Biggest Silver Squeeze Ever: Is $100 Next Or Collapse? | David Morgan
Summary
Silver Market Dynamics: The podcast discusses the current industrial and investment demand for silver, highlighting that both are stronger than ever, creating a tight market scenario.
Recent Market Movements: Silver experienced a significant selloff, dropping from $54 to $48, attributed to overbought conditions and external factors like tariffs, yet this correction is seen as healthy for the market.
Historical Price Levels: The $50 price point for silver is identified as a psychological barrier, having been breached only a few times in history, with current market dynamics suggesting a potential for sustained levels above this mark.
Investment Opportunities: Coupin Silver is highlighted as a company with significant leverage to the silver price, offering a large resource base and active exploration programs, making it an attractive option for investors.
Global Supply and Demand: The podcast emphasizes the role of China and India in the silver market, noting their impact on supply through refining and demand through industrial and investment needs.
Market Risks: Trade tensions and potential tariffs on silver exports from major producers like China and Mexico could influence market dynamics, adding a risk premium to current prices.
Correlation with Other Metals: Silver's dual role as both an industrial and monetary metal is discussed, explaining its correlation with gold and copper despite differing fundamental drivers.
Future Outlook: The possibility of a natural squeeze due to unmet industrial demand combined with strong investment interest is explored, with scenarios outlined for silver potentially reaching $100.
Transcript
The market itself says, "I need silver or I'm going to die because I'm out of business unless I have it." And there's so much of an industrial demand that industrial demand requires more silver than is available. What if the industrial demand is stronger than ever and the investment demand is stronger than ever at the same time? Well, that's where we're at right now. >> What would theoretically need to happen for silver to reach $100 this cycle? you would have to have such a >> Our next guest is somebody who's been analyzing the silver market very closely. Silver is one of the fastest moving assets of 2025. It's come down a bit from its highs. We're going to find out what's next after the sharp drop off uh dramatic selloff from the last week's highs. David Morgan joins us once more. He is the founder of the Morgan Report. It's always good to see you again, David. Welcome back. >> David Lyn, it's good to see you again. Thank you. >> Thank you, David. Let's talk about uh the recent uh selloff first. Uh I think that's top of mind for investors. As you know, silver uh reached a high of $54 last week and just this week following the announcement of uh tariffs and uh new additional tariffs from China and uh a market selloff uh that took gold down as well. Silver followed. It's now down to $48. That's we're talking about an 11% decline um in a matter of couple days. So David uh walk us through what's happening currently and then we can talk about what's next. >> Well you outlined it very well David. I mean currently we were overbought in both gold and silver for a long time. You know the guys that look at technical work the RSI relative strength indicator a lot of things were showing us that uh we were due for a correction a pullback profit taking however you want to frame it. And that's taken place. And when these things happen, it's very normal that the down push is greater than the upward push. Meaning markets fall faster than they go up. So we saw, you know, like a 5% 6%, you know, move down in the silver market. Gold got hammered fairly well also. But these are actually healthy for the market. The reason is you don't want a market to go straight up because if that happens there isn't really any support on the way up. So what you really want to see is a stair step. So silver goes from 35 to 37 38 trades in that range 37 to 38 for 3 weeks. Then it moves up to 40. It bounces around 40 to 42 for a month. Then it bounces up to 45 and goes down to test the 38, you know, level, whatever. So, what you want to see is support. You want to see a lot of buying in certain in ranges as it works its way up, as I said, as a stair step. If it goes up, up up, there's no support. And it's like throwing a tennis ball in the air, David, where, you know, you throw a tennis ball as hard as you can and it just keeps going up until it reaches that point of zero momentum and it's actually stops midair for, you know, two milliseconds and then gravity takes over and starts coming down. And that's a good metaphor for a parabolic move. And I don't care if it's soybean, oil, silver, or um IBM shares. If you get that kind of a pattern, that kind of a hockey stick, you really have to be smart to sell in the strength because it will come down usually very rapidly. On the other hand, >> yes, >> if we do what we're doing, then uh we are assured pretty much that we're continuing to be in a bull market that's strong. And so what happens in a bull market, I've said it too often, but it bears repeating, David, and that is the bull's function, is to shake off as many longs as it possibly can. I mean, the uh idea of a bull rider, if you've ever been to a rodeo or watched it on TV, those guys get a big round of applause if they hang on for eight seconds. That's a very good metaphor for how strong, especially the silver market can be. So people that were long and bought the breakout, you know, maybe they used my my rule. Oh my goodness, David's right. It's been three days. I'm going long and it was I don't know 52 at the time in that range and they leveraged up and went up for a few more days after that. They better have a tight stop because as you just said, it could pop down. So what's happened is what we call the weak hands get shaken out. People that are overleveraged get shaken out. people that have thin margins get shaken out. But I have to add one more thing. I'll give it back to you David. And that is if you look at the structure of the market, it actually in silver has not come down to the level where a lot of these shorts have been able to cover their positions because the open interest has stayed about the same. And that's key to note because what that means is the guys that are on what I would say the wrong side of this market that expect the price to keep coming down may not get their wish and are not able to exit their shorts and are stuck especially if the market continues higher from here. Not saying it will but if it does then they got to suck and so do I take a paper loss or don't I or can I force the market down. So, we are in a really strong bull bear scenario where I would say the shorts that have always anticipated their ability to move this market around are having a heck of a lot more difficulty doing so. And that same statement applies to gold. >> I'm going to show a historical chart of silver in just a minute. But what is the significance of $50? Silver has only breached $50. Uh let's think the second time in 1981. it uh it didn't I I correct me if I'm wrong but I think in 1980 January 1980 when it peaked it didn't even reach 50 yet it was like high4948 and so there is this historical psychological ceiling around $50 is that just a coincidence you hit the nail on the head depends who you talk to I actually called the floor of the exchange and I have brokers on the uh on the board of trade that I know personally and I I would say inside information, but according to what they gave me for information, the $50 level was hit what's called intraday. So, there were trades made at 50 or higher, but it didn't close at 50 on that exchange. On the other exchange, I think they closed it at 52 or something. But the 50 level from the actual trading floor that day was according to them matter of minutes. And according to some of the head old heads that are as old as I am, uh they said it was maybe an hour or so. So the point being well taken is this. It did not stay at 50 for very long. Now did it hit 50? Yes. And going to what you said and just refraraming it, David, you're spot on. That is a psychological level that really holds merit and I think it still does because we have seen it go past 50. It stayed there for a few days. Get, you know, we got prints. It closed, traded all day above 50, traded another