The market always tends to oversimplify complex matters. For instance, the surge of 170% in silver prices this year has led many to claim: 'This is because silver is used in solar panels, and China’s export restrictions have caused a supply shortage leading to higher prices.'
While it sounds plausible, the truth is often more complicated. What truly drives the silver market might be a deeper and more concerning logic.Paper silver and physical silver have completely 'decoupled.'This situation is similar to what happened with gold this year, but for silver, it’s even more urgent – factories that genuinely need silver cannot afford to wait. This article will analyze the issue from the following perspectives:
1. Why can't arbitrage close the price gap? The divergence between paper silver and physical silver
2. The predicament faced by COMEX paper silver
3. Why has this rally in silver been more intense than that of gold?
4. The narrative logic of silver across different markets
5. The Financial Attributes of Silver
6. Are COMEX's Three Key Strategies Still Effective?
7. What Happens Next?
I. The Price Difference Exists, So Why Isn’t Anyone 'Flattening' It?
Under normal circumstances, if the price of the same commodity differs between two locations, merchants will immediately buy low and sell high to capture the arbitrage profit, quickly equalizing the price.
However, the recent silver market has been completely irrational:
Shanghai Market Quotation: 77-91 USD/ounce
New York COMEX Quotation: 71-80 USD/ounce
The transportation cost for silver is only 1-2 USD, yet the price spread between these markets ranges from 6 to 20 USD, with no one stepping in to arbitrage for an extended period.
In theory, the operation should be straightforward...