the paper market for silver is losing its significance in the process of price discovery. Everyone who owns physical silver should make their decisions based on what is happening in the physical market, not the paper market.

A basic premise of precious metals is that silver leads gold, which is a point we have discussed before. It will be interesting to see whether the backwardation in silver will lead to a backwardation of gold. If it does, the end game for the US dollar is near. It would mean hyperinflation of the dollar is upon us.”

This imbalance between long-term illiquid assets and short-term liabilities is the fatal dynamic which invariably creates a banking crisis. The bullion bank owns a forward that is a 'paper' asset but has a liability in the spot market to deliver physical metal. Silver that is only going to be mined one or two or three or more years in the future is not going to help the bullion bank with its short position today where it needs to deliver physical metal now or default.