It has been a long time coming for precious metals, but the massive 2025 breakout in gold and silver appears to be only the first salvo in the war between fiat currencies and honest money.
As Matthew Piepenburg points out in painstaking detail, despite a middle-of-the-night increase in margin requirements for silver futures on December 12 that would have forced selling, silver buyers instead stepped up, not only buying at the lows, but eventually sending the price higher only days later.
In 1980, a similar and overnight re-pricing of levered contracts took 50% off the silver price due to a massive sell-off in PAPER silver.By May of 2011, the same tactic successfully crushed the metal when five consecutive margin hikes sent the silver price down in a matter of days from $49 to $33. Thereafter, PAPER silver stayed low for years to come. The COMEX had won.
Since then, similar margin hikes of 10% occurred in February of 2010, followed by an 11% hike in October. In both instances, silver dipped by 1.8% to 3.3% and then rose by 9% and 18% respectively, within 30 days. We saw similar patterns in August of 2020.
The COMEX had lost. Classic shakeouts were followed by major moves to the upside.
On December 12 of this year, unnoticed by most headlines and investors, the same trick failed yet again just as the metal closed at $62.50.
The 10% margin hike this month didn’t shake silver. 67 million ounces of paper silver sold off in minutes, only to be absorbed by purchasers of the physical metal. Less than a week later, silver was at new highs above $66.00.
As of this Tuesday morning (today), silver hit a fresh all-time high of $70.71 and at 9:00 am ET stands at $70.35.
Gold, which is being slammed lower on news that U.S. 3rd quarter GDP was a remarkable +4.2% (more below), was stopped just short of $4,500 per ounce this morning and is presently trading around $4,472. This follows gold's $100+ move on Monday to all-time highs.
Effectively, if the $72.67 price in Shanghai is to be believed (and there's no reason it shouldn't be) there now exists an enormous arbitrage opportunity in silver of somewhere between $2 and $3 a troy ounce. And, while that may sound enticing to carry trade enthusiasts, it's unlikely to last long, if it materializes at all, because the COMEX has lost its ability to set prices on not just silver, but almost all commodities. Trust has been shattered, confidence lost. That function is rapidly moving to Shanghai, Singapore, Dubai, St. Petersburg, and Istanbul.
With U.S. stocks markets already open (sorry, running late here), stock futures were negative following the relase of 3rd quarter DGP (4.2%). The thought of an expanding U.S. economy - as ridiculous as that may be on the surface - goes against the narrative for further rate cuts at the Fed. There would be more rationality in raising rates than lowering them if the economy was expanding.
There isn't time this morning to examine the inner details of the BEA's GDP estimate [PDF], this line stands out:
Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) increased $166.1 billion in the third quarter, compared with an increase of $6.8 billion in the second quarter.
More tomorrow. For now, enjoy your F&G™ Santa Claus Rally.
At the Close, Monday, December 22, 2025:
Dow: 48,362.68, +227.79 (+0.47%)
NASDAQ: 23,428.83, +121.21 (+0.52%)
S&P 500: 6,878.49, +43.99 (+0.64%)
NYSE Composite: 22,111.31, +187.38 (+0.85%)
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