The Precious Metals Market Is Nearing a Breaking Point—Here’s Why

The Silver Squeeze That Won’t Quit

Silver is in its fifth straight year of a structural deficit, and the numbers are staggering. Ed Steer points out that London’s available silver inventory has dwindled to around 300 million ounces—maybe even less. Meanwhile, demand is insatiable. In just six days of March, 25 million ounces of silver were flown into London, with none leaving.

On the gold side, over 1.5 million ounces have arrived, but 840,000 ounces have been shipped out. The real question: who’s behind these moves?

Big Players Are Shifting to Physical

It’s not just retail investors hoarding silver rounds and gold bars—major financial institutions are making moves. February’s gold delivery month saw heavy activity from the biggest bullion banks, including JPMorgan, Citigroup, Deutsche Bank, HSBC, and ScotiaBank. These firms aren’t just trading—they’re shifting physical gold and silver, a signal that paper contracts might not cut it anymore.

Steer describes it as a “rush from paper,” with institutions finally playing the same game that stackers have been advocating for years: hold physical metals.

Paper Manipulation—Is the End in Sight?

The manipulation of gold and silver prices through the paper markets is well-documented, and it’s been happening since gold futures began trading in 1975. The strategy is simple: control the market through short selling and price suppression.

But even the biggest players are beginning to step back. The top four commercial traders have been significantly reducing their short positions in gold for six weeks straight. That’s a sign that the “brick wall” of physical demand is nearing.

Steer echoes Hemingway’s famous line on bankruptcy: “Slowly at first, then suddenly.” The “slowly” phase seems to be wrapping up—when the “suddenly” phase hits, price suppression could unravel fast.

China’s Gold Hoard: The Sleeping Giant

Steer and other experts believe China has well over 20,000 tons of gold, far beyond its official reserves. The country has been importing massive amounts, mining aggressively, and even encouraging its citizens to buy gold.

Why? Because China is preparing for a shift in the global financial system. The old saying, “He who has the gold makes the rules,” might soon become reality. If China ever discloses its full gold holdings, the economic center of gravity could shift to Shanghai overnight.

Silver Mining Realities: Why Supply Can’t Meet Demand

Unlike gold, silver is rarely mined as a primary metal—it’s mostly a byproduct of mining for copper, lead, and zinc. This means production can’t just ramp up to meet demand. Even if silver hit $300 an ounce tomorrow, mining output wouldn’t budge in the short term.

Steer is blunt about what this means: the silver supply deficit is permanent. Once available stockpiles run dry, only the price will dictate who gets what’s left.

What Happens When the Manipulation Ends?

The big question: how does this all play out? Steer is clear—the moment the major short sellers step aside, the price of gold and silver will explode.

“You won’t have to ask if it’s over,” he says. “You’ll just look at the price and know.”

Even a $2 or $3 daily jump in silver could trigger an avalanche of buying, as investors and institutions scramble to secure what’s left. And when the suppression finally collapses, it won’t just be gold and silver that skyrocket—it’ll be the entire commodity complex.

A Global Financial Shift Is Coming

For decades, the financial system has pushed paper assets—stocks, bonds, derivatives—while suppressing hard assets. But history shows that fiat currency regimes don’t last forever. When the system finally cracks, those holding physical metals will be in the best position.

Steer believes we’re approaching that moment. The big players see it. The bullion banks see it. And if you’re paying attention, you should see it too.

Now’s the time to ask yourself: are you prepared?

This article is for informational purposes only and does not in any way constitute investment advice. The author may express their own opinions, which may not represent the opinions of ETF Central or its affiliated partners. It is essential that you seek advice from a registered financial professional prior to making any investment decisions.