all day above it, traded another all day above 50, but it hasn't been a month. You know, it's been days and now we're below 50. So, I really think it's a battle line for let's say the uh commercial interests, the bullion banks to kind of persuade the psychology as you said that word. It's a good word. Hey, 50 is it for silver. It can't do more than that. See, you're not you're you're not doing the right thing buying silver dollars. Now, I don't believe that, but I do believe the psychology is to continue to beat that arena, that area of trading to psychologically take the juice out of the bulls. In other words, to discourage them from going in the silver market, this level. Silver has been one of this year's top performing assets, climbing more than 80% year-to date. Importantly, it hit its much anticipated $50 an ounce historical high, which has only happened twice before in its entire history. The whole silver market has been in a frenzy all year. But physical bullion is not the only way to be exposed to the metal. I'm here to tell you that today's sponsor, Coupin Silver, has a great leverage to the silver price. Coupé has a leading growth profile highlighted by one of the largest junior owned silver asset bases in Mexico. The company has a 50,000 meter program underway at the high-grade Columbus silver property to advance the current resource of 54 million ounces at 284 g per ton silver. Coupney is also holding over 200 million ounces in the measured and indicated categories and over a 100 million ounces inferred at the company's promo and lasagara projects. The company has an experienced management team with a track record of success from exploration discovery finance to production. If you're looking for a company that will leverage the potential gains of the silver market, do your due diligence on coupney silver. That's ticker KTN on the TSXV. Yeah. historical price of silver. Like I mentioned, $50 only twice before in history. This is the third time now for silver. And we're speaking at a crucial junction point for silver. This is the precipice of the top, meaning we could go either way. It'll sustain above 50 or it'll come crashing down like the prior two times. And right now, like we talked about, like you just mentioned, it's breached the $50. Hasn't stayed there for longer than a couple days in the last couple days, last week, David. And now it's coming down to 48. It's repeating exactly what happened at the onset of 21 2011 rather and 1980. So what's next? Is this time different? That's probably the most dangerous phrase in all of finance. This time is different, but maybe it is. I'll let you evaluate. Is it? >> I believe it is. If you look at what happened in uh 1980, you can go back to the Hunt brothers and you know there's a book called Silver Bulls by Paul Sarnoff. It explains almost every day leading up to the peak. It's a great read if you're a silver fanatic. Uh in 2011 that was basically based upon uh it's always paper trading. The silver market is a derivatives market but the backup on it is thousand ounce commercial bars. It was very extended. I I called that top by the way and that was mostly retail. Of course, institutions are always on the other side. But this time it is different because it's the silver market hard asset physical commercial bars, 10,000 ounce bars that are difficult to get in the quantity required to clear the market. Which means the refiners basically are not taking any junk silver, sterling silver, silver jewelry to smelt down into 999 fine because it takes too much time and energy. Whereas they will take 100 ounce 999 far fine bar or a kilo bar that's 9995 because all I have to do is throw that in a pot, melt it down and pour it into a thousand ounce bar. So these refiners are backed up with metal that they need to refine and they're pouring it out into thousand ounce bars basically as quickly as possible. There's not really that much refining capacity that takes place in the United States anymore, but there's some. Most of the refining takes place in China. And China imports, you know, the lion share of the silver and they export back out after being refined to the people that, you know, moved it in like a mining company. But most people don't know that smelters get paid in metal most of the time. So if I ship in 10 million ounces of metal and my my uh contract is, you know, 10% goes to them or unless there's what's called nasties in it, the refining process is more difficult. they might get a higher amount back to them. So, China is really the most I think swing factor in the silver market right now uh for and India both for physical thousand ounce bars and recently the Chinese have came into the market on the retail side which really hasn't been the case for quite some time. It's been gold and even India's kind of switched to gold as they become more prosperous. But now India is doing a lot more solar and they have silver ETFs which demand physical silver to back up the ETFs and they're kind of waiting for that silver to come in to India so they can increase the share quantity the amount of shares that they can issue because they have the silver to back it up. So this is something that I would say I've always more or less thought or predicted that there would be a day someday that the commercial bar market the physical what's really the silver market the derivative market that's based on commercial bars is what takes hold and that's happening. The other times we've had those runs, it's been more or less retail buying, you know, retail products, 100 ounce bars, bagged silver, silver rounds, government issued coins, and that's part of the equation. But the real silver markets determined around commercial bars. And that's where we have a problem right now. We have different prices in India than we have in China. Different prices in China than we have at the LBMA. Different prices at the LBMA that we have on the COMX. So now, who's who in the zoo? If you don't know what the real price is, you can't really even hedge. And if you can't hedge, you're going to put up a sign on your website saying, "We're out of silver. We're closed for business." They're probably not out of silver, closed for business. But if you can't hedge, uh, you have got a problem if you are a big coin dealer, if you're a manufacturer of silver shot or silver wire or silver fluids or silver mesh or whatever. So, it's kind of messed up the market in a way because if you don't know what the real price is, you know, in the future, can't hedge what you have, you're taking a big chance. So, if you don't know what to do, you basically kind of quiet down and do the bare minimum that you can. >> Yes. I'm putting the silver price back up now and we can talk about uh the correlations between silver and some other metals. Um, as you and my audience are aware, silver is very much correlated with gold. They track each other. Well, I guess silver tracks gold, but what's interesting to me is that over the last 5 years, these two metals have also kind of moved together in tandem with copper. Now, I don't know if this is just a coincidence or if there's a bigger picture here or if they're supposed to move together, but from what I've been gathering talking to experts like yourself, the fundamentals of each of these metals are very different. And the reasons for why people buy, accumulate, or stock them are also very different. Their use cases in an industry are also very different. So from a fundamental perspective, there's no reason why they should be moving together. But yes, here's the 5-year chart. If you zoom in a bit, the correlation still remains in the last 2 years and ever since 2024, they've more or less moved in the same direction upwards. uh this glitch in the copper price in August of this year uh was due to uh the tariff announcement and then um some discrepancies of pricing uh between the CME and uh sorry the COMX and the LME LME. So I I'll let you comment on why these metals have kind of moved together. What's the bigger story here? >> The bigger story is that gold is absolutely a monetary metal and that's really what it is. Period. So silver is both an industrial and a monetary metal. And so it's got a correlation with gold. I haven't checked it recently. Going back about 5 years, it was proven to be about 85% correlated, which is a very high correlation. But it also has at times when it acts more as an industrial metal like copper. So silver is sort of a dual