SILVER’S NEXT SHOCK? David Morgan Warns of Volatility
Summary
Silver should lead metals volatility into year-end as the gold-silver ratio expands over the next three months following the Fed's first hike in three years.
Mining equities stay choppy on higher financing costs; development-stage names get punished most while retail buyers wait for a washout low.
Comex silver is not being 'drained' — registered and eligible transfers move paper ownership, not physical metal, and open interest reflects leverage, not real demand.
The Shanghai silver premium embeds a 13% VAT and contract costs, so it is not a clean arbitrage signal — Chinese buyers are currently neutral.
A rapid yen carry trade unwind could force gold liquidation to meet margin calls; a central-bank liquidity response would then turn bullish for metals.
David Morgan's takeaways
- Top takeaway The guest argues the Fed's September 16 quarter-point rate hike was largely priced in, so he expects short-term volatility but no major trend-breaker; he adds that the hike itself is bullish for metals long-term because the Fed is tightening precisely because inflation is still too high.
- He expects silver to be more vulnerable than gold initially, with gold-silver ratio expansion before silver finds its footing, and says development-stage mining equities will be the most punished by higher financing costs.
- He is sticking with his prior year-end targets of gold near $5,000 and silver around $78, and does not expect $100 silver by end of 2026; he advises averaging into silver below $60 and being prepared for a possible spike low.
- He argues the Comex is not being drained — silver inventories are only declining modestly, and the widely cited five paper claims per physical ounce is leverage from rolled paper-to-paper derivatives, not selling of nonexistent metal; he adds that bullion banks are not naked short because they offset with LBMA, OTC, and producer positions.
- On the yen carry trade, he warns the danger is the speed of the yen's roughly 5% weekly rise rather than the rate hike itself, with cross-border yen borrowing near $2.4 trillion as of March; he sees a two-stage effect on metals — first liquidation pressure (silver and miners likely to fall harder), then a possible central-bank liquidity injection that would be bullish for gold and silver.
Elijah K. Johnson's takeaways
- Top takeaway He hosts the interview and frames the discussion around the Fed's September 16 rate decision — the Fed's first hike in three years — and steers the conversation through viewer-submitted topics like the Comex drainage narrative, Asian demand, and the yen carry trade.
- He drives the substance of the discussion with follow-up questions, including David Morgan's read on the Fed, his recent interview with veteran bullion banker Bob Gottlieb, and whether the yen carry trade risk has worsened since their last conversation.