TD Securities Bets Big on Silver Crash, Targets $40

With silver struggling to maintain its footing above $80 an ounce, analysts at TD Securities are initiating an aggressive short position, betting on a significant price drop over the next three months as market fundamentals realign.

On Wednesday, the Canadian bank announced its new trade, targeting a sharp decline in silver futures. Daniel Ghali, Senior Commodity Strategist at TDS, confirmed he initiated a short position in March silver futures at $78 an ounce. The bank has set a price target of $40 and a stop-loss at $92 an ounce.

The move comes as March silver futures last traded at $77.94 an ounce, marking a drop of nearly 4% for the day.

Index Rebalancing Expected to Trigger a Sell-Off

A primary driver behind TD Securities' bearish stance is the anticipated selling pressure from annual index rebalancing. After silver's nearly 150% gain last year, the bank projects a major correction is imminent.

"We expect a massive 13% of aggregate open interest in Comex silver markets will be sold over the coming two weeks, to result in a dramatic repricing lower," Ghali wrote in a recent note.

Shifting Fundamentals Signal a Market Top

Beyond technical pressures, TDS points to a significant shift in silver's supply-and-demand dynamics. The precious metal's recent run to a record high of $84 last month was fueled by major disruptions in its physical supply chain. Persistent supply deficits over the last five years, driven by strong industrial demand, depleted above-ground stocks and created conditions for a short squeeze.

However, Ghali argues that the rally is overextended. He believes higher prices will rebalance the physical market, and a key catalyst for a sell-off could be an upcoming decision from President Donald Trump regarding silver's designation as a critical metal.

The Tariff Question: A Catalyst for a Price Drop

Silver's supply chain problems have been intensified by the threat of U.S. tariffs on imports. This has caused significant inflows of the metal during the first half of 2025 to remain within the U.S.

TD Securities is operating on the assumption that silver imports will not be tariffed. If confirmed, this policy decision could release a flood of physical silver back onto the global market.

"We expect no tariffs on silver bars," Ghali stated. "Scrap and private vaults can continue to replete London vaults. The primary deficit continues to shrink amid demand destruction. Timelines to depletion trend higher. These are the markings of a cycle top."

Many analysts share this view, anticipating that silver will avoid tariffs because a consumption tax could severely damage the U.S. manufacturing sector, which relies on imports that domestic production cannot meet.

A Second Attempt After a Costly First Try

This trade marks TD Securities' second recent attempt to short silver. The bank previously initiated a short position in October as prices broke above $50 an ounce but eventually exited the trade with a loss of nearly $2.4 million.