(Kitco News) – Silver investors have been watching gold’s multi-year rally with envy, with many asking when silver prices will finally catch up and outperform gold as they have in previous bull markets. The gray metal is now gaining some buzz of its own as a growing number of X users rally around the idea of manufacturing a silver squeeze on Monday, March 31.
The community’s call-to-arms is based on the belief that silver prices are being artificially manipulated through the futures market, keeping them low even as many of the traditional drivers – rising inflation, increasing physical demand, supply deficits, and skyrocketing gold prices – have aligned to support higher silver prices. They believe that a concerted effort to buy – and to not sell when the inevitable pushback occurs – could break silver prices through the ceiling and spark a bull run.
Peter Krauth, publisher of SilverStockInvestor and author of The Great Silver Bull, said that trade tariffs are the latest factor disrupting supply and spiking demand, and #SilverSqueeze2.0 could benefit from the timing.
“There's been a lot of silver flowing into New York from London,” Krauth told Kitco News anchor Jeremy Safran in a March 27 interview. “If tariffs are imposed, they could potentially affect gold, affect silver. And interestingly enough, a lot of this metal is moving to New York, but it's ending up in private vaults. That's an interesting aspect to what's going on, as there has been, for a long time, ongoing talk about the potential that silver prices are manipulated and kept down.”
“I'm actually myself wondering about March 31,” he added. “That's just a few days away. It’s before these new tariffs that Trump is talking about should kick in, on April 2nd. It's the end of the month, end of the quarter. It's interesting to see what kind of effect this could have.”
Jesse Colombo, an independent precious metals analyst and investor, publishes The Bubble Bubble Report. He was one of the earliest prominent voices to come out in support of #SilverSqueeze2.0, and he has written some of the best analysis of the current dynamics in the silver market.
Colombo said that whatever happens on March 31, he’s on board for the long haul, because he thinks people need to become aware of the tamping down of silver prices that so often occurs early in the North American session, and what could happen when silver does break through.
“It's more about building publicity and galvanizing both regular everyday investors, and institutions,” he told Kitco News on Friday. “It's not just the little guy buying a few coins here at the local coin shop. I don't believe that's going to be the core of this movement. I believe it's a concerted effort, but it's going to also include hedge funds. They can go along with futures, or they can buy Sprott physical silver ETFs, and take physical delivery through futures.
“I'm not limiting it just to March 31,” he added. “I'm not the one who originated it. But I went along with it because I'm trying to generate publicity for this idea that silver's very manipulated, but that's not a reason to be down on silver.”
“On the contrary, I believe the manipulation is about to lose control.”
The control that the paper market exerts on silver prices is almost impossible to overstate. Krauth pointed out that the futures market is net short around 223 million ounces right now. “That's about 25% of the annual mine supply, so it certainly is significant,” he said. “If you look at the ratio of paper silver to physical silver, we’re something like 378 to one, which is well beyond any other futures market for any metal, or any commodity.”
Looking ahead to Monday, Colombo expects the usual suspects will be ready to push back hard, but the opportunity will still be there as the session unfolds.
“The suppression occurs in the morning, but there's no reason why it can't rally in the afternoon in the American session,” he said. “A lot of times what I've seen is it'll be slammed in the morning, just like today, and then it'll recover sometime around lunchtime into the afternoon, and sometimes actually even make net gains, and then the Asian session will open up and then they'll help push it through.”
“That's the best combination, is when it carries over into the next trading session,” he added. “You really want to be firing on all cylinders; you don't want it to be only driven by the Americans, by the Europeans, by the Asians. You want everyone on board, and that's what happens when you have a technical breakout.”
Colombo said that he doesn’t see Monday as the ‘do-or-die’ day, but he’d like to see some momentum going into it.
“I hope something good happens,” he said. “We've seen silver spike [Thursday], and we broke above a key technical level. I would like to see further follow-through today. I know Fridays are usually bad – and it's getting slammed right now; this is another morning slam – but we still have a lot of hours left in the trading session. I would like to see further follow-through from a technical perspective.”
As he did in 2021, Krauth is advising caution for investors who want to jump on board the silver squeeze bandwagon, as the price move can only get so far ahead of the fundamentals.
“I was telling subscribers that I thought what would happen was this would eventually die off, and the reason for that was because it was not a fundamental driver in terms of suddenly more and sustained demand,” he said. “This was a call to action. “
Krauth said that’s just how it played out in 2021. “We did have that surge in silver prices, we had the surge in trading volumes for the mining stocks,” he said. “And I said, ‘You know, if you've got some big gains, if you feel like you want to lock in some of those gains, I don't blame you. I think it's probably a good idea, because I just don't see this kind of action being sustained.’”
Krauth said that if we do get another squeeze, it’s likely to be similar this time around. “It could be possibly stronger if there's enough people that really get on board, and it could actually last somewhat longer than it did back in 2021,” he said. “But unless you see this sort of fundamental shift in demand… you’d have to see some sort of big industrial change in demand, because that's where you've got less leeway, less flexibility in terms of being able to use or not use the silver.”
“I like to say that industrial demand is what provides a rising floor under the silver price,” Krauth said, “and it's the investment demand that ebbs and flows, that comes back and causes these silver spikes.”
Colombo said that while the fundamentals are important – and largely supportive – he’s a very technically-focused trader, and he thinks the ultimate success or failure of #SilverSqueeze2.0 will be determined on the price charts.
“I view $33 an ounce in silver as paralleling $2,000 to $2,100 in gold,” he said. “I believe once silver decisively breaks through – and it's been a huge battle, but it was for gold – once it finally clears that level once and for all, I think we're never going to look back. That’s how I'm looking at it. Because then what happens is you get algorithms, that’s essentially program buying. It'll be in the ETFs, it'll be in futures, and then it just becomes a virtuous cycle.”
And while Krauth didn’t offer a key trigger area for the near-term price action, he remains very bullish on silver’s prospects in the medium term.
“The all-time high would be $50,” he said. “I think we're going to see that at some point next year. It's not a question of if; it's a question of when.”
