The HUGE Demand for GOLD & SILVER is not Stopping (Uncut) 03-30-2025

The HUGE Demand for GOLD & SILVER is not Stopping (here’s why) | Eric Yeung

The key thing to remember, Danny, is that, you know, when you see the slams in the morning, every day, just don’t be afraid because the underlying situation right now is that the humongous demand from the US for gold and silver is not stopping. It’s just continually, you know, being, like, huge or might even ramp up. You’re watching Capital Cosm.

My name is Danny and today’s guest is fan favorite, Eric Jung. Eric, thank you so much for coming on, my friend. Well, Danny, thank you very much for having me on again.

It’s a pleasure to be here. Yeah, yeah, the pleasure is all on this side of the table as well, Eric. Let’s go ahead and dive right in with your most, you know, your top story, let’s say.

What’s weighing heavily on you right now? What’s front and center on your radar screen at the moment? The top story is definitely gold and silver right now. Gold and silver are breaking out, especially, you know, I think both are breaking out, but especially gold. Gold is sitting at $3,111 right now for its June contract.

So that’s pretty impressive, right? And even if you look at the April contract, we’re looking at $3,091.50. Yeah, and it’s a pretty sizable move. A lot of this move from, you know, the lower parts of the $3,000 handle up to where we are today, happened in like the span of two days. Oh, yeah.

I mean, it all comes down to the EFP doom loop thing that we talked about the last time I was on the show. And if you want, you can pull up the chart that I gave you today. Okay.

And I can explain what’s going on to your viewers. Sure. So here it is.

Okay, bam. So this chart basically explains, it shows you, shows your viewers how the Western gold and silver market works. So in the West, you have the COMEX, which we are very familiar with.

It’s basically a futures contracts place, right? It’s a futures market. So you have buyers and sellers buying and selling futures contracts. And as we all know, normally it has a 10 to one approximately, okay, reported by people, 10 to one paper to physical distribution in terms of like contracts.

Mm-hmm. The LBMA is a supposedly a physical market. But as you know, Danny, a lot of experts have reported that the LBMAs actual paper to physical ratio is actually pretty high.

For gold is around 100 to 200 to one paper to physical. And for silver is up to 400 to one. Isn’t that crazy? Yep.

That’s paper to physical in terms of the number of contracts that are purely settled by cash. A hundred to one paper to physical. Wow.

Yeah, yeah, yeah. So like a hundred contracts, let’s say at the LBMA for gold in the past, were settled by just cash. And maybe out of those hundred contracts, maybe one contract is actual physical delivery at the LBMA.

But guess what? The bankers, they call that a physical market. Isn’t that funny? They call that physical, right? So like other experts who I’m friendly with, like Ron and Manny, he calls it a promissory note market, which is actually, he calls it an unallocated promissory note market, which I think is more appropriate for the LBMA. And I’m going to explain that.

Why is that? Remember we talked about last time, Danny, what the bankers do at the LBMA and the ComEx? They would short the ComEx. Yep. And they would long the LBMA.

That’s how they make that, they skim the system. They make the arbitrage, right? It’s called the basis trade. And that’s how it skimmed prior to 2025.

Yeah, yeah. Prior to that, it’s all honky-dory, right? They make money every day. Doesn’t matter if the price of gold and silver go up or down a bit, because as long as the ComEx futures price is lower than the LBMA, they call it spot price at the LBMA, they make money.

They’re skimming the system. But what happened at the end of 2024 or beginning of 2025? This thing reversed because of the huge demand at the ComEx for gold and silver. So what’s happening now is the EFP spread is actually negative.

Okay, here I got to make a point because the bankers, when they lose money with the EFP, they actually call it positive. And when they make money, they actually call it negative. Okay, I think they do it to confuse people.

Maybe it works. It works, right? But for our purposes here, we’re just going to keep it simple. If they lose money, it’s negative.

If they make money, it’s positive. Okay. Capiche? Good? Okay, because otherwise it would be confusing.

