Silver prices have surged by 110% this year, far exceeding the gains of gold. However, behind futures short squeezes, physical shortages, and the failure of the paper system, the market is experiencing a profound trust crisis and a battle for pricing power.
(Background: Silver surpasses $63 to hit a new all-time high! Up over 100% this year, far surpassing gold and Bitcoin—will it challenge the $100 level next year?)
(Additional context: Silver breaks through $60 to reach a new all-time high! Up over 100% this year, ranking as the sixth-largest asset worldwide)

Table of Contents

• The Crisis Behind the Rise
• Futures Short Squeeze
• Who Is the Market Maker?
• The Gradual Failure of the Paper System

In December, the precious metals market is dominated not by gold, but by silver—the most eye-catching light.

Rising from $40 to $50, $55, $60, it has rapidly crossed numerous historical price levels at an almost uncontrollable pace, leaving little room for the market to breathe.

On December 12, spot silver briefly reached a historic high of $64.28 per ounce before plunging sharply again. Since the beginning of the year, silver has increased by nearly 110%, far surpassing gold’s 60% gain.

This appears to be an “extremely reasonable” rally, but it also makes it particularly dangerous.

The Crisis Behind the Rise

Why is silver rising?

Because it looks worth rising.

From the explanation of mainstream institutions, everything seems reasonable.

The Fed’s rate cut expectations reignited the precious metals rally; recent soft employment and inflation data led the market to bet on further rate cuts in early 2026. As a highly elastic asset, silver reacts more intensely than gold.

Industrial demand is also fueling the surge. Explosive growth in solar energy, electric vehicles, data centers, and AI infrastructure has fully demonstrated silver’s dual nature (precious metal + industrial metal).

Global inventories continue to decline, worsened by unexpected quarterly production shortfalls at mines in Mexico and Peru. Silver bars stored in major exchanges’ warehouses are decreasing year by year.

……

If you only look at these reasons, the rise in silver prices is a “consensus,” even a belated revaluation of its value.

But the danger lies in the story:

Silver’s rise looks reasonable, but it’s not solid.

The reason is simple: silver is not gold; it lacks the same consensus and the “national backing.”

Gold remains resilient because central banks worldwide are buying it. Over the past three years, global central banks have bought over 2,300 tons of gold, which is reflected on their national balance sheets — an extension of sovereign credit.

Silver is different. Global gold reserves exceed 36,000 tons, but official silver reserves are almost zero. Without central bank support, silver lacks any systemic stabilizer during extreme market volatility; it is a typical “island asset.”

Market depth is even more disparate. Gold’s daily trading volume is about $150 billion, while silver’s is only $5 billion. Comparing gold to the Pacific Ocean, silver is more like Poyang Lake.

It’s small in scale, with few market makers, insufficient liquidity, and limited physical reserves. Most critically, silver’s main trading isn’t in physical form but in “paper silver”—futures, derivatives, ETFs dominate the market.

This creates a dangerous structure.

Shallow waters are easy to capsize; large capital inflows can suddenly stir the entire surface.

And this year, precisely such a scenario has occurred: a sudden influx of capital pushed an already shallow market rapidly upward, driving prices away from the ground.

Futures Short Squeeze

What has caused silver prices to go off the rails isn’t the seemingly rational fundamentals described above. The real price war is in the futures market.

Under normal circumstances, the spot price of silver should be slightly higher than the futures price, which is easy to understand: owning physical silver involves storage costs and insurance, while futures are just a contract, naturally cheaper. This price difference is generally called “contango.”

But since the third quarter of this year, this logic has inverted.

Futures prices have begun to systematically stay above the spot prices, with the spread widening. What does this imply?

Someone is wildly pushing up futures prices. This phenomenon of “futures contango” usually occurs in only two situations: either the market is extremely bullish on the future, or someone is forcing a short squeeze.

Given the gradual improvement in silver’s fundamentals—solar and new energy demand won’t surge exponentially within months, nor will mine output suddenly dry up—the aggressive behavior in futures markets resembles the latter: capital is pushing futures prices higher.

Even more alarming are anomalies in the physical delivery market.

Data from COMEX (New York Mercantile Exchange), the largest precious metals trading platform, show that the proportion of physical deliveries in gold and silver futures contracts is less than 2%, with the remaining 98% settled via cash or contract rollovers.

However, in recent months, COMEX’s silver physical delivery volume has surged far beyond historical averages. An increasing number of investors no longer trust “paper silver” and are demanding the withdrawal of real silver bars.

Silver ETFs have experienced similar phenomena. Large capital inflows have been met with redemptions from some investors seeking physical silver rather than fund shares. This “run on the bank” type redemption has pressured ETF silver reserves.

This year, the three major silver markets—New York COMEX, London LBMA, and Shanghai Gold Exchange—have all experienced run phenomena.

Wind data shows that in the week of November 24, silver holdings at the Shanghai Gold Exchange fell by 58.83 tons to 715.875 tons, hitting a new low since July 3, 2016. COMEX silver inventories plummeted from 16,500 tons in early October to 14,100 tons—a 14% drop.

The reasons are not hard to understand: during the U.S. dollar rate-cutting cycle, traders are reluctant to settle in USD. Another covert concern is that exchanges may not have enough silver available for delivery.

