Gold futures had impressive gains today last seen up $44.40 or 1,11% back above $4,000 at $4,035.50. The gains are impressive not simply by their magnitude but because almost all other markets traded dramatically lower. The Nasdaq fell by 4.39%, The S&P 500 lost 3.41%, and Bitcoin had been down over 9% but is recovering now down only 6.16%. Even the other precious metals were not spared from today’s sell off.
Platinum and palladium lost -2.02% and -0.51% respectively silver’s move is not as black and white. The precious white metal lost $0.14 in Comex futures and is currently at $47.51 but in the spot markets silver gained $0.92 or 1.87% and is pegged much higher at $50.12. This is not normal as usually futures prices will be higher than spot and this is known as contango. It is seen as a sign of a healthy market.
Silver’s backwardation (opposite of contango) could be perceived in a few different ways; one could argue that spot pricing leading futures is a bearish sign as it could tell us traders believe the bullish factors will dissipate soon. Such would be the case if silver production were to ramp up or demand were to unwind but that is quite the opposite as silver deficits have been persistent since 2019 increased and have continually increased, in 2024 the deficit was around 158 million ounces.
Another possible cause could be people shipping silver into the US that had been held abroad on fears that Trump’s trade tariffs could start to be enforced on the metal. Trump has stated that o precious metal would be subject to tariffs but the trade negotiations are in a constant state of flux so people could be acting out of excess caution. If this were the case though we would see backwardation in gold and other precious metals as well, so this theory does not hold a lot of weight.
I think it is more likely that silver’s backwardation is a product of typical “silver stackers” in that they always prefer owning the hard asset over a futures contract or ETF. If this is indeed the case the price differential of $2.61 in favor of spot silver tells us just how eagerly investors are scooping up physical silver.
Both gold and silver had strong tailwinds today from a weaker dollar which fell by 0.50% to 98.85 after reaching a two-month high yesterday.
The bottom line is the drivers that took gold to 14 new record high closing prices since September have not gone away, and silver is just starting to break records reaching a new all time high and closing price in the futures markets yesterday. Spot silver has closed in uncharted territory for the past three days. So, expect Gold to make more records in the coming weeks and months and do not sleep on silver as it is finally waking up from its decade long slumber, or more precisely traders are waking up to its fair value and profit potential. As such silver will also see multiple record highs and our initial target has been $60 per ounce by the end of 2025.
For those that would like more information about our services click here
Wishing you as always good trading,