So what happened is in the past, they made money. So it was positive, the EFP. They made money, everything was fine.

But now the ComEx price is higher than the LBMA price. So they’re losing money. But wait a minute.

People ask me, why is it all of a sudden that the ComEx price is higher than the LBMA price? Why is that? And before, why would the ComEx price be lower than the LBMA price? Well, think about it, Danny. If you are a whole bunch of banks, you’re sitting on concentrated short positions at the ComEx, and you long the LBMA, by definition, the ComEx price for gold and silver in the long run will be lower than the LBMA price. Make sense? I’m just going by what the experts say, because they tell you, every other expert coming on the show, they tell you concentrated long positions at the ComEx.

They say it every single time. So by definition, yeah, that’s how it works. What changed? Well, like we said last time, Danny, big players in the US, and I said, I was one of the first people who said it, probably most of these guys, US government proxies, are standing for delivery at the ComEx.

So they don’t want to paper settle, they don’t want cash. They want the physical metals. So when that happens, what happens? The ComEx physical price should shot up.

Boom. Okay. So your viewers, or people who go on my exit account, they ask me, well, but then shouldn’t the LBMA spot price go up even higher than the ComEx price? Right? It should, right? And then they will have that upper price, right? Yeah.

The diagram you have laid out here maintains itself. It should, right? But look at that diagram. Look at the bottom of the LBMA.

Look at the 95. What happens when your delivery time goes from T plus two to T plus 30 or T plus 60? That’s actually a misprint. It’s not T plus three.

It’s T plus 30 to T plus 60. What happens when your contract goes from T plus two, which is two days after you settle, you’re supposed to deliver the metal, right? Now you’re saying T plus 30, T plus 60. Or what happens when your vault is draining in the case of silver? What happens? Then the buyers who are not connected, now this is, by the way, this is my speculation on my part, but it’s educated speculation as you will see.

So in that scenario, what happens? You’re a buyer at the LBMA. Your contract is supposed to be T plus two. Now it’s T plus 60, T plus 90, T plus 30, whatever.

You have a lot less confidence in that paper contract, correct? Because it’s obviously, I mean, it’s just in a sense defaulting, isn’t it? Yeah. You’re supposed to go in two days, right? If you go to someone, you ask them for, you let someone borrow like your phone or something, and they say they can’t get it back to you for another 60 days, you’re going to be like, they have no contact with it. They lost the phone.

Okay. So what happens? So then your contract trays in a discount because at the end of the day, you get the metal for sure, right? On time. So it trays in the premium.

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You won’t be disappointed and make sure to tell them Danny sent you. So a trace at a discount or people see that your vault number is going down. So they’re afraid, right? So that paper over there is trading at a discount.

That’s why this thing reversed the EFP. That’s why every day, everybody, Robert Gottlieb, even Bob Coleman, everybody is talking about the reversed EFP spread right now. So I’ve heard the argument, Eric, I’ve heard the argument that the LBMA was just caught off guard with this and they don’t have the person.

It’s a personnel issue, right? And they say that because that they didn’t expect something like this to happen. They never hired the personnel required to maintain deliveries on time. What do you, what do you think of that talking point? It’s a complete, it’s a, it’s a, it’s a completely ludicrous.

I mean, look at what they said too, right? They said gold is heavy. That’s, that’s the problem. They said gold is heavy.

That’s why the delays happen. And they said they have trouble operating the trolleys. I mean, look at what they say.

And like, I mean, that’s just like a talking point, right? It’s funny. Okay, fine. Let’s look at the reality of what’s happening with gold and silver at the LBMA.

With gold is vault numbers drop, I believe in the last two months. Okay. Because you can only look at the difference between the vault number for each month to determine how quickly that like the vaulted LBMA gold is drained.

It drained 70 metric tons. That’s really small, isn’t it? That’s a small number. So you would think that, um, that would indicate that, uh, that, you know, the LBMA, that there’s no demand on the gold.

