Silver plummets, suspicions arise, are major Wall Street firms unable to withstand it?

After experiencing a continuous surge, spot silver underwent a roller coaster ride on Monday morning, soaring nearly 6% to approach $84 per ounce before plummeting sharply, currently down over 3% to $76.59 per ounce, with an intraday low of around $75 per ounce. Amidst the dramatic fluctuations, a rumor circulating on social media platform X regarding a "systemically important bank" facing a margin call on its short positions in silver futures has drawn widespread market attention.

On December 29, a user on social media platform X shared a report stating that a large bank heavily short in the silver futures market failed to meet a margin call by 2 AM Eastern Time on Sunday and was forcibly liquidated by the futures exchange at 2:47 AM. The report indicated that the Federal Reserve was compelled to inject $34 billion into the banking system through an emergency overnight repurchase mechanism, which is in addition to the $17 billion injected on Friday.

The rumor described the involved bank as "one of the largest participants in the precious metals derivatives market," holding "hundreds of millions of ounces in massive short positions in silver." In the comments section of the post, some questioned the authenticity of the report, arguing that "there was no trading on Saturday and Sunday." Others believed that if the report were true, "the impact could quickly spread through a series of interconnected derivatives, but there are currently no signs of bank failures."

Although the rumor did not disclose the specific bank's name, market speculation focused on a few major European banks. Analysts have differing views on the rumor's authenticity; some believe that even if true, the liquidity reserves of the relevant banks would be sufficient to cope with such shocks, while others express concern that the market may follow a "sell first, ask questions later" panic logic.

Rumor Details: $2.3 Billion Margin Shortfall

According to reports circulating on social media, this bank received a margin call from the commodities exchange last Friday when silver prices broke above $70 per ounce, citing "insufficient liquidity." The clearinghouse required it to post an additional $2.3 billion in cash collateral before Sunday morning.

The report stated that in the past 36 hours, the bank's executives frantically attempted to raise funds, contacting counterparties to sell assets and pleading for bridge loans, but "no one was willing to help them."

It was claimed that every major bank on Wall Street reviewed the bank's derivatives book and found that the bank "was already dead; it just hadn't stopped operating yet."

The report further stated that at 2:47 AM, the bank notified the exchange that it could not meet the $2.3 billion margin requirement, and at 3:03 AM, the exchange began forced liquidation, with all of the bank's positions closed by 4:15 AM. Sixteen minutes later, federal regulators took over the bank to prevent disorderly liquidation

Regarding the rumor forwarded by X user, opinions in the comments section are mixed. Some question the authenticity of the report, stating, "If there was no trading in COMEX silver, how was the forced liquidation executed at 2:47 AM (Eastern Time)? Where is the CME liquidation notice?"

At the same time, although the rumor did not disclose specific bank names, some speculate it is JP Morgan, saying, "They have made mistakes in precious metals trading before."

Others believe, "If this is true, its impact could quickly spread through a series of interconnected derivatives (such as defaulting counterparty contracts), but current market data shows no signs of bank failures. If this is true, considering the risk situation, one can't help but wonder if this is a European bank? Time will tell."

Rumors Point to a Major European Bank?

On December 29, "TanTu Macro" published an article on WeChat, citing data from a major European bank for stress testing.

According to the bank participation report from the U.S. Commodity Futures Trading Commission (CFTC), as of December, non-U.S. banks held a total of 49,689 silver short contracts on COMEX, with each contract corresponding to 5,000 ounces, amounting to a nominal total of $2 billion at $80 per ounce.

Under extreme assumptions—assuming this $2 billion short position comes entirely from a single bank and is fully self-held rather than held on behalf of clients—if the silver price rises from $50 to $80 over the past month, the bank would need to spend approximately $7.5 billion due to losses. Adding about $250 million in additional expenses from COMEX's two consecutive increases in silver margin requirements, the cumulative liquidity expenditure pressure in extreme cases would be $7.75 billion.

The analysis points out that taking a major European bank as an example, as of the third quarter of 2025, its high-quality liquid assets are approximately $330 billion, with about $230 billion in cash and approximately $70 billion in Tier 1 capital. A liquidity expenditure of $7.75 billion "is not difficult, nor is it likely to trigger bankruptcy."**

The analysis emphasizes that the above estimate is based on extreme assumptions. In reality, COMEX short positions cannot come from a single bank, and most banks are managing client assets, so actual losses and liquidity pressures are bound to be much lower than this level.

Additionally, from the financial reports, some banks' holdings of precious metal spot assets can form effective hedges.

Although data analysis shows that the rumored liquidity pressure is manageable, analysts also point out several potential risks.

First, a major European bank is still undergoing a painful integration process, having completed only about 70% of its system migration and business integration, with the remaining involving complex assets such as commodity exposures, which have historically seen multiple significant risk control failures; it remains unclear whether potential risks will spread.

Second, regarding bank risks, the market follows the principle of "sell first, ask questions later." Even if the rumors are unfounded, widespread market concerns may still lead to fluctuations in the stock prices of the related banks, creating a short-term vicious cycle of stock price decline - increased worries - further stock price decline.

Third, in addition to participating in the COMEX market, a major European bank is also a clearing member and market maker of the London Bullion Market Association (LBMA). Due to LBMA's information disclosure being less transparent than that of COMEX, the liquidity risks borne by the relevant banks in that market remain unclear