I’ve been watching the action in silver over the last few weeks. The volatility has been insane. Open interest is heavy, physical delivery pressures are mounting at the COMEX, and everyone is watching to see if the paper game can hold up.
At the same time, we are waking up to major geopolitical escalation in the Middle East.
I think the timing of a strike on Iran specifically this weekend makes perfect sense when you look at it through the lens of the commodities market.
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Silver has been screaming for delivery. Retail and large investors want the real metal (especially with China's recent refusal to allow shipments out of Chinese vaults). The COMEX is a paper futures market, and the reality is that the registered vaults do not hold enough physical metal to cover the potential delivery demands of the outstanding contracts. The system relies on most traders rolling contracts rather than standing for delivery.
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In times of extreme stress, exchanges have a tool called "force majeure." It allows them to suspend the fulfillment of contracts due to unforeseen catastrophic events. Declaring force majeure because of a bank collapse or a massive delivery default would absolutely shatter confidence in the dollar and the American financial system permanently. It would expose that "the emperor has no clothes" so to speak. They cannot just do that out of the blue on a random Friday.
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If the US attacks Iran, you immediately have a legitimate reason to shut down or severely restrict markets. Global trade routes are threatened. The Strait of Hormuz is on fire. This is the perfect, uncontrollable external shock that justifies emergency measures.
If you are an institution worried about a silver default, a major war provides the ultimate camouflage. You don't have to admit the dollar is weak and you don't have to admit that COMEX is insolvent. You just say "Due to geopolitical instability and risks to global shipping, we are invoking force majeure on deliveries."
Friday is the end of OPEX, making early next week the earliest physical shipments would be requested. It would make sense, IMO, that the empire strikes Iran this weekend specifically.
