Silver Short Positions Collapse as Price Discovery Moves to Shanghai

Silver has cooled off after a strong start to March. The metal briefly traded in the $94–$96 range during the first days of the month, but it has since pulled back and is now hovering around $84 per ounce. The drop has slowed the momentum that built during the recent rally, but some analysts believe the bigger structural story in the silver market is only beginning.

Former financial journalist Willem Middelkoop shared an update on X arguing that a major change is happening in the silver market. His post points to a big decline in large short positions on the COMEX futures exchange and suggests that price discovery may now be shifting from Chicago to Shanghai.

Large Silver Shorts Are Rapidly Shrinking

Middelkoop’s tweet focuses on the behavior of the largest traders in the COMEX silver market. Based on the data he shared, the four largest short sellers have been forced to heavily reduce their positions since 2024.

In fact, he claims those traders have already closed nearly half of their COMEX short exposure over the past two years.

That change matters because large concentrated short positions have long been a defining feature of the silver market. For decades, critics of the futures market have argued that a small group of major institutions held outsized short positions that helped suppress price rallies.

If those large traders continue covering shorts, it could remove a major source of selling pressure.

Middelkoop also notes that open interest on COMEX has been declining, which suggests the exchange is becoming less dominant in the silver price formation process. As activity drops in Chicago, other trading venues are gaining influence.

The Chart Shows How Concentrated the Silver Shorts Still Are

The chart Middelkoop shared illustrates just how concentrated short positions remain in certain commodity markets. It compares the largest four traders and the largest eight traders across a range of commodities and shows how many days of global production would be required to cover their short contracts.

Silver stands out immediately.

Among all commodities shown on the chart, silver and platinum have the largest short exposure relative to production, with the eight largest traders controlling positions equal to more than 100 days of global supply.

Even the four largest traders alone represent roughly 70 days of world production in short exposure. That level of concentration is far higher than what appears in markets like oil, wheat, copper, or coffee.

This imbalance is one reason the idea of a silver short squeeze continues to circulate in the precious metals community.

According to Middelkoop, the decline in COMEX open interest combined with the reduction in large short positions indicates that the center of gravity for silver pricing may be moving away from traditional Western futures markets.

Instead, the Shanghai Gold Exchange and Shanghai silver markets could increasingly influence global price discovery as trading activity shifts east.

For now, the silver price remains in a consolidation phase after its recent drop from the mid-$90s. But if large traders continue reducing short exposure while demand shifts toward physical markets, the dynamics behind the metal’s price could start to look very different in the years ahead.

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The post Silver Short Positions Collapse as Price Discovery Moves to Shanghai appeared first on CaptainAltcoin.