That would be the logical, you know, kind of like conclusion if you just look at that number, right? But that’s not the case. Why do I say that? Two things. Number one is the CarMax didn’t slow that at all.

I mean, just, you know, in that same period, the CarMax imported approximately, I believe, 200 metric tons of physical gold. Okay. So, and on top of that, the U.S. itself, on a projected basis, because on, you know, for the period between December and the middle of, or the end of February, sorry, StoneX reported that the U.S. imported 2000 plus metric tons.

So there’s some cross over there, right? So let’s say the U.S. imported in the same period that the LBMA said they only shipped out 70 metric tons on its valve. The U.S. imported 500 metric tons. So that tells you that, um, the LBMA number is misleading because the U.S. didn’t slow down on its, um, you know, gold import in the same period.

Okay. But what does that tell you though? That tells you that the LBMA is like the, um, the free float for physical gold is essentially down to less than a hundred tons or zero. Why do I say zero? Because if you are shipping gold at T plus 30 or T plus 60, the definition of your, the gold that is ready to go, ready to ship immediately is zero.

That’s a handful. That’s a mouthful, but does it make sense? Because I know, I know it’s convoluted, the whole situation, but I’m trying to explain it the best I can. Right.

Okay. So like to recap the, basically what I’m saying is that the U.S. imported a lot of gold, the vault number decreased at the LBMA doesn’t show that, uh, U.S. large, uh, importation of gold and, um, you know, the LBMA instead with that low, uh, gold decreased number shows you that it simply doesn’t have any gold. Whatever gold that is, they are shipping out, they are borrowing from foreign central banks.

Yep. So I, okay. So that part.

Yeah. Yep. Yep.

I want to pivot over to some ETF news, uh, PSLV. I know you’ve been talking about the, the, the PSLV ETF, the Sprott physical silver ETF, and it’s, um, it’s increased short volume that we’ve been seeing lately. I brought this up to Ed Steer the other day and, uh, I’ll let you see, see the screen here in a second, and we can kind of go through what you think is going on here, but let me know if you can see it.

Okay. Here it is. So this is PSLV short volume over time.

And as you can see here, it’s, I mean, it’s spiked rapidly since the start of the year. Now I brought this up to my good friend Ed Steer the other day, and he, um, he made a fair point that as a percentage of outstanding shares is still, you know, very, very small regardless, but I want to get your thoughts on this. I know you’ve been talking about it a lot on X. So what do you make of this increased short position on PSLV? Ed is correct.

Um, that the short position, uh, compared to overall standing shares is not a lot, but what is the intention of the short store? First of all, why is it that increased? My thesis is that, um, the bullion banks are trying to limit the number of new, uh, physical silver bars that PSLV would add to his vault so that it doesn’t compete with, um, you know, the bullion banks themselves in getting physical silver to be shipped to the comex. Okay. We, we didn’t talk about the silver vault number just now, but it’s in a dire situation as well.

Like if we look at, um, the LVMA, they probably got five, six months left of silver. If the current outflow doesn’t, doesn’t decrease currently, I think they ship out around a thousand metric tons. Okay.

So that’s, that’s the premise, right? So somebody, bullion banks, whatever they want, they don’t want PSLV to add new bars. So how do they do that? They increase the shorts, but they don’t need to increase the shorts to a huge amount. Why? Because way that the PSLV works is as long as the market price of PSLV market price, you know, the price that you see on your, on your screen for PSLV.

They’re trying to get it down to a discount to NAV essentially. Yeah. Yeah.

Basically a discount or a parity, right? If it’s this kind of parity to NAV, the net value, uh, that asset value price of PSLV, which is derived from the spot silver price divided by the number of shares minus, um, custodian costs, right. Or the other way around. That’s the equation for that.

And the whole point is like if it doesn’t dip to parity or below, then PSLV can add new bars, right? But if it dips, then PSLV cannot. So all it needs is to, for that to dip below, uh, NAV. And right now, me and Ralphie looked at it.

