The Silver Default Is No Longer Theoretical
The hour of the paper-shuffler has ended. As of this Thursday morning, the global silver market is not merely "tight"—it is undergoing a violent, disorderly de-leveraging that will leave the balance sheets of the "Big 8" GSIBs in tatters.
The London Precious Metals Clearing Limited ("LPMCL") cartel—HSBC, JP Morgan, ICBC Standard, and UBS—is currently staring into a mathematical abyss. They have spent decades selling silver that does not exist. They have leased, re-hypothecated, and "unallocated" the world into a false sense of abundance. Today, the bill is due.
In China, the game is already over. The suspension of silver futures and the desperate hike in margins to 20% by the Shanghai Futures Exchange are the final gasp of a controlled market. Beijing has locked the doors. They are hoarding 1-kilogram investment bars while the West is still trying to settle trades in depreciating digits.
Observe the "Big 8" banks. While JPMorgan has perfidiously pivoted to physical delivery to save its own skin, Citigroup and Bank of America remain pinned under rumored short positions totaling billions of ounces. There is no physical silver to satisfy these contracts. The annual global mine supply of 800 million ounces is a mere rounding error compared to their liabilities.
Lars has warned you. The transition from "Paper Promises" to "Physical Reality" is never peaceful. If you are holding "unallocated" silver at a GSIB, you are not an investor; you are an unsecured creditor to a failing institution. The "Force Majeure" notices are likely being drafted as we speak.
Do not wait for the 8-K filings. Move now, or be settled in cash at a price that no longer reflects the metal's value.