Silver goes ballistic and shakes the financial system

[Zy1]

The link below describes what happened in Weimar Republic from 1919 to 1923. There was a period of deflation that began in early 1920, the Mark strengthened, then price inflation began going up from the April 1921 level of 6% and began its climb into eventual hyperinflation in 1923.

see the data from: Weimar: First DEFLATION Then INFLATION | You Should Buy Gold

Interestingly enough, and maybe not related at all, there was a large Coronal Mass Ejection at the inflection point where deflation started to reverse.

Apologies for using Wikipedia



There was a panic in 1857 prior to the September 1859 Carrington event. The 1844 Bank Charter act gave the Bank of England exclusivity (monopoly) in issuance of paper banknotes to the detriment of other domestic banks which were prohibited from doing so. It was inflationary in that bank credit was issued and the PM reserve requirement was sometimes waived. In the US the gold rush of 1849 had begun to peter out and the diminished gold flow was inadequate to supply growing demand for capital, largely to build railroads and telegraphs (the high tech of its day) under a PM reserve requirement. The breakout of war delighted the bankers who were given a green light to provide credit and fiat to fund the conflict.



In March 1989 there was another significant solar storm and subsequent to that a recession condition in the US from 1990 to 1993. The Federal Reserve Fed Funds rate was at a peak of 9.85% in March of 89 and began a decline that hit a trough in November of 1992 of 3.09%. It has remained at around 5% or lower since then. The correlation, if any, solar storm coincides with easing of interest rates which increases lending which increases fiat money supply.

Very nice find. Thanks for posting this, Dennis!

It seems the sun likes to slap us when we move away from sound money. Maybe the C's stating
That it is a bad time for humanity to be addicted to electricity [paraphrasing] is spot on.

Reminds me of Pierre's work. By the way, I sure miss his input here, but I am so glad he has moved on to where he belongs.

 

[Aeneas]

This week was very volatile and the big manipulation of silver was repeated. Some people questioned how the big drop could happen in the COMEX on the 30th of January without triggering circuit breakers. The price dropped 16% in one hour. Upon request, the COMEX answered back displaying the mechanism behind such manipulation. It also became clear that the too big to fall have something akin to a trapdoor, where they can exit the market relatively unscathed. No1 explained the mechanism as relayed by COMEX.

The rules are made to be gamed

Silver edition

no01.substack.com

I called it controlled demolition. I just didn’t know how they controlled it. Jensen found the detonator.

COMEX has Dynamic Circuit Breakers (DCBs). These are supposed to be automatic safety switches that halt trading when things get out of hand. For silver, the DCB triggers at 10% price movement from a reference price calculated over a rolling 60-minute lookback window. When it triggers, trading stops for two minutes. The market takes a breath. Bids and offers fill in. Panic selling gets interrupted.

So far the theory.

On January 30 however, during the final hour of trading alone, silver dropped 17%. The full session: 31%. No two-minute pause. No circuit breaker announcement from CME.

Nothing.

Jensen emailed the CME and asked why their safety mechanisms didn’t work. And CME actually responded. In writing. Check his article for the emails:


CME’s response?

Velocity Logics were triggered, not Dynamic Circuit Breakers.
Velocity Logics - VLs for short - are sub-millisecond price limits that operate underneath the main circuit breakers. Two types exist: VL Narrow (VLN) triggers on a 20 cent move in a 1 millisecond lookback window, and VL Wide (VLW) triggers on a 60 cent move in a 1 second lookback window. When a VL triggers, trading pauses for five seconds. Five. Not 120 seconds.

What actually matters - and this is straight from CME’s written response: when a VL triggers, it resets the reference price and restarts the 60-minute lookback window for the Dynamic Circuit Breakers. CME confirmed this. In writing. Multiple times across the email chain.

Think about what that means!!

High-frequency algorithmic traders can trigger VLs through millisecond-level trading activity. Each time they do: trading pauses for 5 seconds (barely noticeable to anyone watching), the reference price for DCB calculations resets to the new lower price, the 60-minute lookback window restarts from zero, and the 10% DCB threshold recalculates from that new, lower reference point. Do it again. And again. The price walks down in controlled steps. Each micro-crash resets the safety mechanism before it can trigger the actual two-minute halt that might let the market stabilize.

This is how you get a 31% crash without ever triggering the main circuit breaker. The guardrails aren’t removed. They’re just reset continuously, over and over, so they never actually apply.

It’s not a bug.

It’s a feature.

