Brothers, the truth behind the silver surge: the short squeeze storm in the futures market

Brothers, what degree of kinship are we talking about? In the financial markets, your status depends on how much capital you can control and the size of your influence. The recent crazy surge in silver is a scene of the “hierarchy system” collapsing — small-scale assets suddenly overwhelmed by large capital, and the entire market rules being rewritten.

Let’s first unravel this mystery: Is there really a shortage of silver?

The global annual silver production is 27,000 tons, with industrial use consuming 23,000 tons — logically, this stuff isn’t scarce at all, just like salt on supermarket shelves, always available. But there’s a deadly trap here: Sufficient spot supply ≠ Ability to withdraw at any time.

Sufficient supply ≠ Enough inventory, the bizarre state of the futures market

Inventory data from futures exchanges instantly clarify:

• COMEX (New York Mercantile Exchange): 14,000 tons
• London inventories: less than 4,000 tons
• China inventories: 715 tons

Adding up the inventories from these major trading centers worldwide, the silver that can be delivered immediately isn’t enough for half a month of global industrial demand. In other words, the entire futures market is like a huge illusion of prosperity — outwardly trading volume is massive, but actual deliverable resources are extremely scarce.

Massive naked short selling, why dare they play with fire?

This is the most absurd part of the story: traders in the futures market have sold short positions several times larger than actual inventories. Imagine a concert with only 1,000 seats but selling 5,000 tickets. These “shorts” are equivalent to countless “guaranteed delivery” checks — as soon as customers demand physical delivery, shorts must buy back at high market prices to deliver.

Why do shorts dare to play like this? Because in traditional routines, no one really intends to take physical delivery. Most traders in futures don’t want to haul tons of silver home — really, you don’t have a mine at home, where would you store it? Usually, contracts are settled in cash at expiration, settling the difference, and everyone goes their own way happily.

But this time, some longs broke the rules.

Short squeeze begins: the moment of illusionary prosperity’s collapse

Longs are smiling and saying: “Don’t give me money, I want physical silver, delivered to our designated warehouse.”

Shorts break out in cold sweat: “Physical? You really want that? …Wait, I don’t seem to have that much spot inventory…”

The classic short squeeze scenario in financial history unfolds like this. Shorts, to meet delivery requirements, can only buy back silver at high prices. The more buyers there are, the higher the price goes; the higher the price, the more shorts lose; the more they lose, the more urgently they buy… forming a perfect vicious cycle. The price gets “blown up” like this.

But that’s not the whole story.

Gold rises slowly, silver skyrockets; market value determines fate

Someone asked: Isn’t gold also a precious metal? Why is it rising so “refined”?

The answer lies in size difference — or rather, the “brother level” gap:

• Total market value of gold: $30 trillion (global billionaire level)
• Total market value of silver: $3 trillion (middle class level)
• Platinum: $800 billion (small boss level)
• Palladium: $200 billion (individual entrepreneur level)

Imagine, billions of dollars of capital flowing out of the U.S. bond market, seeking “hard currency” for hedging. They first rush into the gold market — gold’s large size is like a big fat guy eating; full quickly, high capacity.

The remaining capital looks around: “Gold is full, let’s go to silver!”

As a result, this “small” silver market suddenly sees a flood of “big appetite” capital, trading volume surges, and the price ceiling is directly broken through — this is what’s called an “spillover effect”. Small markets simply can’t withstand the turbulence of large capital. It’s not that silver is particularly hot; it’s just that it happens to be the “next target” for big funds with nowhere else to go.

This isn’t a commodity bull market, but a dollar credit crisis

What is the real culprit? Not industrial demand, but distrust in the dollar.

The underlying logic of this surge is a clear transmission chain:

Dollar credit shaky → Capital seeks safe haven → Rush into gold and silver markets → Prices skyrocket → More doubts about the dollar → More rush into gold and silver…

This forms a self-reinforcing cycle of trust crisis. Capital is voting with real gold and silver, expressing concerns about the fiat system. Silver just happens to be the most fragile and most exciting link in this game — a small market, volatile, easily “played” by big money.

When will the surge end? Will history repeat?

According to the script of financial history, such madness usually ends in two ways:

1. Shorts are completely wiped out: forced liquidations, forced to admit losses, the market runs out of fuel.

2. Longs start taking profits, and others realize there’s no one to take the other side, leading to mutual destruction.

Then prices will fall — but often not back to the starting point. Like a piece of paper crumpled, hard to smooth out completely. Once trust is damaged, recovery takes longer.

So brothers, next time you hear about silver skyrocketing, don’t rush to dig out your old silver bangles. The main players in this game are not factories or jewelry merchants, but futures traders and hedge fund giants. Their battlefield is in front of computer screens, betting on the direction of global economic confidence.

For ordinary folks, just watch for the spectacle and learn the logic — after all, if you really had to deliver a ton of silver, where would you put it at home? The core of this financial stress test is essentially examining an age-old question: Can we still trust paper money? Silver’s surge is just a silent answer to that question.