Silver market manipulation: how margin hikes crash prices

0:00If you own silver or any precious metal, or even you've been thinking about buying silver or gold, what I'm about to show you is going to make you furious and then it's going to make you money. On December 28th, silver hit an all-time high of $83.90 per ounce. The next day, it crashed 10%. Covered a little bit yesterday. It was an important number to watch out for there as well. But here's what they don't want you to know. This was not an accident.

0:28This wasn't retail investors panicking. This was engineered. And if you don't understand how they did it, you're going to lose money the next time they do it. But if you understand the pattern and more importantly what is coming next, you're positioned for potentially the biggest opportunity in the precious metals market in decades.

0:47So in the next 20, 30 minutes, I'm going to show you exactly who crashed the market, how they did it, why this is the third time they've pulled this exact move at major peaks, and most importantly, what the real plan is that's unfolding right now that could send silver to $100 or beyond. My name is Felix Prehn. I'm an ex investment banker. That's Winston back there who does all the silver research around here.

1:12And we've spent years watching these markets unfold from the inside. I've also got a mentor who's a retired market maker for the London Metal Exchange. A market maker. Basically, the stock market or the metals exchanges are a casino. Right now, the house always wins. Who's the house? It's the market makers. And I've actually asked him what he thinks this means and what's happening next. And he's recorded a little video for me and I'm going to play that for you at the end of this video.

1:40So stick around. The guy is called Elliot. He's an amazing guy. He's a good friend of mine. And he's also the head coach of our GOAT Academy. Just one of the smartest minds I know. So we're going to give you some real insight here because right now what's happening in the silver market is literally just one of the most blatant examples I've seen of the little guy getting squeezed out right before the big move.

2:02And what you're going to learn in this video is the following. The three times in history they've done this exact manipulation. How the CME margin hikes are used as a weapon to crash prices. And the incredible unstoppable demand for silver versus the shrinking supply and then some specific investment strategies, especially if you're a US retail investor. Anywhere else in the world you should still be able to take advantage of it. That we might want to implement right now.

2:31If you're watching this and you think, well, but silver's recovered, just look at the little stock chart here. This is the silver ETF, not the physical stuff, but it tracks the price. And you have that gap down there, engineered. You get a gap back up which looks rather good. But there's one line in here and I want to just make sure you are aware of that too. This gives you a pretty good insight into where institutions are going to sell.

2:50So this is called trademission.io. It's a platform that I built with my co-founder to give you guys access to the same data institutions have access to. And there's a little line in here called resistance. The indicator's called support and resistance. And that line tells you where the big boys, the market makers are likely to sell. So at 70 they're likely to sell. Well, what happened the last three days? Well, each time we broke through 70, those buggers started selling. So it's pretty useful insight into what's actually happening in the market. So watch out for the $70 mark there. That could get tough again.

3:26But let me walk you through exactly what happened because the details really matter. So the rally started around $30 per ounce, right, earlier in the year. By December 26th, it blew past $75. Was December 28th, it hits an all-time high of $83.90. That is a 163% gain. This wasn't a random pump, right? This was a real sustained rally by real fundamental factors driving it.

3:54We're going to get into those in a second. The crash that followed, within a few hours, silver plummets about 10%. Wiped out weeks of gains. How? Well, it caught leverage traders, traders using margin and leverage off guard, triggered a massive wave of forced liquidations.

4:14Now if you're watching this, you're thinking, well, Felix, that's just what the market does, right? Prices go up, prices come down. Well, you'd be wrong on this one, I think, because there was a very specific catalyst that triggered this crash. The catalyst was the CME Group, the Chicago Mercantile Exchange. They run something called COMEX which is the world's largest silver futures market.

4:40Now if you're thinking I only buy the physical stuff, well the prices of the physical stuff are largely driven by the futures market. And on December 29th, right as silver was peaking, they did something rather interesting would be a polite way of describing it. They raised margin requirements. Now let me explain what that means. In futures trading, when you trade a futures contract, you don't pay the full price of the silver. You basically put down a deposit, and that's called margin. Think of it like a security deposit to cover potential losses.

