Is Silver About To Crash: Why Two Banks Think A Meltdown Looms Next Week

Over a month ago, before its exponential year-end meltup and when silver was trading at about half its current spot price, we laid out the bullish case for silver in "No Longer Gold's Quiet Sidecar": Silver Surges To Record High As China Demand Exacerbates Squeeze, which materialized just days later, sparking the a record-breaking surge for the precious metal. However, after the move which also saw unprecedented retail and ETF, not to mention market maker euphoria, it may now be time to cash out some chips. 

The bearish thesis was first noted by TD analyst  Daniel Ghali who in a Dec 31 note (available to pro subs) first wrote that trading volumes in the largest silver ETF have reached extreme levels only rivaled by that seen at prior market tops, amid historically dislocated premiums to NAV, while the historically elevated premium to NAV for this product continues to point to a speculative fervor from retail investors, augmented by liquidity constraints. Even so, Ghali warns that this volume will "likely pale in comparison to the $7.7bn in upcoming selling activity and associated trading activity from the broad commodity index rebalancing over the coming weeks."