personality, you might say. Some of the time it tracks gold stronger because it's monetary um demand is higher over let's say industrial or at least at the margin it's monetary demand and at other times the monetary demand is not very strong like it has been not very strong in the last couple years up until recently I'm not talking the last couple of months >> but the last few years it's been more of an industrial story than a monetary story copper is a pure uh industrial story. So silver kind of oscillates between I'm an industrial metal or needed industrially or I'm needed monetarily. So that's actually why you get that tracking that looks the way it looks. And copper uh they call Dr. copper. I look at it as being a a very good indicator as far as what the actual need is for growth or industrialization or technology improvement on a on a world basis. It's pretty good at that. But actually, I've kind of changed my opinion, David, that I think oil is actually a better indicator. And oil is really not doing that well right now. But that doesn't mean it might not pick up in the future. So hopefully that was a pretty good explanation cuz that's that that's the facts. >> A lot of this run up in uh in the gold price can be explained by central bank buying. The accumulation of um gold by central banks this year was significant especially from the banks of the far east and eastern Europe. How do you explain the silver runup? Who's been buying silver? >> Well, that's India. it's China and it is, you know, the technological revolution plus I think it's let's say um maybe sovereign wealth funds, maybe it's deep pockets that understand the silver market that I think are taking silver for various reasons. And the thing that's very interesting about the silver market is physical silver is needed in the London market to clear the market. how much it's been reported are purportedly 150 million ounces which last time I checked the ComX only had about 170 million in uh in the register category which is readily available to ship to London or wherever. I personally not sure it's going to take that much, but it'll take some physical to clear the market. But the ace in the hole, the the outlier, David, is this section or article 232, which puts silver in the critical metal category. Now, it's been put on the list to be determined to be a critical metal, but that vote has not taken place yet, and it's probably going to be delayed because of the quote unquote close down of the government. government comes back and says silver is a critical mineral, then I would submit that there's a highly strong probability that the need for silver will go to the government as a strategic or critical mineral and they would have to buy it in the open market and the strategic stockpile in 1985 was 140 million ounces round number. So if they all of a sudden decided they the US this government said we need it as a critical mineral let's stockpile it and they said how much do we need we need 100 million ounces at this point in time that would put further stress on the market and you also have the Saudis that bought about a million shares of the SLV race rec recently which just puts them in the position of an authorized participant which means they can actually use the SL LV as a source to get physical metal because if you meet the threshold you can change that paper shares in physical metal. So that's putting further stress and as I said earlier the India has a ETF that's backed by physical and they're waiting to get more so they can issue more shares. So there's stress in the commercial side of the market that I've never seen before David and that is the real silver market. Not that retail isn't important, but it's sort of a, you know, it's it's the tale of the dog. Basically, the dog is the real physical silver market backed up or played around by derivatives. >> So, the the narrative that silver usually only runs up parabolic parabolically when there's a huge investment demand. That's not true in this case. >> It's demand. And silver doesn't say, "Oh, are you investing with for monetary purposes? Are you investing for industrial purposes?" it really doesn't care. >> But we have an industrial demand that's insatiable followed by monetary demand at a much higher level. It's institutional demand or very big wealthy, you know, funds or whatever that are piling on on top of an industrial demand that isn't being met. So if you have an industrial demand that cannot be met by the physical supply coupled with a u an investment demand then you have what we've got and I've said this for years there could be or would be a day where you have both sides fighting for the same quantity going back to your copper gold silver chart what if the industrial demand is stronger than ever and the investment demand is stronger than ever at the same time. Well, that's where we're at right now. >> It it occurs to me that the countries producing the most silver in the world are Mexico and China. And importantly, these two countries are also the highest in terms of refining output. So, both production and refining. Now, both of these companies have been tariffed. In fact, there's a trade war ongoing, not only with the allies of the US, including Mexico. But now, as you know, the trade war between China and the US is heating up once more with 100% tariff placed on China. Anyway, the point is I'm I'm I'm speculating here that the market perhaps is discounting or pricing in the possibility that trade between these two countries are going to kind of diminish somewhat. Perhaps China will threaten to cut off silver exports or uh export fewer silver. They've been already banning a lot of other critical minerals, so why not silver? Maybe that's a risk that's priced in. There's a huge trading risk premium that's priced in right now and perhaps if trade tensions get resolved, the price will come down. The premium isn't coming down. It's kind of like a war premium. Does that make any sense to you, David? >> It does. I think if we get this 232 article that I just talked about for critical minerals, I think that's to take place, you'll probably see the market calm down, go back into contango. I think there may be a little bit of what we call backwardation in the London market, but it's gone from a couple bucks to I think 60 cents or so. So things are starting to kind of quiet down somewhat. And yeah, you make a good point. I think if that were to occur, we'd probably see the market normalize at least for a while and then I would be holding my breath pretty much. meaning that um we're so tight that it wouldn't take much more buying on both sides industrial and investment to take the market higher again. But it come from a base of you know 48 or 52 or whatever it is and I wouldn't say all of a sudden but the market starts to build pressure again and takes the market higher >> right now. Um have you had a chance to look at positioning of silver from traders the futures market are they more long or short right now? Yeah, as I said earlier, maybe I didn't say it succinctly, but right now the shorts are still uh okay, we're sweating because they have not been able to cover the amount of uh paper silver that they would like to. So, if the market does go up from here, they're going to sweat it even more. And then there is that discrepancy between what's required by the LBMA to clear the market and the amount that's been delivered already. And whether that's another 10 million ounces or 100 million ounces, I don't know. I'm not I'm not sure. Uh but I know what's written out there in the blogosphere. I don't buy everything that's out there. I'm not saying they're wrong, but based on the activity so far and where the market's trading right now, I suspect this market will clear within another couple of weeks or so. And going back to your point about silver being used in industry, if I were in industry, if I were one of the industries using a lot of lot of silver, I would do everything in my power to I don't know um hoard silver or perhaps dump futures on the open market to make the price as low as possible because I don't want to pay a high silver price for my input costs. David, is some of that happening around the $50 mark? Is that why we we just can't get past that? >> Absolutely. And that's uh you know, warehousing is the word I like to use. And if you're, you know, Tesla or um Samsung or whatever, it's not a bad idea to have your logistics department, you