The Silver Market Risk No One Talks About, and this is starting to cause issues of a systemic nature in the US Banking sector.
Global silver production is around 800 million ounces per year.
According to widely discussed market estimates and analyst commentary, just two banks — Bank of America and Citi — are believed to hold massive short exposure, estimated at ~4.4 billion ounces combined (BofA ~1B, Citi ~3.4B).
To fully cover these positions, they would theoretically need to buy every ounce of silver produced globally for the next ~5.5 years.
That assumes:
– No silver for jewellery
– No silver for solar panels
– No silver for electronics
– No silver for coins or bars
Which is impossible.
Because ~60% of global silver supply is already consumed by industrial demand.
Free, investment-grade physical silver supply is extremely tight.
This raises a serious question: are these positions actually backed by physical silver — or by paper promises?
The system allows this through:
• Unallocated accounts
• Leasing and rehypothecation
• The same physical silver being “sold” 10–20 times on paper
As long as investors are satisfied with paper silver, the system survives. Prices move slowly. Headlines come and go.
But the risk is simple and binary:
The day a large player demands physical delivery at scale, the system freezes.
History
The Hunt Brothers episode of the 1980s was small compared to what a modern institutional silver squeeze could look like.
In such a scenario:
• Paper markets may shift to cash settlement
• Futures prices and physical prices may decouple
• Physical silver could reprice violently
One rule always applies in commodities:
If you don’t hold it, you don’t truly own it.