5:16Now let's say futures normally require $20,000 in your account. That contract might allow you to control about $400,000 worth of silver. So you're controlling $400,000 worth of silver with just $20,000. That's leverage, right? So what happens when CME raises margins? Suddenly they said you needed not 20,000 but you needed $25,000. Doesn't sound like a huge difference, but if you don't have that extra $5,000 in your account immediately, you get a margin call.

5:51So you have two choices. Put in more cash or you close your position. Now most traders don't necessarily have the cash sitting around so they are forced to sell. Forced liquidations, especially the retail lot, right? So when thousands of traders are forced to sell at the same time the price crashes.

6:08Now something interesting here. The margin increase happened during the thinnest trading of the year, Christmas to New Year. There's almost no liquidity. Everybody's on holiday. So you get a flash crash. This is actually how you arrange it. Now the CME of course says this is about risk management and volatility concerns. But here's my question. If volatility was the concern, why didn't they raise margin when we were at $70 or something? Why exactly at the all-time high of $84 during the lowest liquidity trading period of the year?

6:40And that brings us back to the pattern because this isn't the first time this happens. But before we go into the history, let's talk about who benefits from this crash and who loses. Who are the losers? Retail traders using leverage. Don't do your children. And small institutional players and anybody who bought the top, right? They were on the wrong side of this trade because they don't really understand the manipulation. Sorry, the what was it about, protecting the market or something, right?

7:09Who are the winners? Well, the commercial shorts. So the big banks who were short silver. The COT data from December 20th, just a week before, it comes out only once a week, showed massive commercial short positions, over 100 million ounces equivalent short. So those are the big banks, the primary dealers, institutional players. And when silver was at $80, those guys were underwater. They were losing money. They were crying. Now when it crashed to $73, they made about a billion dollars back in just that move. You see what's going on though? Can you read between the lines?

7:48Now before we get into the real details here, we've just started publishing a newsletter on gold and silver. It's an email that comes out. You can choose a daily one or a weekly one. The weekly is more like a PDF that walks you through the meat of it. The daily one is just to keep you up to date. It's completely free. Costs you absolutely nothing at all. There's the link on the screen, felixprehn.org/silver. So register for that if you are interested in gold and silver. It is 100% free and it's just good insight.

8:17But let's go back to the story. If this was a one-time thing, you could say, oh, it was just a random freak incident. But this is the third time they've run this exact playbook at major silver peaks. In 1980, the exchange changed its rules and silver went from $50 down to just 10. In 2011, silver hit $49 and they increased those margin requirements 5 times in 2 weeks and forced a 48% crash. The first one was an 80% crash. And then 2025, silver hits $84. We get 2 margin hikes in just 2 weeks and we get a 10% crash so far. So 3 times, 3 major peaks, 3 interventions, same playbook, right?

9:09So is this not the scheme? Well, what happened, actually understanding the history I think is very helpful. And let me just walk you through it briefly. In 1980, we had the most legendary silver manipulation ever. And it involved two Texas oil billionaires, Nelson Bunker Hunt and William Herbert Hunt. The names are marvellous, aren't they? They're called the Hunt brothers.

9:31And they believed silver was massively undervalued. So they started systematically buying physical silver, hundreds of millions of ounces. They also used futures contracts to amplify their buying pressure. Essentially, they were trying to corner the market. So silver went from below $10 to over $50 at the top. The London spot market even hit $54. That would be today's price is about $200 per ounce, by the way, if you take inflation into account. So this is a crazy price, right? And it was an unprecedented squeeze that they created.

10:07Now the establishment saw what was happening and they responded with overwhelming force. The COMEX exchange, the same friends we have today, enacted Silver Rule 7. This rule restricted trading to liquidation only, meaning you could only close positions, not open new ones. They raised margin requirements to 50%. Basically, they eliminated leverage for all new positions. At the same time, the

10:33Fed sharply raised interest rates, making it impossibly expensive to finance your leverage positions. So the Hunts got a massive margin call. They couldn't meet it. They're forced to liquidate and silver collapsed from 50 back down to $10. It was known as Silver Thursday even. And the Hunts lost their fortunes.

