Open Interest in the silver market has now plunged below the 2020 & 2013 lows setting up a capitulation moment.

The audio interview with Nomi Prins discussing what to expect next for gold, silver, mining stocks, oil and uranium will be released within hours. Until then Alasdair Macleod’s audio interview has just been released (LINK BELOW).

June 12 (King World News) – Alasdair Macleod:  Currencies are debased during and after wars, because government spending goes through the roof not just due to defence spending but also because of the economic consequences

Financial markets, particularly in North America and Europe are ignoring the lessons of history. By their actions participants believe that it is the marginal cost of holding gold over prospective interest rates which determine the former’s value. The assumption is that inflation is increasingly likely to surprise on the upside as a result of the closure of the Straits of Hormuz, removing the hoped-for reduction in interest rates later this year and substituting the likelihood of an increase

This is thoughtless nonsense which assumes that currency deposits in a bank are the ultimate safety. The delusion is primarily due to accounting investment returns in these currencies, which ignores the factors changing their purchasing power. Last week has been a prime example of this error, as the values of currencies have been driven higher against those of gold and silver.

Trading short-term is particularly hazardous. But there is a major benefit for stackers prepared to benefit from an arbitrage between current investment misconceptions about the role of gold and silver, and the reality which always undermines currency values following war.

In early European trade this morning (Friday) gold was $4225, having rallied from a low of $4029 yesterday morning on news from the White House that a settlement is being agreed with Iran which will lead to Hormuz being opened this weekend or possibly Monday. But it should be noted that Iran said that there’s no agreement and restated its red lines. At $67.30, silver rallied this morning from yesterday’s low of $61.50.

The problem we have in assessing the immediate prospects for gold and silver prices can be summed up in the following bullet points:

  • There have been several instances of false optimism emanating from the American side only to be followed by renewed military conflicts. Could it be that this time both sides are serious in their intentions to end the war? If so, a rally in gold and silver could continue on the basis that markets currently associate war with lower precious metal prices.
  • Israel has discouraged peace talks by intensifying attacks on Southern Lebanon and Beirut when they have been mooted. At the time of writing, we have yet to see if Israel will again try to disrupt an attempted agreement with Iran.
  • If there is cause for optimism it is likely to be a memorandum of understanding, not a peace agreement. That will take time to negotiate, likely to keep Hormuz closed for much longer than beyond Monday as the Americans have stated. It will also need agreement and compliance from the Israelis, which at the moment seems unlikely.

We can only conclude that this sudden settlement announced by President Trump yesterday should be treated with caution and the uncertainties undermining gold and silver are far from removed. Traders face continuing uncertainties in a market driven predominantly by the vested interests of market makers and bullion bank trading desks who are short of gold and silver futures. At the margin, they will push for lower prices.

Gold’s open interest on Comex remains very low:

This indicates that speculative interest diminished as the price rose above $3000 in early-2025. The rise in gold’s paper price has been driven by underlying physical demand from central banks and Asian interests, particularly Chinese and to a lesser extent perhaps Indian. Any liquidation of positions will have been minor, though in May ETF flows turned slightly negative, according to the World Gold Council:

The dips in March and May confirms what the cynics know: investors tend to sell when the price is down and buy when it’s up. Perhaps net ETF liquidation is not over, but we can be sure that in this very oversold market any ETF selling will be easily absorbed.

While investor sentiment in silver is rock-bottom, the story here is potentially explosive. First, we look at Comex’s open interest:

Open interest is lower than in October 2013, and more so than in April 2020 when silver began its current bull market from below $12. This chart alone suggests that silver’s downside is extremely limited. We know that industrial demand outpaces the sum of mine and scrap supply for the seventh year, China turned net importer from significant exporter in 2025 Q1, and investor interest has yet to kick in.

In conclusion, in the very short-term uncertainties over Iran and the way they are read in paper markets seem likely to persist. Investors falsely believe that safety is found in currency deposits. That will pass when it is realised that the consequences of war almost always undermine currency values priced in gold. The potential of a bear squeeze in silver as industrial demand drains paper markets of their physical backing coupled with the return of investor interest has the potential to lead to far higher prices, and rapidly at that.

Out last chart of the dollar priced in gold makes the direction of travel very clear. The fiat dollar is heading toward its end of life:

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To listen to Alasdair Macleod discuss the brutal gold and silver takedown and the subsequent rally CLICK HERE OR ON THE IMAGE BELOW.

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