know, take take their longs and ask for delivery and get a small warehouse, you know, nearby your factory or put in your factory if you got the space and start to stack it up because it's a critical input. It's essential and it's not substitutable. So if you require silver to stay in business and you see this congestion that we have right now, I just repeat back to you what you just said. >> Yeah. If >> I was the CEO or the head of logistics, let's say, I'm saying, "Hey boys, let's put six months of silver away right now and our limit price is 54 bucks. Buy everything you can find up until then. But as we got the market smashed down, start to accumulate. Try to be quiet. Not try not to move the market, but let's get this stuff on the shelf." That's what I would say. >> What would theoretically need to happen for silver to reach $100 this cycle? >> You would have to have such a squeeze that people in industry and some investors would say, "I don't care the cost. We have to have x amount of silver by next Tuesday in order to stay in business. Go get it no matter what it takes. I'm not closing down this factory." >> And what kind of what what kind of need would necessitate this level of squeeze? Well, if you're in the semiconductor industry, you need 44 million ounces of silver a year. Now, that's not one manufacturer, but you know, on on aggregate, the whole world, it's 44 million ounces. I mean, if you're looking at um you know, the solar industry, I mean, you're in the hundreds of thousands of ounces, you know, you're in millions of ounces, 100 million, 200 million,und you know. So those two alone are a pretty good you know take that's an absolute requirement to stay in business and then all the stuff that we take for granted in the electrical and electronics world which is a very small amount but required or you can't function so there is a possibility of what I would call what or Jim Dyn I think you remember Jim maybe not know you're pretty young what he called a natural squeeze a natural squeeze isn't the Hunt Brothers. It isn't a bunch of investors. It isn't a sovereign wealth fund or a pension fund. It's the market itself says, "I need silver or I'm going to die because I'm out of business unless I have it." And there's so much of an industrial demand that industrial demand requires more silver than is available. And then the icing on the cake is investment demand on top of that. And that's pretty much the point we're at right now. >> This is from the Silver Institute. According to their calculations, in 2024, there was a deficit uh a market deficit uh before investment demand in ETPs of 149 million ounces. It's projected in 2025 that the deficit will reach 117 thou a million ounces rather. Um so the last couple years has just been marked by a shortage of silver. Is there actually according to what you've observed and not just their statistics you know how much of a shortage actually is there in the open market is there in terms of physical that is >> yeah it's a very good question David I mean if you look at that same study the amount of silver above ground is 3.6 6 million ounces. I mean, what what am I saying? 300 and uh three what is it? Uh 3.6 billion ounces. Is that right? >> It's um >> total supply is Yeah. 1 billion ounces. >> Yeah. Money production recycling physical. >> Yeah. So we have like Yeah, that's right. So we've got a billion ounces in government coins roughly. So that's tight hands. We got another billion ounces that is in what's called silver rounds and that's in tight hand. So we got roughly two billion ounces into the retail market. Now we have 1.6 billion left. Okay. So that's like a year and a half's worth. However, of that 1.6 billion, Silver Institute puts in retail bars along with commercial bars. So if you subtract out the retail bars, David, you're looking at three or 400 million. So now we're down to 1.2. 2 billion ounces, which is about a year's supply. That's what you use. We're using we mine and refine a billion and we're short 200 million the last four years or so. But the problem there is that the ETFs are eating up maybe half of that. So in theory, we're down to again the silver market, which means commercial bars, where there's a float of 600 million. I got my numbers right now. And so what's that? Well, that's, you know, six months or something. However, it looks like where we're at right now is that number is not correct as far as what the demand is. So, in other words, there's demand out there maybe for the Indian ETF, maybe the Chinese market, maybe um big investors that have basically squeezed that market to this point in time. So even though you could in theory have three years above ground stockpile which I just outlined we have all the the retail which holds the lion share of that market are not probably willing to sell at 50. They've waited a long time to see this number. So they're probably not going to hold on and they're going to hold on till they see 60 or 70. So it's not that readily available. Now, now to be honest, a lot of retail silver people have sold. You know, they bought at 35, they see it at 45. I waited forever. I'm done. I'm out. Sell my silver. So, the wholesale side of the North American market has seen a lot of silver come in into the market to be sold. Now that we've gotten to that 50 area, we're starting to see the retail come back into the market to buy. So, it's a very almost schizophrenic market at times where people like, I waited forever. I'm done with silver. I never want to listen to David Morgan again as long as I live. And then it's at 60 and they go, "Oh, I missed it. I want to buy it now." It's that kind of a market. >> What would happen if the Comx or LBMA failed to deliver physical silver in real time for whatever reason? Maybe there's a supply issue, uh, logistics issue where they just don't have enough in inventory at that particular time. What would that look like? Well, that's kind of what we see. The LBMA is actually in that position and we're seeing the disarray, but the price got whacked down really well and the market's uh closed. The spread between I got to have silver right now. I'm going to die or I can wait for it has shrunk from a couple bucks down to I think I haven't looked lately, but you know, pennies, 60 cents or whatever. So, that means the problem looks like it's being solved. And then on the COMX, of course, that would disrupt the market as well. But the Comx, you could settle in cash. And so in theory, it will never default. But if a big player like uh you know, somebody came in and you know, asked for delivery and they were forced to settle for cash, the word would get leaked out pretty quickly and that again would put a strain on silver market. I mean, basically right now, the way I see it is, as we've already talked, the industrial side's saying, "Wait a minute, how much silver we got?" And if uh the logistics department says, "Hey, you know, we've got a year supply on our shelves right now. We saw this possibly coming. We're good. Uh they're out of the market. They're not going to worry about it." On the other hand, if there's some just in time inventory and they're a month behind and they're not getting it, they're going to pay whatever they need. So, it's a market that's pretty diverse. The silver market is a small market, but there is a billion ounces produced every year. And it's, you know, as I said, the above ground stockpile, 3.6 billion, even though most of its coins and tight hands, doesn't mean it won't come in the market. >> Very good report, David. I appreciate your time and uh thank you for educating us on silver. Where can we find your work and read more about you? >> Yeah, the mortgreport.com. And I'd like to do a shout out. Today is the release of my documentary. It's more of a big picture. It does involve silver and gold. It's called Silver Sunrise. It's at silver sunrise.tv, like television. Silverson sunrise.tv. And it talks about the stress control and concern that the money powers have over what I'll call the system at large. So, it goes through a lot of interesting material on the money problem and uh how we can solve it. >> Okay. Thanks, David. Appreciate your time. Follow David Morgan in the link down below and follow this channel. Subscribe and like. Spread the word and we have daily updates every day with experts. Thanks, David. We'll speak again soon. >> Thank you, David Lynn. >> Thank you for watching. Don't forget to like and subscribe.