It’s like minus 1.6%. You see my point here? You don’t need a crap load of shorts to do that. You just need enough. Yeah.

You just need enough to trigger the, uh, the ETF to go out into the spot market and buy X amount of silver. No reverse. You just need to short enough, uh, PSLV so that it cannot be in positive.

Yeah. Yeah. But if the, the ETF where, yeah, but the mechanism of the ETF is that if it gets above it’s, if it gets a premium to NAV, then PSLV, they actually go to the spot market and buy silver.

Well, first of all, they, they do the ATM thing, which is at the market. And then they issue new shares. And then with the new shares, they buy new silver.

That’s how it works. Okay. Because it’s a one-on-one, right? The PSLV.

One-to-one. So, um, you know, the whole point of this short position is to just enough so that it doesn’t, like you said, positive, uh, you know, uh, the, um, the market price versus the NAV is not positive so that they won’t add new shares and therefore won’t buy new silver. It’s that simple.

So I agree with, uh, Esther, but then I just added a whole bunch of stuff on top of what you said and it all makes sense, right? Everyone is happy. Yeah. That’s it.

So you’re quite, you’re quite a diplomat there. There you are. So here’s the price of gold.

I mean, look at this thing. It just ripped through its previous resistance and it’s, um, I mean, the momentum doesn’t seem to stop. Yeah.

Because it’s the EFP doom loop. I explained to you, your viewers, I explained it today. Right.

Like we got stuck a little bit on the, um, on the LBMA vault numbers because it’s so convoluted, but we do know the loop is simple. Like I said, like, you know, what’s happening right now is that, um, they don’t, none of these guys want a short cover, right? At the, on the exchange, on, I mean, the comments, the short cover, you essentially, you’re pushing the short squeeze. So what did you, what are they doing? They are trying desperately to try to get gold and silver physical from the LBMA to deliver to the comics, um, you know, and settle by EFP.

EFP is not on exchange, so it doesn’t affect the price as much. Does that make sense? Yeah, yeah, definitely. What do you, what do you go ahead? So I was just going to say like, so what’s happening right now is obviously somebody, a bunch of guys or a bunch of booting banks are not able to get enough metal from the LBMA.

So they have to short cover directly on the comics. That’s why the price is shooting up and breaking resistance. Yeah.

I mean, look at this gap, look at this gap we formed today. I mean, going from 30, yeah, 30, 58. Which contracts are you looking at though? Which contracts are you looking at? I believe this is April.

I believe this is April. GC1 is April, I believe. Yeah.

So if you look at the April one, then like my thesis make complete sense. But even if you look at a March one, if somebody pulled up the March contract and they said, I guess they didn’t say that, but they said it’s rollover. I want to say right now that yes, it’s rollover.

You know what rollover is, right Ben? Explain it to the audience. Explain it to the audience. Okay.

You close your current months, like March. Okay. You close the March contract short position because it’s expiring.

It’s at the end of the month by exchange rules. If you do that, you close it by buying a long contract. What happened? March contract shows up in price.

And when you rollover, you buy a new contract or short contract in April. That’s the next active month, right? After trading month. That’s rollover.

Yeah, but you actually have to buy the short contract. Yeah, you have to buy. You have to sell, buy.

Right? Okay. So that’s rollover. If you don’t rollover, you just cover what happens.

You don’t buy the new short contract, right? Normally I say, yeah, guys, I agree with you. It’s all rollover because this stuff is going fast, right? So your costs of rolling over is nil. Oh, not nil.

It’s very minimal because the dynamics were different. What’s happening now, Denny? What are we looking at? The chart. You think if you don’t have like infinite money printing machine, you’ll be tempted to rollover all your shorts when you’re losing money on a monthly basis? You tell me.

They should explain to me what’s happening. I say that, yeah, some of it is rollover. Some of it is short covering.

I think that’s a fair statement, isn’t it, Denny? That’s a fair statement. That’s all. It’s all about clarity.

