<div id="readability-page-1"><div id="blog-content"><img height="333" src="https://imageproxy.pbkrs.com/https://cdn.pixabay.com/photo/2017/03/27/21/31/money-2180330_960_720.jpg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="500" original-src="https://imageproxy.pbkrs.com/https://cdn.pixabay.com/photo/2017/03/27/21/31/money-2180330_960_720.jpg"/>Image Source: Pixabay I want to talk to you about what is happening with silver today.As you no doubt are aware, silver has gone parabolic, rising from $45 per ounce at the end of October to over $85 per ounce today. Throughout that period, the precious metal has had only two significant down days!<img height="376" src="https://imageproxy.pbkrs.com/https://gainspainscapital.com/wp-content/uploads/2026/01/image-2.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="620" original-src="https://imageproxy.pbkrs.com/https://gainspainscapital.com/wp-content/uploads/2026/01/image-2.png"/> Now, obviously there are multiple fundamental reasons for this move. As I’ve noted, the current macro backdrop is EXTREMELY bullish for risk assets, specifically inflation hedges.By quick way of review…1) The economy continues to grow as evinced by tax receipts (which cannot be faked), retail sales (7% growth year over year), and more. True, much of this growth is being driven by the top 10% of consumers, but in the aggregate, the economy is growing.2) Corporate profits are surprising… to the upside. 3Q25 EPS growth clocked in at 11%, representing the fourth consecutive quarter of double-digit EPS growth.3) The Trump administration wants interest rates as low as possible. To that end, within six months the President will effectively control the Fed.<ul><li>The President has already appointed three of the seven members of the Board of Governors. If Lisa Cook is forced to resign, that number will jump to four (a majority).</li><li>The President will have a new handpicked Fed Chair by May 2026 (if not sooner depending on whether or not Jerome Powell is forced out).</li><li>The President and his inner circle have suggested that rates should drop to 1% if not lower as soon as possible.</li></ul>However, the price move in silver is beyond macro fundamentals. In fact, it appears silver might be “breaking” the financial system to a degree.This is going to get a bit technical so bear with me for a bit.<h3> How Silver Futures Trading Works</h3>The bulk of silver trading takes place on the futures market. The futures market consists of centralized exchanges where contracts are traded to buy or sell physical commodities at a predetermined price on a future date. The most popular exchange is the Chicago Mercantile Exchange or CME.Put simply, silver futures represent a means of betting on silver by giving traders/ producers the option to buy or sell silver at a particular price in the future (hence the name futures).Specifically, every silver futures contract represents the right to buy or sell 5,000 ounces of silver.Now, futures contracts expire every two months in the calendar year (January, March, May, July, September, and December). If a person who goes long a silver futures contract does NOT sell the contract prior to its expiration (or roll it over to a contract expiring at a later date), he or she will receive 5,000 ounces of actual physical silver for every contract he or she owns.The current silver contract expires on March 27th 2026. And the last delivery day for physical silver is March 31st.As I write this, the current open interest for silver on the CME is 150,200 contracts. With each contract representing the right to buy or sell 5,000 ounces of silver, this means that the current open interest for silver represents 751 million ounces of silver.The problem with all of this is that according to the CME’s registry there are 440 million ounces of silver located in its depositories.Put another way, there is 1.7 TIMES the amount of actual silver the CME has stored in various depositories trading in the open market. So many of these contracts are in fact backed by NOTHING.This is where things get dodgy.If a significant portion of the current open positions in silver opt for physical delivery, there is a chance the CME would face a potentially systemic issue. After all, how do you explain that you were letting people bet on an asset that wasn’t actually there to begin with? In this context, the CME is no different from a crypto currency!This is why silver prices are going parabolic. The financial system is beginning to smell the proverbial “blood in the water” for the CME.The CME is trying to deal with this by hiking margin requirements on silver. When a trader buys silver contracts, he or she has to post collateral to backstop the trade. By hiking margin requirements, the CME is effectively forcing the trader to post more money to backstop his or her trades (ironic since it is the CME that doesn’t actually have assets backstopping its futures contracts)! In terms of recent hikes, on December 29, 2025, the CME raised silver margins by approximately 13%. It hikes them by over 30% a few days later on December 31, 2025,.Despite these margin hikes, silver prices continue to soar. The precious metal has broken out of a triangle formation to the upside, rising to $87.50 per ounce. The silver futures contract is even higher at $91 per ounce.<img height="376" src="https://imageproxy.pbkrs.com/https://gainspainscapital.com/wp-content/uploads/2026/01/image-2.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="620" original-src="https://imageproxy.pbkrs.com/https://gainspainscapital.com/wp-content/uploads/2026/01/image-2.png"/><h3> Silver is Becoming a Systemic Risk</h3>This is a MAJOR deal. When MULTIPLE interventions/ margin hikes don’t stop an asset from rising in value, it is clear the CME is losing control. And it has the potential to become a SYSTEMIC issue.You see, the CME doesn’t just trade silver futures, it trades everything from bonds to stocks to commodities and more. The average daily notional value of CME contracts traded is $11 TRILLION, with the annual trading volume exceeding $1 QUADRILLION (1,000 trillions)!So… if it turns out the CME is permitting trades WITHOUT actual assets backstopping them… then the door opens to a collapse in the CME as traders panic realizing that they couldn’t take delivery of the items they’re trading even if they tried.Small wonder then that the CME Group which controls the CME futures markets has NOT participated in the bull market in stocks. Instead, CME shares have traded sideways for 12 months!<img height="376" src="https://imageproxy.pbkrs.com/https://gainspainscapital.com/wp-content/uploads/2026/01/image-3.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="620" original-src="https://imageproxy.pbkrs.com/https://gainspainscapital.com/wp-content/uploads/2026/01/image-3.png"/>How this plays out remains to be seen, but I wanted to warn you that one of the main pillars of the current financial system (the futures markets) is beginning to crack. I’ll be tracking this situation as it develops, but there is a potential systemic risk that could make things ugly.<hr/>More By This Author:Japan Is About To Go Bust… Is The U.S. Next? Japan Is About To Go Bust… Is The US Next? “Run It Hot” Means The Great Global Melt-Up Is Just Getting Started</div></div>

Silver prices have surged from $45 to over $85 per ounce, driven by a bullish macroeconomic backdrop and rising corporate profits. However, the silver futures market is facing systemic risks, as the open interest of 751 million ounces exceeds the CME's physical silver supply of 440 million ounces. This discrepancy raises concerns about the viability of futures contracts, prompting the CME to increase margin requirements. Despite these measures, silver prices continue to rise, indicating potential instability in the financial system.

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Silver Is Becoming A Systemic Risk