Biggest Silver Squeeze Ever: Is $100 Next Or Collapse? | David Morgan
Summary
Transcript
The market itself says, "I need silver or I'm going to die because I'm out of business unless I have it." And there's so much of an industrial demand that industrial demand requires more silver than is available. What if the industrial demand is stronger than ever and the investment demand is stronger than ever at the same time? Well, that's where we're at right now. >> What would theoretically need to happen for silver to reach $100 this cycle? you would have to have such a >> Our next guest is somebody who's been analyzing the silver market very closely. Silver is one of the fastest moving assets of 2025. It's come down a bit from its highs. We're going to find out what's next after the sharp drop off uh dramatic selloff from the last week's highs. David Morgan joins us once more. He is the founder of the Morgan Report. It's always good to see you again, David. Welcome back. >> David Lyn, it's good to see you again. Thank you. >> Thank you, David. Let's talk about uh the recent uh selloff first. Uh I think that's top of mind for investors. As you know, silver uh reached a high of $54 last week and just this week following the announcement of uh tariffs and uh new additional tariffs from China and uh a market selloff uh that took gold down as well. Silver followed. It's now down to $48. That's we're talking about an 11% decline um in a matter of couple days. So David uh walk us through what's happening currently and then we can talk about what's next. >> Well you outlined it very well David. I mean currently we were overbought in both gold and silver for a long time. You know the guys that look at technical work the RSI relative strength indicator a lot of things were showing us that uh we were due for a correction a pullback profit taking however you want to frame it. And that's taken place. And when these things happen, it's very normal that the down push is greater than the upward push. Meaning markets fall faster than they go up. So we saw, you know, like a 5% 6%, you know, move down in the silver market. Gold got hammered fairly well also. But these are actually healthy for the market. The reason is you don't want a market to go straight up because if that happens there isn't really any support on the way up. So what you really want to see is a stair step. So silver goes from 35 to 37 38 trades in that range 37 to 38 for 3 weeks. Then it moves up to 40. It bounces around 40 to 42 for a month. Then it bounces up to 45 and goes down to test the 38, you know, level, whatever. So, what you want to see is support. You want to see a lot of buying in certain in ranges as it works its way up, as I said, as a stair step. If it goes up, up up, there's no support. And it's like throwing a tennis ball in the air, David, where, you know, you throw a tennis ball as hard as you can and it just keeps going up until it reaches that point of zero momentum and it's actually stops midair for, you know, two milliseconds and then gravity takes over and starts coming down. And that's a good metaphor for a parabolic move. And I don't care if it's soybean, oil, silver, or um IBM shares. If you get that kind of a pattern, that kind of a hockey stick, you really have to be smart to sell in the strength because it will come down usually very rapidly. On the other hand, >> yes, >> if we do what we're doing, then uh we are assured pretty much that we're continuing to be in a bull market that's strong. And so what happens in a bull market, I've said it too often, but it bears repeating, David, and that is the bull's function, is to shake off as many longs as it possibly can. I mean, the uh idea of a bull rider, if you've ever been to a rodeo or watched it on TV, those guys get a big round of applause if they hang on for eight seconds. That's a very good metaphor for how strong, especially the silver market can be. So people that were long and bought the breakout, you know, maybe they used my my rule. Oh my goodness, David's right. It's been three days. I'm going long and it was I don't know 52 at the time in that range and they leveraged up and went up for a few more days after that. They better have a tight stop because as you just said, it could pop down. So what's happened is what we call the weak hands get shaken out. People that are overleveraged get shaken out. people that have thin margins get shaken out. But I have to add one more thing. I'll give it back to you David. And that is if you look at the structure of the market, it actually in silver has not come down to the level where a lot of these shorts have been able to cover their positions because the open interest has stayed about the same. And that's key to note because what that means is the guys that are on what I would say the wrong side of this market that expect the price to keep coming down may not get their wish and are not able to exit their shorts and are stuck especially if the market continues higher from here. Not saying it will but if it does then they got to suck and so do I take a paper loss or don't I or can I force the market down. So, we are in a really strong bull bear scenario where I would say the shorts that have always anticipated their ability to move this market around are having a heck of a lot more difficulty doing so. And that same statement applies to gold. >> I'm going to show a historical chart of silver in just a minute. But what is the significance of $50? Silver has only breached $50. Uh let's think the second time in 1981. it uh it didn't I I correct me if I'm wrong but I think in 1980 January 1980 when it peaked it didn't even reach 50 yet it was like high4948 and so there is this historical psychological ceiling around $50 is that just a coincidence you hit the nail on the head depends who you talk to I actually called the floor of the exchange and I have brokers on the uh on the board of trade that I know personally and I I would say inside information, but according to what they gave me for information, the $50 level was hit what's called intraday. So, there were trades made at 50 or higher, but it didn't close at 50 on that exchange. On the other exchange, I think they closed it at 52 or something. But the 50 level from the actual trading floor that day was according to them matter of minutes. And according to some of the head old heads that are as old as I am, uh they said it was maybe an hour or so. So the point being well taken is this. It did not stay at 50 for very long. Now did it hit 50? Yes. And going to what you said and just refraraming it, David, you're spot on. That is a psychological level that really holds merit and I think it still does because we have seen it go past 50. It stayed there for a few days. Get, you know, we got prints. It closed, traded all day above 50, traded another all day above it, traded another all day above 50, but it hasn't been a month. You know, it's been days and now we're below 50. So, I really think it's a battle line for let's say the uh commercial interests, the bullion banks to kind of persuade the psychology as you said that word. It's a good word. Hey, 50 is it for silver. It can't do more than that. See, you're not you're you're not doing the right thing buying silver dollars. Now, I don't believe that, but I do believe the psychology is to continue to beat that arena, that area of trading to psychologically take the juice out of the bulls. In other words, to discourage them from going in the silver market, this level. Silver has been one of this year's top performing assets, climbing more than 80% year-to date. Importantly, it hit its much anticipated $50 an ounce historical high, which has only happened twice before in its entire history. The whole silver market has been in a frenzy all year. But physical bullion is not the only way to be exposed to the metal. I'm here to tell you that today's sponsor, Coupin Silver, has a great leverage to the silver price. Coupé has a leading growth profile highlighted by one of the largest junior owned silver asset