Let’s just get clarity. That’s right. March is, I think, is half and half, maybe.

April. Well, there’s no like rollover in April. That’s the next current front month, right? So April, I think the doom loop is activated.

It’s happening. And same thing with May, etc. Okay, so I have the silver chart now pulled up.

And you’ll see that we are at resistance. And we hit this level back in October of 2024. What do you make of the current silver price action? Well, look at it this way.

It rebounded, right? I’m looking at the May contract. Let me pull up March. It’s kind of useless.

Let me look at the April one. April is not an active month for silver. So let’s look at the May one, right? May is the next active one.

Okay. Yeah, the one on the screen is the May one. Yeah, they pushed it down to like, what, $34.9915 or something.

And now it’s at $35.165, right? So like explain to my ex audience, what do they do every 9am or 9.30am? They buy a crap load of shorts at the COMEX. I mean, I’m not the one who’s saying this. Everybody’s saying it, right? Your other guests are saying it.

Concentrated shorts. And it was just illustrated recently by Cyril Hedge. They have a chart of every day before 9am, right? Around 9am.

Around like, you know, when the COMEX opens. When it slaps. So they are buying the shorts on silver.

Because I think silver is being drained at the LBMA, physical silver. That’s why they’re desperately trying to suppress the silver price by rinsing the managed money, which are basically the non-Boolean bank players. But I mean, here, I mean, check this out.

After this $35, if we break out of this $35 handle, there’s pretty much no resistance beyond that. Yeah, but I’m telling you, you’re looking at it from a chartist point of view, right? I’m telling you what’s happening behind the scenes. What is happening, right? So I’m saying, you know, the Boolean banks, they came in, they slammed the thing with the concentrated shorts this morning.

And then at the same time, they probably bought a whole bunch of longs at the LBMA to hedge that. Does that part make sense? Yep. Yep.

Okay. So they did that, right? So now, are they, like, they still got around 5,200 metric tons of free float at the LBMA. Robert Gottlieb say that they got 7,700.

So I don’t know who’s right, Robert Gottlieb or the guys on X who did their own research. But either way, it’s five to seven months around, right, of inventory, free float at the LBMA vault. So I think that’s why silver recently is being more actively slammed than gold because of that.

Because silver still has, you know, a couple thousand, five to seven thousand metric tons of inventory at the LBMA. So they can open those longs and they can suck a whole bunch of gamblers in there, right, to take the short position or, like, you know, some poor schmuck working for whatever refiner. I don’t even think they have any capacity now, but if they exist, right, they would be shorting.

Shorting is just selling. That’s all it is, okay, by the way, at the LBMA. It’s just a seller of the metal.

Make sense? Yep. Right? Okay. So that’s how the system works, okay? They short a crap load at the ComEx and they long at the LBMA and they cross their fingers and hope that EFP spread is making money.

That’s it. Is that simple enough? Because I know some of your viewers complain. No, you demystify the entire thing.

Okay. So they can do it temporarily, right? They slam it, but then if it shoots up again because of actual physical demand, which is humongous at the ComEx, right, and they don’t have enough to cover outside of the ComEx via EFP, then somebody will have to buy the long contract at the ComEx to cover, right? And the price shoots up. See the mechanism? Yep.

So basically, it’s a tug of war, right? As long as they have a couple thousand metric tons, it will be up, down, up, down, rinse. You’re rinsing the managed money, right, when you can. And then when you don’t have enough physical for that particular player, that player need to cover and then the price should up.

That’s it. That’s why I think it’s happening. And of course, you have the normal trading dynamics, right? Of course, that’s the bottom layer, the supply and demand of the long and short contracts.

But I think I explained it very clearly. It’s exactly what’s going on. I think, yeah, I think we’ve covered pretty much everything there is to… All right, well, let’s put a fork in this thing.

What does this chart really mean from a high level perspective? Give us the executive summary to kind of cap things off here. Okay, perfect, Danny. So I explained the LBMA, I explained the ComEx and I explained the ETFs.