10:54So the parallel is we had a powerful rally. The exchanges change the rules, you get a forced liquidation, you get a crash. Today, you have a powerful rally. The exchange raises margins, you get a forced liquidation, you get a crash. Same playbook 45 years later. Similar situation 2011.

11:10So let's go back to right now. The question you have is, is this going to end the same way? Are we going to get a massive crash? And the answer is the fundamentals are very different today. In the 1980s, we had the Hunt brothers. There was one group trying to corner the market and it was just speculation, right? In 2011, it was the post financial crisis. Speculation, fear-driven buying after the 2008 wobble.

11:33Now 2025, we have structural industrial demand. It's not speculation. This is not one group trying to corner the market. This is a genuine severe multi-year supply deficit driven by inelastic industrial demand. Inelastic is a strange economics term, sorry about that. Basically says that the demand doesn't change even if you increase prices.

12:01Why is that? Because the physical market is in desperate need of metals. The fundamentals, in my opinion, have never been stronger for silver. And yes, the margin hikes can suppress the paper prices for a while. They can shake out some leverage traders, but they can't create more physical silver. They can't change the fact that the world needs more silver than is being mined.

12:20And that brings us to the heart of this, the unstoppable industrial demand. Now, we should thank Winston here because he did all the research. You can see he's exhausted from the endeavours. And as we do that, make sure you sign up for the free newsletter. Literally no credit card required. Nothing at all. Just pop in your email and you'll get it for free. Just a little bit of joy and information and education we're spreading into 2026.

12:44Now, silver is quite unique. It's a monetary metal like gold, but it's also the most critical industrial metal on the planet. And that's what's creating this perfect storm here. In my humble opinion, silver has the highest electrical conductivity and thermal, so heat conductivity of any metal. And that makes it so far irreplaceable in the technologies that are driving our wonderful world.

13:12So you can't basically build green energy without silver. You can't run the AI revolution without silver and you can't build an electric vehicle without silver. So what are these 3 sectors? What's the input here? Let's go through them one by one.

13:28Solar is actually the biggest, largest industrial consumer of silver right now and it is growing exponentially. Silver accounts for 29% of all industrial demand. It was only 11% a decade ago. So you can see demand there has tripled. Each solar panel uses about 20 grams of silver. It's a silver paste, it's a conductive layer in photovoltaic cells. It's essential for converting apparently sunlight to electricity. No viable substitute. I'm told technology might solve that down the road, but for now it has not.

14:04And global solar demand is exploding because people want to meet some sort of random climate goal, but they also might just want more electricity because we're going to need a lot more electricity for AI. And according to my research, silver could demand 85 to 90% of all known silver reserves by 2050. Not a typo. 90% of all known reserves could just go into solar panels. Crazy stuff, right? So one sector could theoretically consume basically all silver available in the next 25 years.

14:47And then you've got EVs. This is why Elon's upset about these high silver prices. They're the second massive demand driver. A typical battery vehicle needs about 25 to 50 grams of silver, which is about 70% more than a usual combustion, dirty, lovely engine. So it's critical for battery management, power, electronics, charging, all that stuff. You need silver heavy components.

15:17Now, car manufacturers are not going to just stop production lines for lack of silver, right? So those guys are just going to pay what they need to pay because they're going to make the car. So we've got solar consuming 29% of industrial demand. We've got EV growth accelerating.

15:33And then there's the third factor which nobody really talks about, that is AI. Now AI is actually a massive physical infrastructure. The buildout is happening right now, is a huge consumer of, you guessed it, silver. Every AI server, every data centre requires thousands of high performance electrical connections. And these connections rely on silver because it conducts better than anything else.

15:58And so this was not a factor in 2011 or in 2020. This is a new demand. It's been added on top of the solar, on top of the EVs, and tech companies are literally in an arms race to build the most compute power, the biggest data centres, and each one is a silver consumer.

16:16Now, here's where it gets really interesting. While the paper market, so the futures market on COMEX, silver crashed, the physical market is telling a very different story. Let's talk about the Shanghai premium. The normal premium for physical silver in Shanghai is about $5 to $10 above the COMEX price, which is the Chicago lot that we love so much because they care about us. Now, not quite sure we get the 35 from here, but it was $8, which is pretty elevated during the last week.