bases in Mexico. The company has a 50,000 meter program underway at the high-grade Columbus silver property to advance the current resource of 54 million ounces at 284 g per ton silver. Coupney is also holding over 200 million ounces in the measured and indicated categories and over a 100 million ounces inferred at the company's promo and lasagara projects. The company has an experienced management team with a track record of success from exploration discovery finance to production. If you're looking for a company that will leverage the potential gains of the silver market, do your due diligence on coupney silver. That's ticker KTN on the TSXV. Yeah. historical price of silver. Like I mentioned, $50 only twice before in history. This is the third time now for silver. And we're speaking at a crucial junction point for silver. This is the precipice of the top, meaning we could go either way. It'll sustain above 50 or it'll come crashing down like the prior two times. And right now, like we talked about, like you just mentioned, it's breached the $50. Hasn't stayed there for longer than a couple days in the last couple days, last week, David. And now it's coming down to 48. It's repeating exactly what happened at the onset of 21 2011 rather and 1980. So what's next? Is this time different? That's probably the most dangerous phrase in all of finance. This time is different, but maybe it is. I'll let you evaluate. Is it? >> I believe it is. If you look at what happened in uh 1980, you can go back to the Hunt brothers and you know there's a book called Silver Bulls by Paul Sarnoff. It explains almost every day leading up to the peak. It's a great read if you're a silver fanatic. Uh in 2011 that was basically based upon uh it's always paper trading. The silver market is a derivatives market but the backup on it is thousand ounce commercial bars. It was very extended. I I called that top by the way and that was mostly retail. Of course, institutions are always on the other side. But this time it is different because it's the silver market hard asset physical commercial bars, 10,000 ounce bars that are difficult to get in the quantity required to clear the market. Which means the refiners basically are not taking any junk silver, sterling silver, silver jewelry to smelt down into 999 fine because it takes too much time and energy. Whereas they will take 100 ounce 999 far fine bar or a kilo bar that's 9995 because all I have to do is throw that in a pot, melt it down and pour it into a thousand ounce bar. So these refiners are backed up with metal that they need to refine and they're pouring it out into thousand ounce bars basically as quickly as possible. There's not really that much refining capacity that takes place in the United States anymore, but there's some. Most of the refining takes place in China. And China imports, you know, the lion share of the silver and they export back out after being refined to the people that, you know, moved it in like a mining company. But most people don't know that smelters get paid in metal most of the time. So if I ship in 10 million ounces of metal and my my uh contract is, you know, 10% goes to them or unless there's what's called nasties in it, the refining process is more difficult. they might get a higher amount back to them. So, China is really the most I think swing factor in the silver market right now uh for and India both for physical thousand ounce bars and recently the Chinese have came into the market on the retail side which really hasn't been the case for quite some time. It's been gold and even India's kind of switched to gold as they become more prosperous. But now India is doing a lot more solar and they have silver ETFs which demand physical silver to back up the ETFs and they're kind of waiting for that silver to come in to India so they can increase the share quantity the amount of shares that they can issue because they have the silver to back it up. So this is something that I would say I've always more or less thought or predicted that there would be a day someday that the commercial bar market the physical what's really the silver market the derivative market that's based on commercial bars is what takes hold and that's happening. The other times we've had those runs, it's been more or less retail buying, you know, retail products, 100 ounce bars, bagged silver, silver rounds, government issued coins, and that's part of the equation. But the real silver markets determined around commercial bars. And that's where we have a problem right now. We have different prices in India than we have in China. Different prices in China than we have at the LBMA. Different prices at the LBMA that we have on the COMX. So now, who's who in the zoo? If you don't know what the real price is, you can't really even hedge. And if you can't hedge, you're going to put up a sign on your website saying, "We're out of silver. We're closed for business." They're probably not out of silver, closed for business. But if you can't hedge, uh, you have got a problem if you are a big coin dealer, if you're a manufacturer of silver shot or silver wire or silver fluids or silver mesh or whatever. So, it's kind of messed up the market in a way because if you don't know what the real price is, you know, in the future, can't hedge what you have, you're taking a big chance. So, if you don't know what to do, you basically kind of quiet down and do the bare minimum that you can. >> Yes. I'm putting the silver price back up now and we can talk about uh the correlations between silver and some other metals. Um, as you and my audience are aware, silver is very much correlated with gold. They track each other. Well, I guess silver tracks gold, but what's interesting to me is that over the last 5 years, these two metals have also kind of moved together in tandem with copper. Now, I don't know if this is just a coincidence or if there's a bigger picture here or if they're supposed to move together, but from what I've been gathering talking to experts like yourself, the fundamentals of each of these metals are very different. And the reasons for why people buy, accumulate, or stock them are also very different. Their use cases in an industry are also very different. So from a fundamental perspective, there's no reason why they should be moving together. But yes, here's the 5-year chart. If you zoom in a bit, the correlation still remains in the last 2 years and ever since 2024, they've more or less moved in the same direction upwards. uh this glitch in the copper price in August of this year uh was due to uh the tariff announcement and then um some discrepancies of pricing uh between the CME and uh sorry the COMX and the LME LME. So I I'll let you comment on why these metals have kind of moved together. What's the bigger story here? >> The bigger story is that gold is absolutely a monetary metal and that's really what it is. Period. So silver is both an industrial and a monetary metal. And so it's got a correlation with gold. I haven't checked it recently. Going back about 5 years, it was proven to be about 85% correlated, which is a very high correlation. But it also has at times when it acts more as an industrial metal like copper. So silver is sort of a dual personality, you might say. Some of the time it tracks gold stronger because it's monetary um demand is higher over let's say industrial or at least at the margin it's monetary demand and at other times the monetary demand is not very strong like it has been not very strong in the last couple years up until recently I'm not talking the last couple of months >> but the last few years it's been more of an industrial story than a monetary story copper is a pure uh industrial story. So silver kind of oscillates between I'm an industrial metal or needed industrially or I'm needed monetarily. So that's actually why you get that tracking that looks the way it looks. And copper uh they call Dr. copper. I look at it as being a a very good indicator as far as what the actual need is for growth or industrialization or