Short squeeze explained
In order for the market to trigger a short squeeze, the price of silver would have to climb quickly and considerably. Like the Redditors who attempted to trigger a silver short squeeze in 2021 rightly pointed out, silver is a commonly shorted commodity, making it prime for a short squeeze in the right market conditions. Unless market manipulation is involved, silver short squeezes – or any short squeezes, for that matter – are not against the law. A silver short squeeze is a natural market phenomenon that occurs when the price of an asset rises quickly and dramatically, so there’s nothing inherently illegal or market manipulative about it. Silver’s breakout on Friday marks a pivotal moment in its ongoing bull market, confirming many of the key conditions I’ve been highlighting for weeks. When silver approaches a breakout point that could trigger a snowball effect of additional buying, bullion banks step in to drop the hammer, forcefully slamming the price back down below that level.
This monetary environment is historically more favorable for precious metals. Copper is another story entirely — Trump previously ordered the Department of Commerce to investigate copper tariffs, and while it was supposed to provide a report within 270 days, sources now indicate it could come sooner. People familiar with the matter told Bloomberg that the investigation “is itrader review looking like little more than a formality,” and the news has bolstered prices for the red metal. There is a high probability that silver will quickly run to $50 in the course of this rally. I’m focusing on $50 as a relatively short-term target because it’s a significant psychological level and the peak reached during both the 1980 and 2011 rallies.
The True Supply and Demand Fundamentals for Silver
Another key confirmation I’ve been watching for is a breakdown in the gold-to-silver ratio, a useful indicator for assessing silver’s price trajectory. For the past several weeks, I’ve been writing about an imminent silver breakout that could quickly push prices to $50. Banks get into trouble, not because they lend deposits, but because those loans are often long-term while the deposit is short term. In other words, banks mismatch the durations of their deposits and their loans. The depositor has the right to withdraw his deposit, but the bank does not have the right to call its loan. Though silver is heavily manipulated and suppressed—possibly the most manipulated asset on the planet—I have strong hope that it will soon break free and thrive.
The Morgan Report has guided thousands through uncertain markets, delivering clear, actionable insights to help protect and grow your wealth — especially in times like these. With over four decades of experience in the precious metals sector, we cut through the noise and focus on what actually matters. Short squeezes in the stock market can either happen naturally or via deliberate, coordinated efforts. Below, we’ll cover two of the most notable short squeezes of the past decade. When a trader is “long,” that means they actually own and possess a stock that they hope will go up in value, at which point they will sell.
Key Differences Between Canadian and Australian Stock Exchanges
What’s both infuriating and disheartening is that this manipulative pattern has persisted almost daily for decades, consistently driving prices downward—never upward. Early indicators of potential silver squeezes include unusual social media activity focusing on silver market structure or short positions. Monitoring forums devoted to precious metals can provide advance notice of coordinated buying campaigns before mainstream financial media coverage. While the 2021 attempt demonstrated retail’s growing role, silver’s market size ($30B+) requires institutional participation to sustain momentum. Coordinated retail buying can impact silver prices temporarily, but individual investors typically lack the capital required to create a sustained short squeeze. For those interested in precious metals investments, looking into gold ETF strategies can provide complementary options.
This unprecedented accumulation has spillover effects on silver, which is increasingly viewed as an undervalued monetary metal. Due to silver’s dual role as a precious and industrial metal, its investment demand has faced conflicting forces so far in 2025. While recessionary fears and geopolitical tensions support portfolio diversification, a weakening global economic outlook worsens industrial demand prospects, the association said. While gold reaching $3,000 might be a bit far-fetched, it’s actually quite realistic, as it’s just over a 10% increase from today’s price. We believe an informed public makes better decisions, and this leads to a better market. In researching this story, we spoke to a few dealers who preferred not to comment.
Days ahead of the official squeeze, the white metal’s price is on the move. It rose to the US$34.50 per ounce level on Thursday (March 27), although it had pulled back to around US$34.10 by Friday’s close. The price of copper is often an underappreciated factor in silver’s performance. Copper’s recent decline has weighed on silver, but there is a strong likelihood that it will find support around the $4.25 level and bounce from there. This rebound should provide an extra boost to silver’s nascent rally.
Live Spot Silver
Unlike the 2021 effort, which was largely anonymous, several recognized silver market analysts have publicly supported the 2025 initiative, lending it additional credibility among traditional investors. The global silver deficit is expected to narrow by 21% to 117.6 million troy ounces in 2025 due to a 1% fall in demand and a 2% increase in total supply, the Silver Institute industry association said in a report on Wednesday. Jesse Colombo is a financial analyst and investor writing on macro-economics and precious metals markets. Recognized by The macd crossover screener Times of London, he has built a reputation for warning about economic bubbles and future financial crises. An advocate for free markets and sound money, Colombo was also named one of LinkedIn’s Top Voices in Economy & Finance.
