Short sellers now report a whopping $1.3 billion loss in silver following the price surge of the commodity of over $33.60 per ounce.
Silver prices have surged significantly, climbing over 6% to surpass $33.6 per ounce.
This unexpected rise has put five major U.S. banks at risk of heavy financial losses due to their substantial short positions in the metal.
The recent spike in silver prices has led to potential losses for these banks, estimated in the billions, as reported by The Silver Academy.
The Commodity Futures Trading Commission (CFTC) indicates that open interest in silver futures contracts has reached 141,580 contracts, with each contract representing 5,000 ounces.
“This situation undermines market integrity and could have serious implications for both the financial sector and industries reliant on stable silver prices,” stated The Silver Academy.
The concentration of short positions among just five U.S. banks has raised alarms among industry analysts.
Critics suggest that this level of short-selling artificially lowers silver prices, even with robust demand from industries such as electric vehicles and solar energy.
“Silver is seen as the more affordable alternative to gold. As gold hits new record highs and copper reaches a 2.5-month high, traders have pushed silver past the resistance level at $32.50,” remarked Ole Hansen, head of commodities strategy at Saxo Bank A/S, according to a Bloomberg report.
Concerns about market integrity and possible supply shortages are growing, with fears that a rapid price increase could force banks to buy back large amounts of silver, resulting in significant losses.
This surge in silver prices comes as investor interest in precious metals rises.
Renowned investor Robert Kiyosaki has predicted a potential stock market crash and emphasized the importance of investing in gold, silver, and Bitcoin, underscoring a trend of investors seeking safe-haven assets amid market uncertainty.
Additionally, noteworthy options activity was observed in First Majestic Silver (NYSE: AG) on Monday, indicating bullish sentiment among investors and heightened interest in silver, possibly signaling expectations of further price increases.
On Wednesday, a breakout in silver prices drew attention, linked to rising dollar demand associated with electoral prospects, demonstrating broader market dynamics affecting silver prices.
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Also Read: Interactive Brokers Violations Now Prompts Illegal Short Selling Inquiries
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