Modern precious metals markets are highly financialized systems; most “silver” is just digital entries. Actual silver bars are repeatedly mortgaged, leased, and derivatives are created globally. An ounce of physical silver may correspond to a dozen different rights certificates.

Senior trader Andy Schectman cites London as an example: LBMA has only 140 million ounces of floating supply, but the daily trading volume reaches 600 million ounces. On this 140 million ounces, there are over 2 billion ounces of paper claims.

This “fractional reserve system” operates smoothly under normal conditions, but once everyone wants physical silver, a liquidity crisis could erupt.

When the shadow of crisis appears, markets often exhibit a strange phenomenon colloquially called “cutting the network cable.”

On November 28, CME experienced an nearly 11-hour outage due to “data center cooling problems,” the longest on record, preventing proper updates of COMEX gold and silver futures.

Notably, this outage occurred at a critical moment when silver broke through its all-time high: spot silver surged past $56, and futures prices broke $57.

Market rumors speculate that the outage was to protect market makers exposed to extreme risks of large losses.

Later, data center operator CyrusOne stated that the disruption was caused by human operational error, fueling various conspiracy theories.

In short, this kind of futures-driven rally is doomed to produce extreme volatility in the silver market. Silver has effectively shifted from a traditional safe-haven asset to a high-risk target.

Who Is the Market Maker?

In this short squeeze drama, one name cannot be ignored: JPMorgan Chase.

The reason is simple: it is internationally recognized as the silver market manipulator.

From at least 2008 to 2016, JPMorgan manipulated gold and silver prices through trader operations.

Their method: large orders in futures markets to buy or sell silver contracts, creating false supply and demand signals, luring other traders to follow, then canceling orders at the last second to profit from price movements.

This spoofing technique ultimately led JPMorgan to pay a $920 million fine in 2020, setting a record for the largest single penalty by the CFTC.

But this was just a textbook example of market manipulation.

On one hand, JPMorgan used large short positions and spoofing to suppress silver prices; on the other hand, it accumulated large quantities of physical silver at its COMEX warehouses during the period when others were reducing holdings.

Starting around 2011, when silver approached $50, JPMorgan began stockpiling silver in its COMEX vaults, continuously increasing its positions as other large institutions reduced theirs, eventually holding up to 50% of COMEX’s total silver inventory.

This strategy exploited structural flaws in the silver market: paper silver prices dominate physical silver prices, and JPMorgan can influence paper silver while being one of the largest physical silver holders.

So, what role does JPMorgan play in this silver short squeeze?

On the surface, JPMorgan seems to have “reformed.” After the 2020 settlement, it implemented systemic compliance reforms, including hiring hundreds of new compliance officers.

Currently, there is no evidence that JPMorgan is involved in any short squeeze. However, in the silver market, JPMorgan still wields considerable influence.

According to the latest CME data as of December 11, JPMorgan’s total silver holdings in the COMEX system (proprietary + brokerage) are about 196 million ounces, accounting for nearly 43% of the exchange’s total inventory.

Additionally, JPMorgan is the custodian for the silver ETF (SLV), which, as of November 2025, holds 517 million ounces of silver, valued at $32.1 billion.

More critically, in the “Eligible” silver (qualified for delivery but not yet registered as deliverable), JPMorgan controls over half of the holdings.

Currently, only about 30% of silver in the “Registered” category is available for delivery, while the majority of “Eligible” silver is concentrated in a few institutions. The stability of the silver futures market largely depends on the actions of these few nodes.

The Gradual Failure of the Paper System

If one were to describe the current silver market in one sentence:

The trend is still ongoing, but the rules have changed.

The market has undergone an irreversible transformation, and trust in the “paper system” of silver is collapsing.

Silver is not an isolated case; similar changes are happening in the gold market.

Gold inventories on the NY Futures Exchange have been declining steadily, with registered gold repeatedly hitting lows. The exchange has had to reallocate gold from the “Eligible” category—originally not used for delivery—to facilitate matching.

Globally, capital is quietly shifting.

Over the past decade-plus, mainstream asset allocation has been highly financialized: ETFs, derivatives, structured products, leveraged tools—all can be “securitized.”

Now, increasing amounts of capital are withdrawing from financial assets to seek physical assets that do not rely on financial intermediaries or credit backing, with gold and silver being prime examples.

Central banks continue to buy large quantities of gold, almost without exception in physical form. Russia bans gold exports, and even Western countries like Germany and the Netherlands are demanding to repatriate their gold reserves stored abroad.

Liquidity is giving way to certainty.

When gold supply cannot meet enormous physical demand, capital starts looking for alternatives, and silver naturally becomes the top choice.

The essence of this tangible movement is a weak dollar and a reassertion of monetary pricing power amid deglobalization.

According to Bloomberg reports in October, global gold is shifting from West to East.

Data from CME and LBMA show that since late April, over 527 tons of gold have flowed out of Western markets like New York and London, while imports of gold in major Asian consumption countries like China have increased, with China’s August imports reaching a four-year high.

To adapt to these changes, JPMorgan announced that by the end of November 2025, it would relocate its precious metals trading team from the U.S. to Singapore.

The surge in gold and silver prices signals a return to the “gold standard.” While this may be unrealistic in the short term, one thing is clear: whoever holds more physical metal will have greater pricing power.

When the music stops, only those holding real gold and silver can sit peacefully.

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