Core Insights - The U.S. government shutdown continues, potentially leading to layoffs of nearly 10,000 workers, which could further impact the already weak labor market [1] - U.S. bank credit loss provisions were lower than expected, easing market concerns over earnings reports and reducing risk aversion, leading to a drop in precious metals after reaching new highs [1] - Last week, COMEX futures surpassed $4,300 per ounce for gold and $53 per ounce for silver, with silver experiencing significant volatility due to a liquidity crisis in the market [1] - The rental rate for silver in London surged to over 30%, exacerbated by a spike in demand for silver due to the upcoming traditional festivals in India [1] - This week, the focus will be on the U.S. CPI inflation data [1] Market Performance - Domestic main contracts showed mixed performance in early trading, with silver down nearly 4% and eggs down over 2%, while pure soda increased by over 1% [3] - Other commodities such as caustic soda and gold also experienced declines of over 1% [3]

Core Viewpoint - The silver market is experiencing a liquidity crisis, leading to a significant price increase, with silver reaching a historical high of $52.38 per ounce, a 73% increase since the beginning of the year [1] Group 1: Liquidity Crisis in the London Silver Market - The liquidity crisis in the London silver market is attributed to a long-term trend of declining inventory, exacerbated by short-term events and increased investment demand [2] - As of the end of July, the share of available silver inventory in London was approximately 20%, the lowest since data was published [2] - The imbalance between physical supply and demand and the financial market's leverage is a core issue, with non-ETF inventory at a ten-year low and significant ETF holdings creating a mismatch [2][3] Group 2: Factors Contributing to Price Surge - The surge in silver prices is primarily driven by tightening liquidity in the market and soaring silver borrowing rates, leading to a short squeeze [4] - The expectation of increased tariffs on silver imports due to U.S. policy proposals has raised concerns about supply chain stability, further tightening the market [3] Group 3: Investment Trends and Future Outlook - There is a notable structural inflow of funds into the silver market, with record high holdings in silver ETFs, indicating strong institutional interest [5] - Short-term projections suggest that silver prices may remain strong due to Fed rate cut expectations and supply-demand mismatches, while long-term trends indicate a shift from industrial metal to a value storage asset [5]