Part 6/12:
Leasing silver—short-term borrowing of physical metal—is another facet Morgan discusses. He suggests that some of the calm in the market might be due to leased silver being used to meet demand temporarily, which could be withdrawn or re-leased elsewhere on short notice. The lease rates, which had backed off recently, remain an indicator of potential stress points.
Morgan warns that such leasing activities, if manipulated or misrepresented, could provoke sharp price movements once the physical supply chain cannot keep up with demand. In times past, tightness in physical silver has caused short squeezes and sudden price jumps, similar to what occurred in the nickel market and platinum recently.