swung wildly after they topped $80 an ounce, with the market still weighing in on the impact of the US-based CME group’s fixing a higher margin and cutting the positions that a person could hold in the futures market.
In India, silver future contracts on topped ₹2.5 lakh a kg.
The white precious metal became the second-most valued financial asset, overtaking Nvidia with a valuation of $4.65 trillion. Nvidia’s valuation is $4.60, with gold at the top at over $35 trillion.
10% swing either side
On, those tracking silver futures swung 10 per cent on either side, rising to $82.615 an ounce and falling to $75.44. At 10:45 hours IST, silver was trading at $79.55 an ounce. In the futures market, March contracts traded at $79.26 an ounce.
In China’s Shanghai Futures Exchange, silver March contracts were quoted at 19,775 yuan a kg ($87.42 an ounce). It sashayed wildly between 18,048 yuan and 19,988 yuan ($88.45 an ounce) on Monday.
On the MCX, the March silver contracts were trading at ₹2,48,467 per kg, after hitting a high of ₹ 2,54,174. In the Mumbai spot market, silver was ₹2,43,483.
‘Silver Thusday’ fears
The CME’s new stipulation has raised fears of “Silver Thursday,” which dragged silver prices by 50 per cent on a single day in 1970. Then silver soared to $50 from $2 an ounce. As COMEX stepped in raising the margins, it plunged 50 per cent in a day and nosedived to $10 in two months.
Similarly, in 2011, when silver hit $49.5 an ounce, the CME raised the margin five times within 10 days. It plunged prices by 30 per cent in a couple of weeks.
However, bullion metals analyst Eric Yeung said that the silver-gold ratio will return to its historical average. “Silver will return to its rightful place during the upcoming deglobalisation. The experts who keep talking about 1980 and 2011 are looking at too short a time frame,” he tweeted on ‘X’.
Traders said those who had gone short in silver (selling in anticipation of a fall) face delivery issues as they had no stocks, while industrial manufacturers are racing supply chain chaos. Banks, too, were facing claims of delivery that are yet to be allocated by exchanges.
Physical silver shortage
They said physical silver is not available for December delivery contracts, and big banks were buying all the available physical silver, pushing up prices.
On the other hand, a big multinational bank has been “caught in the wrong position” going short and is unable to meet the margin requirement.
JP Morgan is suspected to be the bank and the US Federal Reserve had pumped in $34 billion into the banking system in addition to the $17 million it infused two days ago. The infusion was made by emergency overnight repo facility.
‘Crazy week ahead’
An analyst warned on social media that a “crazy week” was ahead for silver.
According to traders, the Chinese curbs on silver exports from January have begun to play out in the market. In addition, for every ounce of physical silver available in the market, over 300 ounces have been sold.
Silver’s current phenomenal run is being attributed to geopolitical crisis, lack of confidence in the dollar, tariff war and concerns over the global economy. In addition, the market has been facing a physical deficit since 2020, with a lack of new investments in the mining sector.