- The squeeze ended dramatically on “Silver Thursday” (March 27, 1980) when the brothers couldn’t meet margin calls on their leveraged positions.
- And people are making investment decisions based on this, which I just think there’s a lot of good reasons to buy gold and silver.
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- Demand for silver coins and bars will rise 7% this year after falling by 22% in 2024 to a five-year low of 190.9 million ounces due to major declines across all Western markets.
The global silver market is highly liquid, with annual mine production exceeding 800 million ounces, and industrial applications (electronics, solar panels) account for 50% of demand. In the process, these entities amassed a massive net short position of 42,116 futures contracts, equivalent to 211 million ounces of silver—or roughly a quarter of the world’s annual silver production. This staggering figure underscores the immense downward pressure being exerted on the silver market. The silver squeeze movement represents a coordinated effort by retail investors to create upward price pressure in the silver market by purchasing physical silver and related investment products. Following the GameStop short squeeze in 2021, attention turned to silver markets with advocates suggesting prices could potentially reach $100-$1,000 per ounce through coordinated buying. Simply put, the goal of silver price manipulation is to keep silver’s price artificially low as well as prevent it from breaking above key technical levels that could trigger a full-blown bull market.
How Short Selling Works
For investors considering participation in the 2025 Silver Squeeze, the distinction between physical silver and paper derivatives represents a crucial decision point. Physical holdings – including coins, bars, and allocated storage – provide direct exposure to the metal without counterparty risk, but typically involve higher premiums and storage considerations. Central bank buying patterns have shifted significantly, with many nations aggressively adding to their precious metals reserves. According to recent data, central banks collectively purchased over 1,250 tonnes of gold in 2024, continuing a trend that began accelerating in 2022.
Since the mid-2010s, silver has slightly lagged behind M2 growth, which, combined with other factors discussed in this piece, positions it for a strong rally. So if you see the price of the future rising relative to the price of spot, and there can be two different mechanical causes for that. But if the price of futures rising relative to spot, what does that mean? Well, that means that spot is either being pushed down so the price is falling or the future is being pushed up by buying, the price is going up because the buying is being driven or being led by the futures market.
A silver short squeeze is far less common than some bullish investors would lead you to believe. Silver remains a commonly shorted asset, and efforts in recent years to deliberately trigger a short squeeze in the silver market have been largely unsuccessful. The concept of a short squeeze may seem complicated, but it’s actually relatively easy to understand. When a stock or other investable asset rises in value quickly and dramatically, investors who bet that the asset would depreciate may be forced to buy stocks in that asset to cover their losses. When this happens, prices for the asset climb even higher, creating a pattern known as a short squeeze. Buying physical silver or shares of silver stocks is a way to be involved in the so-called “Silver Squeeze 2.0.” When more investors buy a stock or commodity, short-sellers usually need to sell shares to cover their losses.
The price of silver rose from around $25 to $30 in a few days of coordinated buying. However, the price of silver quickly fell to around $26-27, as the chart below shows. Retail investors decided to coordinate their actions, via a Reddit forum, and bought a lot of the company’s stocks, thus causing the price to rise. As many shares had been sold short, the price increase led to significant losses and to a frantic rush to buy back shares. This covering of short positions only caused the price to increase even further. As a result of the short squeeze, the price GameStop shares rose from $17.25 at early January to $348 at the end of the month.
- The COMEX markets are overwhelmingly markets for trading paper contracts rather than for delivering physical metals.
- A true squeeze would see this phenomenon repeat but potentially at much higher spreads.
- This covering of short positions only caused the price to increase even further.
- The most intense phase of buying pressure typically lasts between 2-4 weeks, during which physical premiums reach maximum levels and delivery delays extend to their furthest points.
- With solar panel production alone consuming over 140 million ounces annually and growing at 15-20% per year, industrial demand continues to apply structural pressure to available supplies.
Starting from a base of 100 in 1970, this index has been relentlessly eroded, plunging to just 8.19 by February 2025—a staggering decline of nearly 92%. These manipulation slams almost exclusively a man for all markets occur in the morning and rarely at any other time of the trading day. To me, these are unmistakable fingerprints of bullion banks deliberately suppressing silver’s price. As you can see from the 5-minute intraday chart, silver staged a powerful breakout, surging $1 per ounce (3%) during the Asian and European trading sessions.
Navigating Gold Prices Amidst 2025 Market Chaos
During the 1980 Hunt Brothers silver corner attempt, margins were raised from 12% to 50%, effectively ending the squeeze despite the brothers controlling over 100 million ounces of physical silver. Technical analysis of LBMA inventory reports reveals that registered silver stocks have declined by over 110 million ounces in the past year alone, a rate not seen in previous market cycles. The price of copper is often an underappreciated factor in silver’s performance, as I recently explained. Although the Synthetic Silver Price Index didn’t break out on Friday, it still posted a solid 1.21% gain.