Hua Er Jie Jian Wen·2026-01-08 00:26Core Viewpoint - The Bloomberg Commodity Index (BCOM) is set to undergo annual rebalancing, leading to significant selling pressure on silver, with an estimated $7.7 billion in silver sell orders expected to enter the market over the next two weeks, equating to 13% of the total open interest in the COMEX silver market [1][6][7]. Group 1: Rebalancing Impact - The rebalancing will reduce the weight of gold from 20.4% to 14.9%, with silver also facing a weight reduction [1][2]. - Deutsche Bank's analysis indicates that silver will experience the largest selling pressure during the rebalancing period, followed by aluminum and gold [2]. - The rebalancing period is scheduled from January 9 to January 15 [1]. Group 2: Market Dynamics - TD Securities highlights that the trading volume of the largest silver ETF has reached extreme levels, typically seen only at market peaks, indicating speculative fervor among retail investors [1][6]. - The report suggests that the recent surge in silver prices is not reflective of demand or supply fundamentals, but rather a speculative bubble that may lead to significant price corrections [6]. Group 3: Supply and Demand Factors - Goldman Sachs presents a contrasting view, emphasizing that liquidity in the London market is crucial for determining silver price movements. They predict that extreme price volatility will persist as long as the tight inventory situation in London remains unresolved [1][8]. - The tight inventory in London has led to increased borrowing costs for physical silver, indicating a supply squeeze [9][11]. Group 4: Future Price Projections - Goldman Sachs notes that lower inventory levels have created conditions for price squeezes, with sensitivity to demand changes significantly heightened during tight supply situations [11]. - If liquidity in London improves, there could be a notable downside risk for silver prices, especially if silver currently held in the U.S. returns to London, alleviating the tightness [12].