Is silver the new nickel?

There are similarities in the factors behind the nickel crisis on the LME in 2022 and developments in silver markets today

You may recall the kerfuffle in the nickel market when in 2022, in the face of a soaring nickel price, the London Metal Exchange ended up cancelling $12bn of nickel trades on March 8. It was a short squeeze to end all short squeezes. Hedge fund Elliott Associates said the cancellation of trades that morning cost it $728 million.

On the other side of the trade was an enormous short position, held by Tsingshan, a Chinese nickel producer which held shorts in OTC derivatives of which the LSE were not aware, though the rumour-mill in commodity markets definitely was.

Could this be repeated in silver in the coming weeks? Silver has underperformed gold recently and gold is now soaring into new high ground. Yet silver still languishes in the mid-twenties. But there are some striking similarities between silver today and the nickel case in March 2022.