In the past few weeks, the global commodity market has witnessed a short squeeze. Silver, a precious metal often overshadowed by the brilliance of gold, suddenly took center stage. Its price skyrocketed in a short period, not only reaching a new high in fourteen years but also coming close to the historical peak set by the Hunt brothers' speculative frenzy forty-five years ago. In this year's asset return race, silver has surged by an astonishing 61%, far outpacing gold (47%). The root of this surge did not begin on a trading day in September but originated in London. The London Bullion Market Association (LBMA) is the largest and most important physical gold and silver market in the world, and its inventory levels serve as the ultimate barometer for global silver supply and demand. Before this event erupted, this barometer had already issued a red alert. Inventory Crisis: Due to strong industrial demand (from sectors like solar energy and electric vehicles) and dual pressure from investment and safe-haven demand, LBMA's silver inventory has been in a state of net outflow for several months. The amount of physical silver available for free trading in the market has dropped to dangerously low levels. Evidence of soaring costs: A professional yet extremely important signal has emerged in the market—the surge in Silver Lease Rates. Simply put, this is the interest that needs to be paid to borrow physical silver. When the rates rise to extreme levels, it unmistakably tells us in market terms: physical silver is becoming extremely scarce, and holders prefer to hoard rather than lend it out. As can be seen from the chart, the monthly rate has approached 12%, and the annualized rate will be 144%.

The upcoming 10.1 Golden Week has become the Eastern spark that ignites the silver market. The annual Chinese Golden Week holiday is increasingly becoming a variable that cannot be ignored in the global silver market. To understand its impact, one must first grasp the key mechanism of "East-West arbitrage." China is both a major consumer and producer of silver, and the Shanghai Futures Exchange (SHFE) has a large inventory independent of London. Normally, when the London silver price is higher than that in Shanghai, arbitrageurs buy silver in Shanghai and transport it to London for sale, balancing global prices. However, during the Golden Week holiday (October 1-8), the market closes and logistics come to a halt, interrupting this "East water to the West" pipeline. As London faces tight inventory, this predictable supply disruption becomes a market catalyst. Buyers needing physical silver and short sellers realize they have lost a major supply source, leading to panic and triggering a buying spree and short squeeze. The following chart illustrates this point well. In early September, the silver market entered a high-level consolidation phase, with inventory stabilizing around 1,250 tons, and market performance was relatively calm. However, the market changed dramatically in mid to late September. Starting around September 17, silver inventory experienced a cliff-like decline, with over 100 tons flowing out in just a few days. This phenomenon indisputably confirms the rampant activity of "East-West arbitrage." The huge price difference drives traders to continuously transport Shanghai's inventory to Western markets. As the month-end approaches, just before the holiday, there is a brief inventory replenishment. This is mainly due to the logistics window closing, forcing arbitrage activities to stop, and some funds adjusting their positions, further confirming the holiday's disruption effect.

As the demand for anti-inflation becomes increasingly clear, the Federal Reserve is losing its independence. Next, we will see many undervalued assets taking advantage of market characteristics to short-sell. The altcoin season of 2021 may have already begun. I think this will last for at least a month. Quality altcoins will only rise and not fall. Every candlestick of SPX and NASDAQ is pulling the moving averages upward; in such a strong market, quality altcoins have no reason to continue lying low. $DOGE $APT $OKB