Silver's steep price climb leads to record interest in tokenized markets

Silver hit an all-time high of around $84 per ounce on Monday, but its price has slightly dropped and is currently trading at $75.72 per ounce. The surge in the metal’s interest is spilling into tokenized markets. 

On-chain data revealed that trading volumes in tokenized markets are increasing in tandem with activities in futures and exchange-traded funds (ETFs). The tokenized version of the iShares Silver Trust (SLV) has seen its monthly transfer volume surge by about 1,200% over the past 30 days. 

China imposes export licensing requirements for silver exports

Data from RWA.xyz also shows SLV recorded a 300% increase in holders and approximately a 40% hike in net asset value over the same period. Rose AI founder Alexander Campbell argued that there’s monetary demand for SLV shares after they surged again following years of outflows. 

Multiple factors are driving silver’s price higher, including supply constraints, macroeconomic tailwinds, and structural demand. Campbell pointed to China’s decision to impose export licensing on refined silver beginning January 1.

Elon Musk warned on Saturday that the move is not good because silver is needed in many industrial processes.

Campbell said it matters because China is a massive net exporter of refined silver, exporting about 121  million ounces annually through Hong Kong to the world. He believes that the new requirements will exacerbate concerns about silver’s supply availability, potentially leading to higher prices.

The analyst also reported that silver is trading at $85/oz in Shanghai, $91/oz in Dubai, and $77/oz in COMEX.

“You live in a world of dollars. The marginal buyers don’t. They’re paying $10-14 premiums, and they don’t care. When physical diverges from paper like this, one of them is wrong. Historically, it’s not physical.”

–Alexander Campbell, Founder of Rose AI. 

Campbell stated that the London OTC market, where physical silver is exchanged between bullion banks, refiners, and industrial users, is in the deepest backwardation in decades. He argued that the market is paying users more for silver today than for a promise of silver in the future. 

Data shows that the metal had a $29 spot a year ago, with its curve rising to $42, which is normal contango. However, the current spot is $80, with silver’s curve falling to $73. The analyst also believes COMEX paper is sitting in lazy contango, pretending everything’s fine. He argued that if London’s physical remains stressed while COMEX paper yawns, either supply will appear, or paper will reprice to physical reality.

Data revealed that silver has 19% of the open interest in net long positions, while gold has 31%. Campbell argued that despite the move, silver positioning isn’t at extremes, and that there’s fuel left for it to run.

CME raises margins for precious metals

CME also raised margins on precious metals, including gold, silver, platinum, and palladium, to $25,000 per contract effective Monday. Expert trader Jacob Canfield warned of a potential 15%-20% candle if COMEX increases margin requirements to above 20%.

Meanwhile, gold prices have slipped from levels close to historic highs  $4,549 an ounce on Monday. At the time of publication, gold has dropped more than 2% and is trading around $4,442 per ounce.

Spot platinum also dropped 6% to $2,305.15/oz, falling from its all-time high of $2,478.50. Palladium also fell 13.2% to $1,669 per ounce.

ActivTrades analyst Ricardo Evangelista argued that Monday’s price drop, which follows record highs, is attributed to traders taking profits ahead of year-end. He also believes that the optimism from the U.S. administration’s progress in the Ukraine peace talks had presented a mild headwind.

The market is also awaiting the release of the Fed’s December meeting minutes on Tuesday, which will provide clues on the interest rate outlook. Traders are expecting two rate cuts in 2026. UBS analysts wrote that gold prices are trading at an elevated premium, but there’s downside risk if a hawkish pivot of the Fed were to surprise the market.

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