The Great Silver Pivot: Major Banks Exit Shorts and Go Long, Signaling a Potential Bull Run Through 2027
In a seismic shift for the precious metals market, several major U.S. banks, led by JPMorgan Chase, have dramatically unwound their massive short positions in silver futures and pivoted to net long stances.
This development, unfolding in late 2025, marks a historic departure from years of alleged market suppression and could propel silver prices to new heights over the next two years. As of December 20, 2025, silver has already surged to all-time highs above $67 per ounce, up 127% year-to-date, amid tightening supply and soaring demand. Analysts suggest this bank exodus from shorts is removing a key artificial cap on prices, potentially triggering a prolonged rally driven by industrial needs, investor inflows, and geopolitical uncertainties.
The Turn of Events From Suppressors to Accumulators
For over a decade, bullion banks like JPMorgan have been accused of manipulating silver prices through aggressive short selling on the COMEX futures exchange. JPMorgan alone reportedly held a short position equivalent to around 200 million ounces earlier this year, but recent data shows the bank has fully closed it out and flipped to a substantial net long position while stockpiling physical silver in its vaults. This isn’t an isolated move; other major players have followed suit, slashing collective short positions from approximately 34,738 contracts to just 19,413, according to the latest Commitment of Traders (COT) reports from the Commodity Futures Trading Commission (CFTC). The banks involved in this pivot include:
- Bank of America: A key participant in reducing shorts, contributing to the overall U.S. bank shift to net long for the first time in history
- Citigroup: Has exited significant silver shorts, aligning with JPMorgan’s strategy amid rising prices.
- Wells Fargo: Part of the group unwinding positions, though specifics remain somewhat opaque in public data.
- HSBC: As a major bullion bank, it has scaled back shorts and begun sourcing physical silver to hedge against upward momentum.
This collective action has left European and foreign banks holding the bulk of remaining shorts, many of which are now deeply underwater as silver breaches $65 per ounce. Market watchers, including analyst like Ed Steer, point to this as evidence of a crumbling cartel, with JPMorgan’s vault levels hitting “crisis” territory due to physical delivery demands. The $6 billion collapse of a major short position earlier this month underscores the risk for holdouts, reminiscent of the GameStop squeeze put on a commodity scale. Why now? Rising industrial demand for silver in solar panels, electric vehicles, and electronics has created in a structural supply deficit entering its fifth consecutive year. Combined with central bank diversification away from the dollar and retail investor fervor, the shorts became untenable. JPMorgan’s control over 40% of COMEX silver futures highlights the regulatory gaps that allowed such dominance, but mounting losses have forced a reckoning.
Potential Impacts on Silver Prices: Our Bullish Outlook for 2026-2027
The unwinding of these shorts removes a longstanding downward pressure on silver, often dubbed the “poor man’s gold.” Historically, concentrated shorts by banks have suppressed prices to benefit their trading desks, but with U.S. institutions now long, the market dynamics favor bulls. This could amplify a silver squeeze, where short-covering buys fuel further price spikes, especially if physical deliveries strain vaults. Over the next two years, several factors point to sustained upward momentum:
- Supply Constraints and Demand Surge: Global silver mine production is flatlining, while demand from green energy sectors is projected to grow 10-15% annually. The Silver institute forecasts a 2025 deficit over 200 million ounces, widening in 2026. Without bank suppression, prices could reflect true scarcity.
- Investor and EFT Inflows: Similar to gold’s rally, silver ETFs and retail buying are accelerating. Trade tensions and inflation fears could drive more capital into precious metals, pushing silver toward gold’s performance.
- Geopolitical and Economic Wildcards: Escalating U.S.-China trade wars, Federal Reserve policy shifts, and currency devaluations could bolster silver as a hedge. If global growth slows, industrial demand might dip, but safe haven buying often offsets this.
Price forecasts vary but lean bullish. CoinCodex predicts silver reaching $92.50 by January 2026, a 40% gain from current levels. LongForecast sees highs of $93.80 in early 2026, with averages climbing through 2027. Bank of America anticipates an average of $56.25 in 2026, peaking at $65, while more optimistic views from BNP Paribas suggest $100 per ounce by year-end 2026. Note: the BNP Paribus forecast is more in line with my $105 per ounce price target (published on December 15th through ZeroHedge). The World Bank anticipated new highs for silver in 2026 before the rally eases in 2027, possibly from boosted mining output or stabilized demand, while Citi cautions about a potential pullback amid stronger economic challenges. However, I vehemently challenge these views from the World Bank and Citi, as these institutions are actively accumulating silver and likely downplaying their bullish stance to avoid tipping the market until their acquisition strategies are fully executed.
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