#SILVER ——What happened?

The reason for the price crash is simply that a large number of short positions flooded into the futures market, leading to a sharp decline in prices. It is easy to draw this conclusion by observing the futures trading volume, but to further validate it, it is important to observe some interesting patterns. I noticed some very interesting patterns that confirm my argument that some shorts needed to cover. Today, in both the Shanghai and COMEX markets, they had the opportunity to cover:

What exactly happened today? As far as the Shanghai market is concerned, I did not see any significant large-scale physical silver redemptions, which means that in today's downturn, no physical silver changed hands. So, what exactly happened?

Firstly, short positions have placed heavy downward pressure on silver prices. Even in Shanghai, the futures market is supported by paper contracts rather than physical contracts, which many people tend to overlook. However, Shanghai silver futures (SGE1!) are 100% backed by physical silver bars. Nevertheless, today there are still non-physical silver transactions: (The trading volume of Shanghai silver contracts is 531 tons. This reflects that short positions are being closed and transferred to new longs, with buyers seizing the opportunity as sellers close positions at prices 10-15% below the day's opening price. There was no physical silver withdrawal today, which is not a bearish signal at all. This is merely a transfer of paper/spot deferred delivery positions and not the physical delivery that many are worried about.

To emphasize again, this is an active trend in the derivatives market. The structure of this event is as follows: first, there is huge paper pressure; second, shorts take the opportunity to exit during the decline; third, buyers absorb all positions; the fourth point is very important: there is no confirmed physical closing. I believe what happened today is a washout driven by paper trading, coupled with continuous accumulation. COMEX data is usually released the next trading day, so data is expected to be released on Monday, and we already have the Shanghai report, which conveys a very clear message.

Moreover, the timing of manipulating silver prices is also quite thought-provoking, just like last month on December 31, when silver prices dropped about 15% in one day, only to start rising again. Guess what? On the same day, a record amount of dollars was issued to banks under the standing repurchase agreement. And these banks are also actively shorting silver. This data is publicly visible on FRED and CME. There is a close link between loans for balance sheet purposes at the end of the month and the ability to suppress prices massively at the end of the month. This pattern is very obvious and supports my theory: banks are facing an extremely severe predicament, not only due to liquidity tightening but also because the next risk comes from silver. This is one of the main reasons I predict a financial crisis and stock market crash. I have been shorting silver for months and have made significant profits on several trades including PLTR, NFLX, MSFT, COIN, MSTR, etc., which have lasted for several months.

Physical silver remains very sought after, and demand is strong, there is no doubt about that. I would not sell at $85 per ounce, nor do I know anyone willing to sell their precious metals at that price. Monday is going to be a day full of variables for many reasons. The U.S. market closed at $84 per ounce, while the Shanghai market was close to $122 per ounce. This corresponds to a historic 44% price gap. On Monday, dealers worldwide will need to decide at what price they are willing to sell physical silver. It is worth noting that in recent weeks, physical silver has been selling for between $120 and $130 per ounce, with the Tokyo market even reaching $150 at one point, and most dealers' inventories have been sold out. If demand remains steady or even increases, why would dealers lower prices?

Shanghai and COMEX need to safely close short positions, and that is key. I believe the coming weeks will prove this point. Therefore, I conclude that the purpose of this move is clear: the market has realized that silver is in a strong bull market, and shorts are starting to concede. I remain very optimistic about silver, just as I was when it was at $20. We have reached the target price of $100, and I personally expect the price of silver to reach $130-150 in the near future.

The above data refers to information provided by the Shanghai market: https://en.sge.com.cn/h5_data_DailyReport?start_date=2026-01-30&end_date=2026-01-30&inst_ids=Ag99.99,Ag(T%2BD )

This article does not constitute any financial advice and is for educational purposes only.