three precious metals bull markets that I've lived through, at some point in time, silver decouples from gold. Perhaps we've seen that the last four weeks. And when that happens, for a time at least, the gold price seems to, pardon me, the silver price seems to move twice as fast as the gold price. One would expect from the period that breakout occurs for silver to outpace gold roughly 2:1. >> [clears throat] >> Therefore, if you believe that the gold price for the balance of this bull


market goes up 300%. It would not be uh out of line to speculate that the silver price could go up 600%. Something extraordinary is unfolding in the world of precious metals. a silent struggle between real silver and paper silver that could redefine the foundations of global finance. In recent months, gold has surged to new record highs as central banks and investors scramble to protect their wealth from a weakening US dollar. But beneath that golden spotlight, silver's story is turning even more dramatic. Veteran


investor Rick Rule describes the silver market as one of the most dangerously leveraged systems in existence today. A place where roughly 200 paper ounces are traded for every single physical ounce available for delivery. That's not a small imbalance. It's a staggering 200 to1 ratio. According to rules, such a structure is unsustainable. The moment investors begin demanding actual physical silver instead of paper settlements, the entire system could unravel and the warning signs are already emerging. Around the world,


silver shortages are becoming more frequent. In India, exchangeraded funds have even paused new share creations due to a lack of physical supply. The question now is simple. What happens when the paper illusion collides with physical reality? That's what we'll explore next as Rick Rule explains how this extreme leverage could trigger one of the biggest silver surges in modern history. Let's not worry for a second uh about the exchange traded derivatives uh you know the ETFs the sprat physical


products because I think those accounted for in the silver market. The claims that have always bothered me uh are the claims in the futures market. It is not uncommon for the daily volume of futures obligations in the silver market, the daily volume to exceed by a factor of 200 times, not 200% but rather 200 times the amount of physical silver available for good delivery. This is an extremely extremely leveraged market. Now, virtually all of those claims until very recently, cash settled, which is to say


they weren't held for maturity. They were rolled over. Um, you know, whatever happened. Very recently, uh, because of location disparities, which is to say the London market not having enough gold, uh, there was a location premium for gold in London. uh and what that meant was futures holders in the US would actually take delivery of the physical silver and ship it to London to take as much to take advantage of as much as a 4% disparity uh in the London quote and the Chicago quote that was contemporaneous


um you know a one day 4% premium when that happened the gold lease rates in the United States skyrocketed because rather than leasing gold uh it was easy to make two or three or 4% si simply shipping that gold to London. What has always scared me was an imbalance between supply and demand between the physical gold uh and that paper gold if more people stood for delivery. Make no mistake, Michelle, if you have a real imbalance uh in the futures market, you are not going to engineer the massive short


squeeze that the silver people hope for. What the exchange will do is that they will halt silver trading. They will set an arbitrary price between buyers and sellers and they will cash settle. That's what will happen. The exchanges run for the exchanges for the exchange members benefit. that notwithstanding uh that sort of market turmoil, what is likely to be the agreed upon cash settlement price uh were that shortage to occur, I think would likely be dramatically higher in the circumstance


that we see today than the price is today. and and the dislocation uh in a market where 200 times the claims uh where there where there are 200 times the claims relative to the amount uh available to settle on a daily basis is a market that's market that's really really really ripe for disruption. Yes. [laughter] Now that doesn't happen every day, but there are days when if you look at the physical silver available uh uh in North American futures markets on the comics as an example, good


delivery silver in system available for the settlement of the claims. Uh it is not unheard of to have 200 times that amount of silver traded in contracts on a daily basis. Now the huge majority of those things cash settle. they aren't >> for delivery. But in a situation where you have these goofy uh location swaps, 4% difference in spot price between London and Chicago, it's very tempting to take delivery, ship it, and grab the money. So all of a sudden, you had a situation where uh the uh held for


delivery uh proportion of those trades relative to the cash settlement portion of those trades went up. uh and the comics uh got stressed. Uh I'm sure that uh your channel your channel's employer has also seen uh a remarkable shortage of small denomination physical silver products, the 1oz products, the 10oz products. Uh we've noticed at SPAT that there is no shortage of silver available to us in good delivery in wholesale quantities. In other words, the bullion banks have been able to supply Sprat


with the physical silver that they need, but the dealers have had a very difficult time keeping retail denominations in stock. They've also uh had a very difficult time hedging their silver inventories uh and leasing silver inventories to make available inventory to their clients on a short-term basis. There's been a dramatic uh you know dramatic turmoil uh in the silver market. Your your own sponsor being one of the few that seems to have been able to stick handle their way through this


crisis in good order and service their clients. I've never understood it. First of all, uh the idea that the price of a substance should be dependent on its relative abundance or scarcity in the earth's surface doesn't make any sense to me. It's a good way to generate commissions or sell newsletters. But that ratio doesn't go to utility. It doesn't go to production cost. Uh it doesn't go to stock versus float. The idea that silver should be or or or that gold should be 16 times more valuable


than silver because silver is 16 times more abundant in the earth's surface doesn't explain much to me. Uh people pay a lot of attention to it and I think it's actually become a factoid. Uh, I think that when people quote that number, uh, they actually impact the market's perception and the market's action. I'm just not sure why the statistic is valuable. If you like our video, please subscribe to our channel for more insights.