December implied gold EFP declined another $3.00 today to $15.25, while silver saw an extraordinary 6-cent drop to just 7 cents. Silver's implied EFP is now trading below the cost of money and comparable London OTC forward rates, highlighting a growing dislocation between CME futures and the physical OTC market. This is an important development to monitor. If these conditions persist and begin to reflect tightening physical liquidity, they could become supportive of precious metals prices over the longer term. The potential for increased silver imports into India ahead of the wedding season adds another interesting dynamic, particularly following the reduction in India's silver import duties. Stronger seasonal demand could help absorb available supply and potentially tighten the physical market. The key will be whether lower EFPs translate into stronger physical demand, tighter liquidity, and improving market fundamentals. While short-term price volatility remains significant, developments beneath the surface of the physical and forward markets deserve close attention. We still need to keep an eye on the FOMC and mid-term elections, so be patient!

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For educational and informational purposes only. Not investment advice.