(Kitco News) – Global commodity markets were rocked by a major infrastructure disruption on Wednesday afternoon as the CME Group halted electronic trading for metals and natural gas, just after silver futures had reclaimed the $90 per ounce milestone.
In an official statement provided to Kitco News on Thursday, a spokesperson for the CME Group said the stoppage was triggered by a technical failure on the Globex platform.
"Due to a technical issue, the CME Globex Metals and Natural Gas futures and options markets were halted at 12:15 p.m. yesterday," the CME said. "Natural gas futures and options markets reopened at 12:50 CT. Metals markets reopened at 1:45 CT. All day orders and GTDs with yesterday’s date were canceled. All GTCs that have been acknowledged remained working."
The disruption occurred at a particularly sensitive time – just ahead of the first notice day for March silver – and as silver was testing highs above $91 per ounce.
Kevin Grady, president of Phoenix Futures and Options, told Kitco News on Thursday that the outage would definitely have disrupted trading and settlement (TAS), but it would have been harder on the energy traders than those in the metals.
“I'm not sure how the exchange handled it,” he said. “The conspiracy theorists are out there in droves. I noticed they were a little late with settlements on Tuesday, and then obviously what happened [on Wednesday]. I think everyone else is going to be speculating.”
“In the energy [contracts], when something expires, it expires, because it's delivery contracts and things like that, so it's more relevant in the energy markets,” Grady added. “Metals, obviously, these people get hit with notices. You can retender and things like that, but it's not like you're getting hit with delivery where you have to figure something out. I think it was definitely more pressing in the energy markets.”
Billionaire investor and Sprott Inc. founder Eric Sprott told Kitco’s Jeremy Szafron that he’s certain physical stocks are being rapidly depleted.
"There's no doubt there's a physical short squeeze going on," Sprott told Szafron. "We can track the inventories of the LBMA, we track them on the CME, we can track them on the Shanghai Gold Exchange."
Sprott noted that the physical drain is accelerating globally, specifically pointing to recent outflows in the East. "Shanghai today, they lost 10% of their inventories," he said. "Today they're down to about 11 million ounces. I mean, that's almost zero for a country the size of China."
He emphasized that major Western institutions are largely trapped in their paper positions as the physical supply vanishes. "There's still a short position of, I think, roughly 500 million ounces of silver on Comex," Sprott explained. "And I don't see the miners doing that, it's mostly banks."
According to Peter Schiff, CEO of Euro Pacific Asset Management, the timing of the CME suspension raises critical questions about the integrity of the metals market during a period of extremely elevated physical demand.
“It's better than telling the truth,” he said in an interview with Kitco News.
Schiff said the official explanation may be a mask for deeper liquidity problems. “If they have a real problem, they don't want people to know what it is,” he said. "And if the truth is something that’s going to make the price go even higher, then a technical difficulty is a good excuse to stop the trading.”
The comments from retail traders were especially harsh, with the CME’s Wednesday afternoon X post about the outage receiving over 1,000 replies ranging from confusion, to outrage, to allegations of conspiracy and calls for investigation.
“So let me get this straight, for the past 5 years you have had 0 outages,” wrote X user Chadd Schroy, “but now when metals are running and other market corruption is coming out there have been 2 outages in less than 6 months...”
This seems very fishy…..again,” said Jeff Davis. “How is this allowed. Transparency and integrity are being lost by the day.”
“Your ‘technical difficulties’ conveniently resolved at the exact moment 31,828 Silver contracts (159.1 MILLION ounces) were market-sold in a single 15-minute candle to defend the $91 resistance line,” wrote X user Skyler Le. “This is a synthetic delta-dump, not a glitch. @CFTCenforcement subpoena the Globex Command Center server logs and communications from 12:15 PM to 12:45 PM CT. Protect the market, not the paper shorts.”
Silver managed to break definitively above $91 dollars on Friday as news of U.S. evacuation orders ahead of expected imminent military strikes on Iran hit the wires just before 8 am Eastern.
Spot silver last traded at $93.470 per ounce for a gain of 5.86% on the daily chart.