16:52So what does that mean? Well, physical buyers in Asia are ignoring the paper price and they're paying a massive premium to secure the actual physical metal. And that signals a genuine shortage of physical silver available for delivery. So the physical market is screaming, "We need metal now," right? And the paper market is saying, "Everything's fine, calm down. We're shorting this thing. Let's make it go down."

17:18But the inventories tell a very different story. The Shanghai silver inventory is down 86% from its 2020 levels. The London vaults are also showing drawdowns. COMEX is seeing declining inventory. And at these current levels, these hubs will only hold about 30 days or so of usable silver, which is weird.

17:40So the paper money can always be manipulated, right? Margin hikes and that sort of thing. But the physical market cannot. And right now, there is this growing unsustainable disconnect between the two. Now, social media is full of people saying the physical market is screaming for metal but the paper game continues. And they're actually right for once.

17:59And these disconnects, they can't last. Eventually, the paper price has to reflect the physical reality or the paper market starts to become irrelevant. So we've covered the unstoppable demand. Well, let's talk about supply because this is where the crisis becomes undeniable in my opinion.

18:15The silver market is in its 5th consecutive year of a supply deficit. This means for 5 straight years, demand has exceeded total supply. The total deficit is about 820 million ounces. For 2025, which is the best data I've got, the deficit is rumoured to be 230 million ounces.

18:43Now, what does that mean? Well, it's the entire annual output of Mexico, one of the world's top silver producing nations. So it's a lot of silver. The world produces about 800 to 850 million ounces per year. There's about a quarter of that missing. Then on top of that you have recycling which adds another 200 million. So you got about a billion ounces a year of total silver production. Demand is about 1.2 billion. So you got that gap and it's a big gap.

19:16So how is the deficit being filled? Inventories are being drained. Exchange vaults are being drawn down and the strategic stockpiles are being tapped into. But these are finite amounts, right? Eventually you're going to run out.

19:31So why can't the supply catch up? Well, mine production is actually down from its peak. There's been underinvestment. Silver prices have been low. Why the heck would you want to start a silver mine? Right now, a new mining project takes 8 to 12 years to bring into production. You can't just flip a switch and say, "I want more silver."

19:51And silver, most of it is actually a byproduct of things like copper, zinc, and lead in gold mining. It means silver prices don't automatically trigger more silver production because you'd need higher copper or higher zinc prices to incentivise the mining. So the math doesn't really work. Demand is accelerating while the supply is stagnant. And that's your textbook definition of a supply squeeze.

20:13And then China just dropped a bomb. They're going to put in export restrictions. So you have already a global supply deficit. China has just said, "We're not going to sell you any more silver." Now, there are export licence requirements for it, but it's very, very strict. It's very hard to actually get those.

20:33Why does it matter? Because China controls about 60% of the world's refined silver supply. Yeah, 60% just kind of matters, right? So most of the world's global refined silver comes from or through China. And why are they doing it? Well, they want to preserve their own domestic stockpiles because they are a major industrial nation. It might also be a political element in there. We're not going to get into that. We're just going to take the information as it's been given to us.

20:58But it's pissing people off. Even Elon Musk tweeted, he said, "This is not good. Silver is needed in many industrial processes," certainly in all of his. But it tells you something. The guy makes EVs. He makes solar panels. He makes AI chips. And he's warning about silver supply. This actually matters.

21:15Now, let me give you one more piece of context that kind of ties this all together. The gold to silver ratio. What is it? The ratio measures how many ounces of silver it takes to buy 1 ounce of gold. Now, if gold is, whatever it is, say gold

21:29Is $4,400 an ounce and silver is 75, then your ratio is about 58 right now. Now there is something funny about this, and that is that there is an actual natural occurrence of how much silver there is for every ounce of gold in the earth, in the earth's crust. It's about 17.5 ounces of silver for 1 ounce of gold. And a lot of historical monetary systems that used gold and silver, they had that ratio, that 15 to 1, 16 to 1 kind of ratio.

