December CME Gold and Silver EFPs Move Lower Alongside Prices: What Does This Signal?

December CME Gold and Silver EFPs Move Lower Alongside Prices: What Does This Signal?

Silver is leading today's precious metals selloff, with prices now down approximately 6% on the session. However, developments in the Exchange for Physical (EFP) market deserve close attention.The December silver EFP settled 5.5 cents lower at 18.5 cents, with the implied CME forward now trading more than 1% below the comparable London OTC forward market. Why does this matter? The widening differential between CME and London OTC pricing may signal a developing dislocation between the two markets. While lower EFPs alone do not necessarily indicate a physical shortage, a persistent divergence could reflect changing liquidity conditions, financing costs, or relative demand for physical silver in London. This is particularly important given the extreme physical tightness that helped drive the silver rally in 2025 and January 2026. The key is what happens next. If London physical silver liquidity begins tightening again, accompanied by rising lease rates and increasing backwardation, those conditions could become supportive of silver prices despite the current selloff. For now, the EFP market is an important indicator to monitor. Price weakness and tightening physical liquidity can coexist, and that divergence may ultimately prove significant.

For educational and informational purposes only. This commentary reflects market observations and opinions, not investment advice or a recommendation to buy or sell precious metals.