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The banks have lost control: Eric Sprott on the $300 silver squeeze and his massive mining sweep
Kitco Media
By Jeremy Szafron
Published:
12:53
Updated:
13:08
Kitco News
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The banks have lost control: Eric Sprott on the $300 silver squeeze and his massive mining sweep
Kitco Media
By Jeremy Szafron
Published:
12:53
Updated:
13:08
Kitco News
The Leading News Source in Precious Metals
Kitco NEWS has a diverse team of journalists reporting on the economy, stock markets, commodities, cryptocurrencies, mining and metals with accuracy and objectivity. Our goal is to help people make informed market decisions through in-depth reporting, daily market roundups, interviews with prominent industry figures, comprehensive coverage (often exclusive) of important industry events and analyses of market-affecting developments.
The banks have lost control: Eric Sprott on the $300 silver squeeze and his massive mining sweep teaser image
(Kitco News) - Gold has firmly established itself in the low to mid $5,000s, a level the market is now pricing as the new normal. But the real story unfolding in the precious metals market is the violent breakout in silver. With spot silver showing incredible strength and pushing into the low $90s during a massive morning surge, the structural shift in global capital allocation is becoming impossible for the broader market to ignore.
Billionaire investor and Sprott Inc. founder Eric Sprott sat down for an exclusive interview with Kitco News Senior Anchor Jeremy Szafron ahead of the 2026 PDAC convention in Toronto. Sprott detailed the mechanics of the current physical squeeze, a monumental shift in Eastern trade flows, and his aggressive multimillion dollar sweep across the junior mining sector.
The CME Interruption and the Physical Squeeze
The explosive price action coincides with mounting stress on Western exchanges. This week, the CME experienced a Globex technical interruption that halted metals and natural gas trading for approximately 90 minutes.
In a statement provided to Kitco News, the exchange confirmed the exact timeline and impact of the outage. "Due to a technical issue, the CME Globex Metals and Natural Gas futures and options markets were halted at 12:15 p.m. yesterday. Natural gas futures and options markets reopened at 12:50CT. Metals markets reopened at 1:45CT," the CME stated. The exchange added that all day orders and GTDs with yesterday’s date were canceled, while all acknowledged GTCs remained working.
While the exchange attributed the event to technical issues, it follows a similar disruption last November, raising serious questions about physical market liquidity.
"There's no doubt there's a physical short squeeze going on," Sprott told Szafron. "We can track the inventories of the LBMA, we track them on the CME, we can track them on the Shanghai Gold Exchange".
Sprott noted that the physical drain is accelerating globally, specifically pointing to recent outflows in the East. "Shanghai today, they lost 10% of their inventories," he said. "Today they're down to about 11 million ounces. I mean, that's almost zero for a country the size of China."
He emphasized that major Western institutions are largely trapped in their paper positions as the physical supply vanishes. "There's still a short position of, I think, roughly 500 million ounces of silver on Comex," Sprott explained. "And I don't see the miners doing that, it's mostly banks."
The East Rewrites Global Pricing
Global pricing power is shifting rapidly away from Western paper markets and moving directly to the East. Sprott's claims regarding a massive influx of Indian capital are directly corroborated by breaking regulatory shifts. On February 26, the Securities and Exchange Board of India (SEBI) overhauled its mutual fund rules, officially allowing actively managed equity funds to allocate their residual portion up to 35% of their total assets into gold and silver instruments.
"The Indian government came out and said, yeah, we're gonna mandate that mutual funds and ETFs in India can now own up to 35% of their assets in gold and silver," Sprott explained. "And this pool of assets is 385 billion".
This regulatory change formally creates a massive new pipeline for institutional demand in India, opening up the country's $385 billion actively managed stock fund sector to precious metals.
Furthermore, SEBI has officially decoupled its valuation framework from Western benchmarks. Starting April 1, 2026, Indian mutual funds will be mandated to value physical gold and silver using domestic polled spot prices published by recognized local stock exchanges, marking a definitive shift away from the London Bullion Market Association (LBMA) pricing standard.
This move perfectly aligns with Sprott's assessment that the country plans to circumvent Western exchanges entirely. "We are not going to price off of the LBMA or the Comex," Sprott noted. "We don't want to, we're going to use prices established in India."
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The 15 to 1 Ratio and the Path to $300 Silver
As industrial consumption accelerates, Sprott maintains that a massive reversion in the gold to silver ratio is imminent. Historically, silver is mined at roughly an eight to one ratio to gold, but the market has strayed wildly from historical norms.
"I've always thought that we should go back to 15:1, and in our weight in going to 15:1, we'll overshoot, so we might go to 10:1," Sprott said. With gold trading in the low to mid $5,000s, a 15 to 1 ratio implies a fundamental silver price well over $300 an ounce.
This demand is exacerbated by direct automaker and tech manufacturer interventions. "Samsung did a deal with Silver Storm Energy, that they're going to buy all their silver output and then advance them like $5 million to get started," Sprott revealed, pointing to these industrial requirements as proof of the growing physical scarcity.
Hycroft Mining and Sweeping the Juniors
As for his own capital deployment, Sprott remains highly confident in his massive position in Hycroft Mining. He recently expanded his stake, acquiring an additional $6.3 million in shares to bring his ownership into the low 40 percent range.
Sprott noted the immense leverage of the Nevada asset at current spot prices, particularly given the sheer size of the deposit. "Their reserve calculation went from 1.6 billion silver equivalent ounces to 2.6 billion ounces," he stated. "I believe that's more than Hecla has, I believe it's more than First Majestic has".
He views the deposit as a coiled spring waiting for proper market valuation. "We're not selling it at cheap prices, we'll be selling it at 150 and 200 when we get there," he said.
Beyond Hycroft, Sprott has anchored a $3 million placement for Rio Silver, deployed $10 million into Silverco, and put $40 million into Highlander Silver in Peru. He expects a historic rush into the broader junior mining sector, drawing direct parallels to the tech boom of the late 1990s.
"We are going to get into what I call the Nortel Effect, and the Nortel Effect is when the world decides they want to own something, as they did when they all wanted to own Nortel," Sprott explained. "There's going to be a shortage of impact here and the stocks have massively underperformed the price of gold and silver. There's a lot of catching up to do".
The Missing Majors
Despite the historic free cash flow being generated right now, Sprott criticized the major gold and silver producers for sitting on the sidelines rather than pursuing aggressive mergers and acquisitions.
"I'm thinking that the seniors are proving they don't understand metal markets," he said. "They might understand mining, but it's not the mining that's important. Most of these guys, their production never goes up anyway."
Ultimately, Sprott believes the era of paper market suppression is ending. As systematic-trend-following funds cut their US equity allocations to absolute zero and rotate aggressively into safe havens, the physical tightness in silver is poised to trigger a historic repricing.
Watch the full exclusive Kitco News interview with Eric Sprott below to dive deeper into his $300 silver thesis, his top junior mining targets, and why he believes the physical metals squeeze has officially broken the paper markets.
The Banks Have ‘Lost Control’: $300 Silver, India’s Bid & the End of Wes...
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