technology improvement on a on a world basis. It's pretty good at that. But actually, I've kind of changed my opinion, David, that I think oil is actually a better indicator. And oil is really not doing that well right now. But that doesn't mean it might not pick up in the future. So hopefully that was a pretty good explanation cuz that's that that's the facts. >> A lot of this run up in uh in the gold price can be explained by central bank buying. The accumulation of um gold by central banks this year was significant especially from the banks of the far east and eastern Europe. How do you explain the silver runup? Who's been buying silver? >> Well, that's India. it's China and it is, you know, the technological revolution plus I think it's let's say um maybe sovereign wealth funds, maybe it's deep pockets that understand the silver market that I think are taking silver for various reasons. And the thing that's very interesting about the silver market is physical silver is needed in the London market to clear the market. how much it's been reported are purportedly 150 million ounces which last time I checked the ComX only had about 170 million in uh in the register category which is readily available to ship to London or wherever. I personally not sure it's going to take that much, but it'll take some physical to clear the market. But the ace in the hole, the the outlier, David, is this section or article 232, which puts silver in the critical metal category. Now, it's been put on the list to be determined to be a critical metal, but that vote has not taken place yet, and it's probably going to be delayed because of the quote unquote close down of the government. government comes back and says silver is a critical mineral, then I would submit that there's a highly strong probability that the need for silver will go to the government as a strategic or critical mineral and they would have to buy it in the open market and the strategic stockpile in 1985 was 140 million ounces round number. So if they all of a sudden decided they the US this government said we need it as a critical mineral let's stockpile it and they said how much do we need we need 100 million ounces at this point in time that would put further stress on the market and you also have the Saudis that bought about a million shares of the SLV race rec recently which just puts them in the position of an authorized participant which means they can actually use the SL LV as a source to get physical metal because if you meet the threshold you can change that paper shares in physical metal. So that's putting further stress and as I said earlier the India has a ETF that's backed by physical and they're waiting to get more so they can issue more shares. So there's stress in the commercial side of the market that I've never seen before David and that is the real silver market. Not that retail isn't important, but it's sort of a, you know, it's it's the tale of the dog. Basically, the dog is the real physical silver market backed up or played around by derivatives. >> So, the the narrative that silver usually only runs up parabolic parabolically when there's a huge investment demand. That's not true in this case. >> It's demand. And silver doesn't say, "Oh, are you investing with for monetary purposes? Are you investing for industrial purposes?" it really doesn't care. >> But we have an industrial demand that's insatiable followed by monetary demand at a much higher level. It's institutional demand or very big wealthy, you know, funds or whatever that are piling on on top of an industrial demand that isn't being met. So if you have an industrial demand that cannot be met by the physical supply coupled with a u an investment demand then you have what we've got and I've said this for years there could be or would be a day where you have both sides fighting for the same quantity going back to your copper gold silver chart what if the industrial demand is stronger than ever and the investment demand is stronger than ever at the same time. Well, that's where we're at right now. >> It it occurs to me that the countries producing the most silver in the world are Mexico and China. And importantly, these two countries are also the highest in terms of refining output. So, both production and refining. Now, both of these companies have been tariffed. In fact, there's a trade war ongoing, not only with the allies of the US, including Mexico. But now, as you know, the trade war between China and the US is heating up once more with 100% tariff placed on China. Anyway, the point is I'm I'm I'm speculating here that the market perhaps is discounting or pricing in the possibility that trade between these two countries are going to kind of diminish somewhat. Perhaps China will threaten to cut off silver exports or uh export fewer silver. They've been already banning a lot of other critical minerals, so why not silver? Maybe that's a risk that's priced in. There's a huge trading risk premium that's priced in right now and perhaps if trade tensions get resolved, the price will come down. The premium isn't coming down. It's kind of like a war premium. Does that make any sense to you, David? >> It does. I think if we get this 232 article that I just talked about for critical minerals, I think that's to take place, you'll probably see the market calm down, go back into contango. I think there may be a little bit of what we call backwardation in the London market, but it's gone from a couple bucks to I think 60 cents or so. So things are starting to kind of quiet down somewhat. And yeah, you make a good point. I think if that were to occur, we'd probably see the market normalize at least for a while and then I would be holding my breath pretty much. meaning that um we're so tight that it wouldn't take much more buying on both sides industrial and investment to take the market higher again. But it come from a base of you know 48 or 52 or whatever it is and I wouldn't say all of a sudden but the market starts to build pressure again and takes the market higher >> right now. Um have you had a chance to look at positioning of silver from traders the futures market are they more long or short right now? Yeah, as I said earlier, maybe I didn't say it succinctly, but right now the shorts are still uh okay, we're sweating because they have not been able to cover the amount of uh paper silver that they would like to. So, if the market does go up from here, they're going to sweat it even more. And then there is that discrepancy between what's required by the LBMA to clear the market and the amount that's been delivered already. And whether that's another 10 million ounces or 100 million ounces, I don't know. I'm not I'm not sure. Uh but I know what's written out there in the blogosphere. I don't buy everything that's out there. I'm not saying they're wrong, but based on the activity so far and where the market's trading right now, I suspect this market will clear within another couple of weeks or so. And going back to your point about silver being used in industry, if I were in industry, if I were one of the industries using a lot of lot of silver, I would do everything in my power to I don't know um hoard silver or perhaps dump futures on the open market to make the price as low as possible because I don't want to pay a high silver price for my input costs. David, is some of that happening around the $50 mark? Is that why we we just can't get past that? >> Absolutely. And that's uh you know, warehousing is the word I like to use. And if you're, you know, Tesla or um Samsung or whatever, it's not a bad idea to have your logistics department, you know, take take their longs and ask for delivery and get a small warehouse, you know, nearby your factory or put in your factory if you got the space and start to stack it up because it's a critical input. It's essential and it's not substitutable. So if you require silver to stay in business and you see this congestion that we have right now, I just repeat back to you what you just said. >> Yeah. If >> I was