The Price of Silver: Understanding Backwardation Dynamics
The comments below are an edited and abridged synopsis of an article by David Morgan, The Morgan Report & Silver Guru
In his recent LinkedIn article, David Morgan of The Morgan Report lays out a compelling case for why the current price of silver and other real assets are flashing warning signs for the broader paper‐finance system. At the heart of his argument is the commodity market phenomenon known as backwardation—a condition where near-term futures prices are higher than longer-term contracts. Morgan argues this is not just a market quirk, but a strong signal that confidence in paper money and conventional markets is eroding.
First, Morgan highlights that backwardation typically emerges when physical supply is constrained, demand is urgent, and the cost of delay becomes intolerable. For silver, this means the price of silver is being driven not by speculation alone, but by structural stress: Tight inventories, elevated industrial demand, and investors seeking tangible stores of value. He emphasises that when the price of silver shows backwardation, it implies holders want immediate delivery, signalling a deeper shift in how value is perceived.
Second, the article connects backwardation with systemic stress. Morgan points out that, as trust in paper financial instruments and fiat currencies weakens, the price of silver becomes a barometer for fear and uncertainty. He suggests that the price of silver may lead other assets in revealing cracks in the system. The implication: Investors holding real assets are better positioned than those heavily reliant on financial derivatives or unbacked currency.
Third, Morgan places the current backdrop into a broader macro context. He argues that with mounting global debt, inflation risks, currency debasement and dwindling real yields, the price of silver is responding to more than cyclical factors; it’s responding to a shift toward real, physical value. According to Morgan, this means the price of silver may not simply return to former levels but could enter a new regime altogether.
For Canadian investors, the take-away is clear. The price of silver and allocation to real assets should be viewed as more than a hedge—they are a strategic position against structural risk. While technology and equities dominate many portfolios, Morgan’s analysis suggests that the price of silver is signalling something different: The value of the tangible. Canadian investors may therefore consider increasing exposure to physical silver or silver‐sensitive equities as part of a diversified strategy.
Of course, Morgan balances his bullish stance with caution; he acknowledges that backwardation periods can be volatile, and the price of silver may not move in a straight line. But his point remains that this is a unique moment: The price of silver is sending a loud message, and for those listening, opportunity lies ahead.
In summary: If you’ve been watching the price quietly, you’re seeing more than just a commodity chart. You’re seeing a signal that the system is under stress, and the opportunity for real assets is becoming more pronounced.
