Amid global market uncertainty over Trump's impending tariff policies, the metal market is experiencing a new wave of price volatility. Following the widening gap between the futures and spot prices in the gold market, this "premium storm" has now spread to other metals like silver and copper. Data indicates that as traders bet on Trump's potential imposition of high tariffs on imports from all countries, the premium on silver and copper futures in the New York market has increased significantly.
Silver and Copper Premium Soars, Nearing Historical Peaks
Last Thursday, the Comex silver futures price for the nearest month had a premium of $0.90 per ounce over London's spot silver, approaching the peak seen in December 2024. Meanwhile, Comex copper futures were priced at a premium of $623 per ton over LME copper contracts, nearing the historical record set last year when a short squeeze shook the global copper market.
Analysts point out that the uncertainty over Trump's tariff policies has triggered a risk-averse sentiment among global investors, with the surge in metal prices in the New York market directly reflecting this anxiety. Saxo Bank's head of commodity strategy, Ole Hansen, stated, "Investors are preparing for rising inflation, fiscal debt issues, and uncertainties surrounding Trump; this market behavior reflects that sentiment."
Arbitrage Opportunities and Risks Coexist
The prices in the New York and London metal markets are usually synchronized, but the current premium fluctuations offer arbitrage traders a chance to profit. For instance, traders can engage in arbitrage by transporting metals from London to New York, exploiting the price gap. However, such trading carries significant risks, especially if the premium widens further, potentially leading to severe losses.
The silver market, in particular, is under scrutiny. Data shows that over the past five weeks, Comex silver inventories have increased by 15 million ounces. However, TD Securities' senior commodity strategist Daniel Ghali warns that global silver output has been insufficient for four consecutive years, and London's stocks are rapidly depleting. If this trend continues, it could lead to a surge in silver prices and result in a phenomenon similar to the copper market's short squeeze.
Future Market Trends Worth Watching
Looking ahead, the market focus will be on how Trump's tariff policies unfold and whether global metal supply can meet demand. The logistics cycle in the silver market typically requires 30 to 45 days, and bottlenecks in transportation capacity may further exacerbate inventory depletion. Ghali predicts that the scale of silver outflows could be substantial, providing the market with a potential "short squeeze opportunity."
In the current market environment, investors should cautiously navigate the high volatility in the metal markets, while closely monitoring the impact of tariff policies and supply chain changes on prices. With Trump's official inauguration, U.S. trade policy could become a key driving force for future metal market trends.
