Silver Markets Face 'Liquidity Squeeze' Risk, Warns Goldman Sachs

Goldman Sachs has issued a high-conviction warning for silver traders, flagging structural fragilities that could trigger extreme volatility. With spot Silver trading at an elevated $76.84 per ounce, the bank questions the market's stability due to a critical lack of physical liquidity.

The Inventory Squeeze

According to analysis from Goldman Sachs, the primary risk stems from critically low inventories in London vaults, the global hub for silver pricing. Physical metal has been relocated to U.S. vaults in anticipation of trade barriers, leaving the London market susceptible to a local squeeze.

Models suggest that a standard large buy order could now move prices by over 7%, a massive increase from the historical 2% sensitivity.

Technical and Derivative Pressure

Compounding the supply dislocation are new export controls from a major Asian economy, which threaten to fragment global supply chains. Options market data corroborates this nervousness, showing an exodus of bullish call positions as traders de-risk.

While Gold consolidates near $4,470, Silver's unique supply-chain fragility makes it the primary volatility risk in the metals complex this week.

Key Market Data

Technicals