Well, at least I explained the PSLV, right? But guess what? With SLV and GLD, banks can actually, bullion banks, they can actually borrow SLV and GLD shares and they can redeem those shares for physical metals. They can take that physical metal out. And then via EFP, they can deliver that physical metal to the LBMA or ComEx.

You see those arrows? So it’s basically like I said in the beginning, it’s three different places all linked together by EFPs, and then the metal just move around wherever it’s needed. Simple enough. They can’t do that with PSLV.

PSLV, they can short it, sit on it so that it doesn’t add new bars, but they cannot borrow PSLV shares and then redeem it for metal. Yeah, that’s kind of the rehypothecation stuff that goes on with GLD and SLV, correct? Where they have multiple claims to the same unit of gold or silver? Yeah, well, they might be, but the PSLV, sorry, the SLV and GLD primarily, the shares are borrowed by authorized participants who can then go and redeem the physical metal. That’s the part I’m talking about.

You’re talking about something else, like how the gold and silver in those vaults are being rehypothecated. We’re not talking about that here. That’s a whole different animal.

Anyway, but you’re right though, Danny, because you’re talking about double counting, right? Because the ETF, the SLV and the GLD vaults are the same vaults as the LBMA and ComEx vaults. It’s not really rehypothecated, but they double counted. You get it? At the LBMA, a lot of the inventory, so-called inventory for gold and silver is actually ETF gold and silver.

Really? Wow. Yeah. That’s why right now, I believe there’s around, they say there’s around 22,000 tons of physical silver at the LBMA.

But like I said, the guys who did the calculation and Robert Gottlieb, they are saying that the free float is only around 5,500 to 7,700. That’s a huge difference, right? Like 5,000 to 7,000 versus 22,000 because the rest is ETFs. And also other allocated owners who won’t let LBMA touch that silver.

Does that make sense? So that explains the double counting, but the rehypothecation, if it exists, is something else. Got you. Yeah.

I think that pretty much covers everything I had in line, at least as it relates to gold and silver. Anything else you want to talk about, Eric, before we wrap up? I think we’re pretty good here. I think we explained almost everything of what’s going on here.

The key thing to remember, Danny, is that when you see the slams in the morning, every day, just don’t be afraid because the underlying situation right now is that the humongous demand from the US for gold and silver, it’s not stopping. It’s just continually being huge, or it might even ramp up. Who knows, right? Next month.

So that’s part one. And part two is that I probably never mentioned it on your program, but China recently just approved its insurance companies, its top 10 insurance companies, to start buying physical gold as part of their investment portfolio. So up to 1% of the assets under management will be physical gold.

And the Bank of America, it predicted just recently, like with its research department, that that number will be an additional 300 metric tons of physical gold demand from China. Think about that. That’s huge, right? Because China imports right now, sorry, not imports, but because that number is not public, but China delivers 1,450 metric tons of physical gold per year at the SGE in 2023 and 2024.

So 300 metric tons, that’s like 20% increase. And guess what’s interesting? The Shanghai Gold Exchange saw a 20% increase in activity right after China implemented this policy. So you have China increasing gold buying, and you have the US buying a lot of physical gold and silver.

I think in the long run, gold and silver prices are going to go up. So we just got to be patient and not be discouraged by the daily slams that are going on. That’s it.

Yeah. Well, I mean, they’ve already been going up, so the trend seems to be your friend. As far as I can tell for now.

So Eric, thank you so much for coming on. As always, it’s always a pleasure. Where can people find you if they want to see more of your work? They can find me on X at KingKong9888.

Okay. We’ll have the link to your X account down below. So check it out, guys, if you’re interested.

If you got value out of this content, drop us a like and comment, Eric, go in the comment section. If you disagreed with anything Eric said, also let me know. I do read the comments.

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Eric, thank you for coming on. And I will see you all in the next episode. Bye all.