• Early 2020 saw net managed silver positions strengthen, building on the positive investor sentiment which had emerged during late-2019.
  • On 18th February, they rose to 330Moz, their highest since September 2017.
  • As the EFP crisis unfolded net positions slumped to just 52Moz by early May, their lowest since June 2019.
  • For a brief period, the silver EFP jumped to over 65 cents from a more normal level of 1-10 cents.


Futures trading in silver has grown in importance in recent years, particularly with increasing investor participation in China, both on the Shanghai Gold Exchange and Shanghai Futures Exchange. However, Comex remains the most important trading platform for silver futures. The spotlight on New York was even more pronounced last year, and the lockdown restrictions brought about by the pandemic had a pronounced impact on futures activity on Comex. As a result,much of this chapter focuses on that episode and asks if history can repeat itself.

CFTC Positioning

The trend in managed money positioning can offer a useful guide to institutional investor sentiment towards silver. Looking first at the trend in net exposure over the past 1-2 years, this strengthened in August 2019 and remained elevated until late February 2020. This was indicative of a gradual improvement in sentiment towards silver, even though the price remained at around the $17-18 level.

However, the onset of the pandemic hit the silver price hard as a deteriorating economic outlook encouraged investors to reduce their exposure to industrial metals, including silver. As a result, exposure towards silver was already in decline as the exchange for physical (EFP; see below) crisis emerged in March. It is therefore quite difficult to say with any certainty how much the EFP issue weighed on investor positioning towards silver at that time. That said, while gross shorts have risen from their end-March 2020 low (a level last seen in November 2017), they remain subdued. This will also reflect the improving sentiment towards silver as prices strengthened during late 2020/early 2021. Some hesitancy may still exist towards building futures positioning in silver, given the lack of growth in net long positioning so far this year as silver prices have improved.

Silver Net Managed Money Positions

Source: CFTC

EFP Crisis

One impact last year as the pandemic emerged, was the dramatic rise in both the silver and gold EFP premiums. This, in turn, had a pronounced effect on gold and silver futures trading on Comex. As such, it is helpful to cover the issue by looking at both metals in some detail, even though this report focusses on silver investment. As a starting point, it is worth looking at the definition of the EFP.

According to the CME Group:

“Exchange For Physical (EFP) allows traders to switch Gold [or silver] futures positions to and from physical, unallocated accounts. Quoted as dollar basis, relative the current futures prices, EFP is a key component in pricing OTC spot gold [or silver].”

Indicative Gold EFP*