The silver market is flashing red for the big banks holding short positions — and flashing green for contrarian investors betting on a historic squeeze. As of March 31, silver short contracts tied to the Sprott Physical Silver Trust (PSLV) have reached an eye-watering 28 million, up a staggering 4 million contracts in just over two weeks. That’s a 20x increase compared to historical norms.
To put this in perspective: prior to 2020, a typical short position on PSLV hovered in the low millions — at most. Today’s figure isn’t just abnormal. It’s unprecedented.
A Brewing Crisis for the Banks
Since mid-March, short interest in PSLV — a fully allocated physical silver trust — has been on a relentless rise. On March 14, shorts stood at just over 24 million contracts. That alone represented a major anomaly. But as of March 31, the situation has worsened dramatically, with the total short interest rocketing to 28 million.
Why are the banks so heavily short? Likely to suppress silver prices and maintain control of precious metals markets — a strategy that worked for decades. But the fundamentals are changing. Physical silver is harder to source, industrial demand continues to rise (especially from solar, electric vehicles, and tech), and retail demand has never been higher.
What’s more, PSLV is not a paper ETF like SLV — it actually requires physical delivery of silver. That means every short position is playing a dangerous game against a trust backed by real bullion, not promises.
Price Suppression Is Reaching a Breaking Point
With silver prices still trading near $25–$26/oz, far below their inflation-adjusted highs, many investors are wondering: how much longer can this manipulation last? The short answer: not long.
In a market with shrinking above-ground stockpiles, surging industrial consumption, and central banks quietly stacking metals to hedge against dollar uncertainty, the massive short position looks less like strategy — and more like desperation.
Once physical delivery pressure builds — and PSLV holders refuse to sell — the banks may have no choice but to buy back those contracts at market prices. That’s when the silver rocket takes off.
Ready for Liftoff?
If even a fraction of those 28 million short contracts are forced to cover, the price action could be violent and vertical. Analysts tracking the market speculate that silver could breach $30/oz, then $40, and possibly challenge its all-time high near $50/oz in short order.
For investors looking to front-run the squeeze, physical silver, PSLV, and select silver miners may represent asymmetric upside — with fiat currency, inflation, and interest rate uncertainty only adding fuel to the fire.
At Invest Offshore, we view the current setup as a generational opportunity. When financial engineering collides with real-world scarcity, something has to give. And this time, it may be the banks.
Invest Offshore has access to exclusive metals-backed offshore investment opportunities — including silver exploration projects in the Copperbelt Region of West Africa. Contact us to learn more.
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