Copper and silver markets face risks as surging Comex prices outpace global benchmarks
Copper and silver futures in New York have risen sharply above international benchmarks as traders speculate on the likelihood of Donald Trump imposing tariffs on metals.
According to BNN Bloomberg, this surge follows Trump’s stated plans to apply universal tariffs on imports, including those from China, Canada, and Mexico, as part of an escalating global trade war.
Front-month Comex silver futures climbed to a premium exceeding US$0.90 per ounce over London spot bullion prices on Thursday, approaching highs last seen in December.
Similarly, front-month Comex copper futures reached a US$623-per-ton premium over prices on the London Metal Exchange (LME).
These price jumps highlight the impact of Trump’s tariff pledges on market dynamics ahead of his January 20 inauguration.
Market uncertainty has grown as reports offer conflicting signals about the scope of Trump’s trade policies.
The Washington Post reported that his team is considering narrower tariffs on critical goods like copper, though Trump denied the story.
CNN, citing anonymous sources, stated that Trump may declare a national economic emergency to justify universal tariffs.
“Investors around the world have started the year looking for protection against sticky and potentially rising inflation, fiscal debt worries and the unpredictability of Trump,” said Ole Hansen, head of commodities strategy at Saxo Bank.
“The blowout in Comex prices is definitely part of the Trump unpredictability story.”
The disconnect between New York and London metals prices offers opportunities for traders with deliverable metals while posing risks for others.
Arbitrage traders often profit by betting that gaps between the markets will narrow, typically buying LME contracts while selling Comex futures.
However, sustained price gaps can lead to substantial losses for investors expecting alignment. Last year’s copper market squeeze highlighted these risks when traders faced escalating losses as Comex prices stayed elevated compared to LME futures.
In the silver market, analysts warn of a similar scenario. Limited deliverable metal against Comex futures creates the potential for another squeeze.
“The market is sleepwalking into a squeeze right now,” said Daniel Ghali, senior commodity strategist at TD Securities. “People are completely disregarding this risk.”
Efforts to close pricing gaps in the silver market have increased shipments of metal from London to New York. Over the past five weeks, 15 million ounces of silver have been added to Comex warehouses, with typical transport times ranging from 30 to 45 days.
Despite this, London stockpiles remain depleted after four consecutive years of global mined silver production shortfalls.
“We expect the drain to be significant in scale,” said Ghali. “This is the silver squeeze that you can buy into.”
