Comment by jmyeet | Hacker News Reader

Comment by jmyeet | Hacker News Reader

This isn't a simple correction. I've been following this for a couple of months and there's a lot going on. I suspect this isn't over. It's noteworthy that the year 1980 because that was when the Hunt brothers tried to corner the silver market. It's often used as an example of the market correcting itself. It's actually a better example of how the exchanges broke the Hunt brothers to bail out the banks.

The key event that caused the collapse is sometimes called Silver Thursday [1]. The exchange changed the liquidity rules, forcing a margin call the Hunt brothers couldn't make, forcing a selloff. This was arguably to bail out banks with large short positions in silver.

Well, pretty much the exact same thing happened this week when COMEX massively increased the margin requirements [2]. It's worth noting that the market is in a state called "backwardation" where the spot prices are higher than future prices. Refiners aren't buying silver, even at the inflated spot price, because of price risk. But also, the COMEX spot price is increasingly being viewed as "fake" because foreign exchanges are paying significantly more for physical silver thna the paper COMEX price [3].

Basically, this whole thing looks like another GameStop ie a short squeeze. There's not enouugh physical silver to meet contract demands. There's like 300oz of futures silver contracts per 1oz of physical silver.

If you followed the original GameStop short squeeze, the price tumbled there too but didn't solve the short squeeze. You even have exchanges closing people's options positions (eg RobinHood) despite them being in the money.

Banks still need to cover their significant short positions and it really looks like the exchanges are trying to crash the silver market to do it.

[1]: https://en.wikipedia.org/wiki/Silver_Thursday

[2]: https://www.bloomberg.com/news/articles/2026-01-28/cme-raise...

[3]: https://seekingalpha.com/article/4861917-why-silver-prices-i...

I think that a real bubble requires margin. It's not just that people are buying because the price is going up, it's that people are buying with borrowed money because the price is going up.

That ends badly. It ends badly for the lenders. So when it starts to look like that's what's happening, a perfectly reasonable response is to change the margin requirements. When the circumstances are normal, use the normal margin requirements. But when the circumstances are abnormal, of course they should adjust.

Do me a favor and look at how many CME Notices were issued raising margin requirements for precious metals in the past year. Hint: They do this all the time to account for market volatility and the contract value. If a contract increases by 10% margin is not static. CME raised margin requirements several times in the last month to little market effect.

Silver crashed because China halted trading on the only public silver and gold ETFs Friday. There are videos of HK police arresting guys freaking out because they couldn't cash out beforehand: Apparently the fund had been operating as some kind of pyramid scheme and was not solvent at those prices.

Also on Friday, China urged investors to "invest responsibly" or some such (source: FT) and froze a bunch of suspicious accounts. I believe those accounts were behind the pump and dump social media ("AI Asian Guy" videos on Youtube, investment subreddit spam) with the help of plenty of useful idiots.

There's a ton of good coverage of the precious metals run up in FT this past week.

So I found a chart showing silver prices vs margin requirements on Linkedin of all places [1]. Yes, margin requirements change and the exchange tries to protect the market in times of high volatility but increasing the margin requirements significantly means everybody has to put up more collateral even if you're significantly in the black.

That's my point: they're intentionally trying to crash the market. The analsysi that they're defending the banks from a short squeeze seems to fit the available data [2].

As for China, the government is ensuring their local industries have sufficient silver supply, which is particularly important for solar.

The US government has a lot of power to do similar to this but refuse to use it because it would hurt profits. I'm thinking specifically of the Defense Production Act, which could've been used to lower oil and gas prices in 2020-2022. Instead we passed on the costs to consumers, let oil companies export to the world and let them make record profits.

[1]: https://www.linkedin.com/posts/ryanlemand_this-chart-is-wort...

[2]: https://finance.yahoo.com/news/everything-investors-know-his...

The left hand scale is presumably dollars per ounce of silver. The right hand side is "margin requirement ($)". I can think of two interpretations of that, neither of which make sense to me. The first interpretation is that one recently needs a $25000 margin per $90 ounce of silver instrument - obviously absurd. The other interpretation is that once you have a $25000 margin you can buy unlimited silver instruments, which is only barely less absurd. How does reality work?

This is the answer; Diamond hands baby

so how long do you think will this play out? asking as a concerned silver and gold holder lol

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