22:04So what does this tell us? Well, it tells us that the ratio has compressed a lot over the last years. In 2020, we were up at 125. Silver is really, really cheap, extremely cheap, relative to gold. 58 shows that silver has been catching up, but it also shows that there is more room to run. Why? There is a rule, it's the 80/50 rule. So when you're above 80, silver is undervalued, massive buy signal. When it's below 50, silver's expensive and basically you sell. So here you buy, at 50 you sell.

22:44Now we're at 58, so there is still a fair room to grow. But another way of looking at this is if we go back to the mean, the average that we've been at in this ratio, and gold stays at the same price of $4,400, then your silver price would need to be $129. I don't think anybody would be very unhappy about that who's watching this video and is into silver. So that's why a lot of Wall Street analysts or silver analysts are basically saying we're still bullish. Silver has outperformed gold massively, but there is actually a reason for it. And I hope you understand that a lot better now than you did before.

23:24So what's the actual plan here for us retail investors? I believe what we're seeing is the last gasps of paper market control over this commodity and that the physical shortage will take over the actual price controls. And I think the institutions know this, and I think that's why the streaming companies, which I'll explain in a minute, barely dropped during the crash while the retail heavy miners got destroyed. So smart money is accumulating physical silver in shares in companies with fixed cost access to silver production while the retail traders using leverage got shaken out, and that was the point of it.

24:00But the fundamentals didn't change. So what happens next? I think we're going to see a lot more volatility in the paper market. Prices are going to be pretty bonkers because they're going to try and suppress the prices. You're going to see a bigger gap in the premiums, especially in Asia. The Chinese prices are going to decouple because of the export restrictions. But eventually the break higher can't be contained just because of the physical demand.

24:25I'm going to show you my market maker's perspective in a second from one of my mentors. He's going to explain to you how these games work from the inside and a few words of advice there. But what can you actually do about this? Can you profit from this? You understand the demand, you understand the manipulation, you understand the fundamentals. So how do you position yourself?

24:46Now, the following is not financial advice. It's not a recommendation. These are just some thoughts of what you could do if you wanted to get access to more silver exposure, but you're going to have to deal with your own risk management and your exit rules and all these kind of things. Because I don't give financial advice. I'm in no way licensed or qualified to do that. I'm just going to give you my opinion, that's the end of it. It's hopefully the beginning of your research. And if you want to dive a little deeper, get your hands on the free newsletter that's down below.

25:17So if this thesis is correct and physical silver will be priced above paper and physical prices will determine paper prices, you're going to want to own physical stuff. So if you want to own silver, I'd say you want to put most of your money, if not all of your money, into physical silver. And you could of course put gold into the same category. You could do some sort of split, 50/50, 60/40, whatever fits you. Traditionally it's 75% gold, 25% silver. I still think silver in the short term is going to do a little bit better. In the long run I think gold will also do incredibly well, that's my humble opinion.

25:58How do you buy it? Go to big dealers. The APMEX guys, JM Bullion, HD Bullion. Focus on government-issued coins and bars. Think the American Silver Eagle, the Canadian Maple Leafs, that kind of thing, because those are more liquid. Now, if you have a bit more money, think about bars because larger amounts will give you lower premiums. Storage is an issue of course with this stuff. Either you have some secure home storage or you are in a reputable vault. Don't put it in a bank box. I don't trust the banks. The vault guys I think are okay. And if you're storing it at home, don't put it on social media. Don't tell people about it, obviously.

26:36All right now, I touched on streaming companies and a lot of people obviously don't know what that is. These are companies like, and I give you a few tickers here, WPM, FNV, RGLD. That's the smart money play. So what are these streaming companies? They're not miners. They provide upfront money to mining companies in exchange for the right to buy a percentage of future production at a low price, a metal royalties play.

27:09And if you've been following me for a while, we were certainly in WPM earlier this year. I think we might even have been in Royal Gold, I can't remember. But we were making money out of these guys, mostly for the gold market. And in very volatile markets they can be superior because they're less volatile because they've got fixed costs. Whereas your mining guys, the actual physical miners, are going to be a lot more volatile. So they're typically very, very profitable. And the other beautiful thing is that their management can't mess up the drilling programme or something. It's a little bit less risk, a little bit more diversification. You can buy these in a regular brokerage account.

