Silver update
market vibes
December 4…)
“Every crowd has a silver lining.” PT Barnum
“Every silver lining has a cloud” Mary kay Ash
Silver has made three attempts to get through $60 and failed again just before the Comex opening yesterday. Early this morning some weak length in the day structure sold prices briefly down to $57.00, but the responsive buyers outsized the sellers. There is recurring drama taking place. If I seem laid-back about it, I am deliberately cautious about mischaracterizing something that, in my lifetime trading silver, has always ended in tears for the longs.
X posts are warning of another squeeze
Cumulative December deliveries total 10,092 contracts (50.46 mm toz), up from 9,527 contracts (47.635 mm toz) as of December 3, including 672 lots on Dec 4. Registered silver is 137 mm toz, but consensus observers think the free float is more like 100 mm, and half has been delivered in 3 days—on pace to set a new record. Dec open interest stood at 1,934 contracts at COB last night = 9,670,000 toz. There was an outstanding 12 million open interest on Tuesday and the fact that shortfall rmains substantially unsatisfied is a red flag.
Some people think the market can’t satisfy all claims at these prices and that a force majeure…an event invoking temporary suspension or termination of a legal contract due to irresistible forces like natural disasters, war, or acts of God—is unavoidable. I don’t see that possibility. This is simply a large, incredibly irresponsible short position that must so far exceed the available supply of silver that every possible legal maneuver is being deployed to buy time. The proper alternative is to approach the market and buy back the short.
The supply-crisis narrative is important, but the market seems to be functioning so far. This is a drama that has played out in 1980, 1997/1998, 2007, 2011, 2021, and now in 2025. I have traded every one of them.
I wrote about this happening in May 2024 when silver was trading $26.00. An interesting you tube clip! Ultimately the market will force the short to cover… frankly it should have happened years ago, so I’m not holding my breath, but I am holding onto my silver.
JJ
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"There was an outstanding 12 million open interest on Tuesday and the fact that shortfall remains substantially unsatisfied is a red flag."
So this is a contractual obligation that has yet to be filled? If so, then how long do 'they' get to fulfil the contracts before being in default?
JJ if you find yourself in search of a futures product to analyze, I'm curious on ZSF26 soybeans; (breaking lower today below the multi-week balance)