(Kitco News) - With silver unable to hold gains above $80 an ounce, one Canadian bank is taking another crack at the short side of the market.
On Wednesday, commodity analysts at TD Securities published their latest trade, saying they were shorting silver futures and looking for sharply lower prices within the next three months as market fundamentals start to balance out.
In his latest commodity report, Daniel Ghali, senior commodity strategist at TDS, said that he initiated a short position in March silver futures at $78 an ounce, with a target of $40. At the same time, the Canadian bank has a stop loss at $92 an ounce.
March silver futures last traded at $77.94 an ounce, down nearly 4% on the day.
TD Securities’ short comes as the bank expects to see significant selling pressure in the metal as annual index rebalancing in the new year takes its toll on silver, which saw a nearly 150% gain last year.
“We expect a massive 13% of aggregate open interest in Comex silver markets will be sold over the coming two weeks, to result in a dramatic repricing lower,” Daniel Ghali, a senior commodity strategist at TD Securities, wrote in a note last week.
At the same time, Ghali also sees a significant shift in market supply-and-demand fundamentals. Silver’s run to record highs of $84 last month was driven in part by a significant breakdown in the precious metal’s physical supply chain.
Robust industrial demand drove supply deficits over the last five years and has taken its toll on above-ground stocks, and with growing investor interest, TDS was expecting to see a significant short squeeze in the marketplace.
However, Ghali said the rally is overdone, as higher prices are expected to start rebalancing the physical market. He explained that the catalyst for a silver selloff could be triggered by President Donald Trump’s decision on the precious metal’s new role as a critical metal.
Silver’s supply-chain issues have been exacerbated by the threat that the U.S. could place tariffs on silver imports. The significant inflows of silver that occurred in the first half of 2025 have largely stayed in the U.S. because of this threat.
TDS is not expecting silver imports into the U.S. to be tariffed, which, when confirmed, could release a flood of physical metal back into the market.
“We expect no tariffs on silver bars. Scrap and private vaults can continue to replete London vaults. The primary deficit continues to shrink amid demand destruction. Timelines to depletion trend higher. These are the markings of a cycle top,” he said.
Many analysts expect silver not to be tariffed, as a consumption tax could devastate the U.S. manufacturing sector. U.S. silver production cannot meet domestic consumption, and it is unlikely the market will see a material increase in supply.
This will be TDS’s second attempt at shorting silver. The bank initiated a short position in October as prices were breaking above $50 an ounce; however, it exited the trade with a nearly $2.4 million loss.