the CEO or the head of logistics, let's say, I'm saying, "Hey boys, let's put six months of silver away right now and our limit price is 54 bucks. Buy everything you can find up until then. But as we got the market smashed down, start to accumulate. Try to be quiet. Not try not to move the market, but let's get this stuff on the shelf." That's what I would say. >> What would theoretically need to happen for silver to reach $100 this cycle? >> You would have to have such a squeeze that people in industry and some investors would say, "I don't care the cost. We have to have x amount of silver by next Tuesday in order to stay in business. Go get it no matter what it takes. I'm not closing down this factory." >> And what kind of what what kind of need would necessitate this level of squeeze? Well, if you're in the semiconductor industry, you need 44 million ounces of silver a year. Now, that's not one manufacturer, but you know, on on aggregate, the whole world, it's 44 million ounces. I mean, if you're looking at um you know, the solar industry, I mean, you're in the hundreds of thousands of ounces, you know, you're in millions of ounces, 100 million, 200 million,und you know. So those two alone are a pretty good you know take that's an absolute requirement to stay in business and then all the stuff that we take for granted in the electrical and electronics world which is a very small amount but required or you can't function so there is a possibility of what I would call what or Jim Dyn I think you remember Jim maybe not know you're pretty young what he called a natural squeeze a natural squeeze isn't the Hunt Brothers. It isn't a bunch of investors. It isn't a sovereign wealth fund or a pension fund. It's the market itself says, "I need silver or I'm going to die because I'm out of business unless I have it." And there's so much of an industrial demand that industrial demand requires more silver than is available. And then the icing on the cake is investment demand on top of that. And that's pretty much the point we're at right now. >> This is from the Silver Institute. According to their calculations, in 2024, there was a deficit uh a market deficit uh before investment demand in ETPs of 149 million ounces. It's projected in 2025 that the deficit will reach 117 thou a million ounces rather. Um so the last couple years has just been marked by a shortage of silver. Is there actually according to what you've observed and not just their statistics you know how much of a shortage actually is there in the open market is there in terms of physical that is >> yeah it's a very good question David I mean if you look at that same study the amount of silver above ground is 3.6 6 million ounces. I mean, what what am I saying? 300 and uh three what is it? Uh 3.6 billion ounces. Is that right? >> It's um >> total supply is Yeah. 1 billion ounces. >> Yeah. Money production recycling physical. >> Yeah. So we have like Yeah, that's right. So we've got a billion ounces in government coins roughly. So that's tight hands. We got another billion ounces that is in what's called silver rounds and that's in tight hand. So we got roughly two billion ounces into the retail market. Now we have 1.6 billion left. Okay. So that's like a year and a half's worth. However, of that 1.6 billion, Silver Institute puts in retail bars along with commercial bars. So if you subtract out the retail bars, David, you're looking at three or 400 million. So now we're down to 1.2. 2 billion ounces, which is about a year's supply. That's what you use. We're using we mine and refine a billion and we're short 200 million the last four years or so. But the problem there is that the ETFs are eating up maybe half of that. So in theory, we're down to again the silver market, which means commercial bars, where there's a float of 600 million. I got my numbers right now. And so what's that? Well, that's, you know, six months or something. However, it looks like where we're at right now is that number is not correct as far as what the demand is. So, in other words, there's demand out there maybe for the Indian ETF, maybe the Chinese market, maybe um big investors that have basically squeezed that market to this point in time. So even though you could in theory have three years above ground stockpile which I just outlined we have all the the retail which holds the lion share of that market are not probably willing to sell at 50. They've waited a long time to see this number. So they're probably not going to hold on and they're going to hold on till they see 60 or 70. So it's not that readily available. Now, now to be honest, a lot of retail silver people have sold. You know, they bought at 35, they see it at 45. I waited forever. I'm done. I'm out. Sell my silver. So, the wholesale side of the North American market has seen a lot of silver come in into the market to be sold. Now that we've gotten to that 50 area, we're starting to see the retail come back into the market to buy. So, it's a very almost schizophrenic market at times where people like, I waited forever. I'm done with silver. I never want to listen to David Morgan again as long as I live. And then it's at 60 and they go, "Oh, I missed it. I want to buy it now." It's that kind of a market. >> What would happen if the Comx or LBMA failed to deliver physical silver in real time for whatever reason? Maybe there's a supply issue, uh, logistics issue where they just don't have enough in inventory at that particular time. What would that look like? Well, that's kind of what we see. The LBMA is actually in that position and we're seeing the disarray, but the price got whacked down really well and the market's uh closed. The spread between I got to have silver right now. I'm going to die or I can wait for it has shrunk from a couple bucks down to I think I haven't looked lately, but you know, pennies, 60 cents or whatever. So, that means the problem looks like it's being solved. And then on the COMX, of course, that would disrupt the market as well. But the Comx, you could settle in cash. And so in theory, it will never default. But if a big player like uh you know, somebody came in and you know, asked for delivery and they were forced to settle for cash, the word would get leaked out pretty quickly and that again would put a strain on silver market. I mean, basically right now, the way I see it is, as we've already talked, the industrial side's saying, "Wait a minute, how much silver we got?" And if uh the logistics department says, "Hey, you know, we've got a year supply on our shelves right now. We saw this possibly coming. We're good. Uh they're out of the market. They're not going to worry about it." On the other hand, if there's some just in time inventory and they're a month behind and they're not getting it, they're going to pay whatever they need. So, it's a market that's pretty diverse. The silver market is a small market, but there is a billion ounces produced every year. And it's, you know, as I said, the above ground stockpile, 3.6 billion, even though most of its coins and tight hands, doesn't mean it won't come in the market. >> Very good report, David. I appreciate your time and uh thank you for educating us on silver. Where can we find your work and read more about you? >> Yeah, the mortgreport.com. And I'd like to do a shout out. Today is the release of my documentary. It's more of a big picture. It does involve silver and gold. It's called Silver Sunrise. It's at silver sunrise.tv, like television. Silverson sunrise.tv. And it talks about the stress control and concern that the money powers have over what I'll call the system at large. So, it goes through a lot of interesting material on the money problem and uh how we can solve it. >> Okay. Thanks, David. Appreciate your time. Follow David Morgan in the link down below and follow this channel. Subscribe and like. Spread the word and we have daily updates every day with experts. Thanks, David. We'll speak again soon. >> Thank you, David Lynn. >> Thank you for watching. Don't forget to like and subscribe.