27:50So there is one thing there. Now strategy 3 are miners. And I think a lot of people again don't really understand these. Let me give you a couple of tickers to look into. NEM would be one. GOLD would be one. AEM would be another one. So those are traditional miners. Now always stick with the tier 1, the low-cost producers, which is why I'm mentioning these. NEM is Newmont, they're the world's largest gold miner. Barrick Gold is a major global producer. AEM is Agnico Eagle. Again, these are quality operators and they all have costs for silver of about $15 per ounce, so they can be profitable even if the metal prices pull back further. They have strong balance sheets. They have good management. They pay dividends.

28:35Avoid the high-cost miners that are barely profitable. So the little miners with a single project, that's super risky. You don't want to be in now. So if it's being talked about on Reddit, you probably want to stay the heck away from it. And then a little bit of dry powder to buy the engineered dips to make sure we can take advantage of that.

28:57Risks. They can hammer the paper markets for a while. We could get a global recession. Anything is possible. China could start flooding the market. Seems unlikely given that they are a huge user of silver themselves. So yes, I think be prepared for the roller coaster. It won't be a straight path up. I'm not saying that in any way, shape or form.

29:17So what do you do? Educate yourself. Grab yourself our free newsletter. Make calm, collective decisions. Make a plan for the next year or 5 years or 10 years, not just for this week. And make sure you've got some good risk rules there. If you want to get into silver, you want to get further into silver, join the free newsletter. We're going to give you some real gold nuggets there every day as well as a real deep dive every week. And it's free. So felix/s.

29:45And if you got some value out of this, share it with a friend. I know we don't normally make gold silver videos here on the channel, but I think it's such a huge topic. I think such a huge opportunity. We've made a lot of money initially with gold and gold miners earlier this year and then silver also, that I think it's good to share the knowledge. And I see this continuing for the foreseeable future, not in a straight line up as I say, but I am bullish on both. I thank you for watching and I wish you all the best.

30:13Hi guys, Elliot here and I want to talk for 1 or 2 minutes about this stuff, silver. Now, as a former market maker on the London Metal Exchange, I'm going to offer you my insight on this bonkers price action that's taking place even as I make this call. Okay, silver traded up to $83 an ounce last night when China announced export curbs on silver producers. Okay, COMEX, the commodity exchange in New York, immediately raised margins, forcing speculators, overleveraged speculators to dump some longs, and the price dropped 16%. We're currently up 4% overnight. The price action is becoming incredibly erratic and news stories of a large bank or several large banks going under or potentially going under due to massive short exposure are doing the rounds across socials. Now, are banks short of silver? No idea. Quite possible. Are banks in trouble? Who knows? But we're

31:17Just not seeing that stress in other markets. We're seeing the VIX at 1-year lows, bond market volatility 1-year lows, equities within splitting distance of the all-time high. And that is totally opposite to what we saw in 2023 when Signature Bank and Silicon Valley Bank went under. We saw equities dumping, VIX surging, and bond market volatility exploding.

31:47So we're just not seeing that price action backing up those rumours. Also, talk of a large injection of liquidity from the Fed overnight. $34 billion, I saw one account posted. It's actually about $17 billion if you look at the data from the New York Fed. That's totally in line with this time of the year. End of year funding stress often requires a little bit of liquidity to carry us over into the new year.

32:14So we're not really seeing those stresses. Now, what does that mean for the silver price? Who knows? Silver could be at $100 today or $50 tomorrow, and neither of those things would surprise me.

32:29What I can say is this. The easy part of the silver trade feels like it's behind us. It's going to be wild, is going to be incredibly volatile, and I would expect lots of those erratic moves to come outside of hours when you guys, or the majority of you guys, will be sleeping. So play it safe because this market is not for the faint-hearted guys.

32:51Thank you. Your retirement could be transformed. But what I'm about to show you today, right now, the Trump administration is pushing through a $1 trillion defence budget that's completely reshaped.