Or more precisely, it’s a reset mechanism that sophisticated traders can exploit to engineer exactly the kind of “mechanical, methodical descent” I observed in real-time.

So they used a way, obviously done by computer algorithms by which they could trigger reset after reset and thus reach the target price and offload the paper contracts.

Silver got hammered again and ended the week at $77,69 compared to $85,15 the week before. Gold was up for the week and crypto currencies were seriously down across the board.

Physical silver is still hard to get in many places and if so, then with hefty premiums.

Scottie made a video about the insane electricity needs of the datacentres which are being built for AI. This led me to ask Grok about the silver needed for these data centres.
Grok on the question: Globally how many AI data centres are being built?

For context, total operational data centers worldwide exceed 10,000–12,000 (various estimates from 2025–2026), but only a subset (especially hyperscale) are AI-focused or being newly built for that purpose. The pace remains extremely high into 2026, driven by AI infrastructure needs.

Which led me ask: How much silver is needed for these 10000-12000+ data centres?

The amount of silver required for the global fleet of 10,000–12,000+ data centers (a common estimate for total operational data centers worldwide, including non-AI ones) is difficult to pinpoint exactly due to wide variations in facility size, type, and silver usage. Most sources focus on AI-optimized hyperscale data centers (the primary drivers of new builds and silver demand in 2025–2026), which use more silver than traditional ones due to high-density servers, advanced GPUs, high-speed connectors, soldering, thermal management, and power electronics.Silver is used in small quantities per component but scales massively across thousands of servers, racks, switches, and related systems. Key estimates from recent analyses (2025–2026 reports, industry commentary, and analyst breakdowns) include:

• A large hyperscale AI data center typically requires several thousand ounces of silver in direct hardware (servers, connections, cooling, etc.). Some breakdowns suggest ~1.2 kg (about 38–40 troy ounces) per server rack, with hyperscale facilities having hundreds to thousands of racks.
• Per-server or per-node figures range from 15–25 grams (traditional servers) up to ~180 grams for advanced AI servers (3x higher due to power/thermal needs), with additional amounts in GPUs (3–12 grams), networking (5–8 grams per port), and power systems (~10–15 grams per server).
• Broader claims for very large facilities (especially if including associated power infrastructure) reach higher: e.g., 3–4 tons (~96,000–129,000 ounces) per megawatt of capacity in some extreme projections, though this appears tied to specific high-end cases or including indirect uses.

A major indirect but often-highlighted factor is powering these data centers with renewables(especially solar PV, common for hyperscalers like Microsoft, Google, Amazon, and Meta aiming for carbon-neutral operations). Solar photovoltaic cells use ~15–20 grams of silver per panel:

• A single 500 MW solar array (enough to support one large hyperscale data center) requires roughly 300 metric tons (~9.6 million troy ounces) of silver.
• If many new AI data centers rely partly on dedicated or grid-tied solar, this multiplies demand significantly across hundreds of facilities.

For the full 10,000–12,000+ global data centers (mix of enterprise, colocation, hyperscale, etc.):

• Direct hardware silver is likely in the tens to low hundreds of millions of ounces total embedded across the fleet, but annual additions (from new builds/expansions) drive most incremental demand.
• AI-driven growth contributes to forecasts of additional demand in the tens to hundreds of millions of ounces annually from data centers/IT hardware (e.g., one estimate: ~67 million extra ounces from massive buildouts; broader industrial electronics including AI/data centers pushing totals higher).
• Global silver mining production is ~800–850 million ounces per year (recent figures), with industrial demand (including electronics, solar, EVs) already exceeding supply in structural deficits. Data centers/AI add pressure but are not the sole driver—solar and EVs remain larger.

In short, while no single authoritative total exists for the entire stock of 10,000–12,000+ centers, the AI subset (hundreds of hyperscale facilities, with many more in pipeline) is estimated to require millions to tens of millions of ounces per large wave of builds—potentially far more if solar powering is factored in. This contributes to ongoing silver market tightness and price surges in 2025–2026, alongside other tech demands. Exact per-center figures vary widely by scale and assumptions, but the trend is clear: AI infrastructure is a growing, non-substitutable sink for silver.

Grok might not be correct in the numbers above as Grok is not as reliable as we have found out, but anyway, it gives some idea of major obstacles for the Net Zero plan and for the massive growth in data centres, which in some cases as Scottie mentioned in the video, sit idly by due to lack of electricity. And paper silver is not going to save the day.

More volatility in the financial markets in the weeks ahead.