop 30% easily if the artificial intelligence build-out pops like a balloon in 2026. The AI market has to make $1 trillion plus to continue their spending, and I do not see how they create that income. Then you might want to buy. Not now, but it is something to watch, it is history.

There are a lot of different things that can happen to bring drastically different prices for silver and gold. Will the prices go up or down though? Usually uncertainty on the globe will increase these precious metals prices. Stability and a large number of corporations mining for these precious metals means the prices will decrease.

- AI build-out collapses, and AI companies begin to collapse, and the US Govt has to come to the rescue, a la 2008!
- A major war or Peace breaks out across the planet
- The US dollar collapsing or the US Dollar strengthens
- An assassination of a leader for a major country

My opinion is it is time to watch it. If the market collapses, it could be a decade before it recovers to it's peak.