The decline in Silver prices is sharply linked to that seen in Gold, raising questions as to whether this is truly associated with our Silverflood thesis or whether it is simply a function of a consolidation in precious, TDS' Senior Commodity Strategist Daniel Ghali notes.

Speculative flows dominate as industrial demand stays weak

"Silversqueeze and Silverflood are associated with a liquidity crisis, not demand. The price action in Silver is related to liquidations that are correlated to those seen in Gold, but convexity in price action is related to ebbs and flows in liquidity. Ultimately, we think we are currently seeing the single largest wave of repletion to London inventories on record, with the London free float potentially rising by roughly 50% from its October lows in just a few short weeks."

"In turn, Silver markets no longer need to discover the strike price at which metal will flood the London system from unconventional sources, which negates the fundamental driver of the bull market in Silver."

"Industrial demand remains notably weaker than at the start of the year, leaving speculative demand to drive the ebbs & flows in OTC Silver demand. Forms of export controls remain a threat to the market structure, including Sec232 tariffs, but we have less conviction that Silver will be subject to a threat of tarrifs than we do for PGMs, zinc, nickel, tin, cobalt and other critical minerals."