On the Money Metals podcast, host Mike Maharrey sits down with Philip Newman, founding partner and managing director at Metals Focus in London. Newman explains that Metals Focus, launched in 2013, is a pure precious-metals research house; it does not trade.
The firm now fields 30-plus staff across eight markets. Analysts spend extensive time on the road with private and public players across the supply chain. Those insights feed historic and forecast supply-demand datasets and detailed mine cost models.
Metals Focus publishes a range of reports, including its latest Investment Focus, unveiled two to three weeks prior at the LBMA conference in Kyoto, Japan. Listeners can request copies directly.
Gold and Silver: A Sharp Rally, A Needed Breather
Both metals cooled after a near-vertical run, particularly in September. Newman frames the pullback as healthy consolidation, not a trend break.
He calls it remarkable that gold appears comfortable around $4,000 per ounce, with levels north of $3,900 discussed as a soft “floor.” Silver holding above roughly $47 underscores resilience. With core drivers intact, Metals Focus expects those supports to push prices higher into next year.
What’s Driving the Trade: The Dollar, the Fed, and Geopolitics
Newman sees persistent pressure points on the U.S. dollar. Debt sustainability questions linger. A broader de-dollarization impulse accelerated after “Liberation Day” on April 2, when tariff moves rattled institutions; a related Supreme Court case remains live.
He flags market unease over Federal Reserve independence. After Governor Cook’s firing and with Chair Jerome Powell’s term ending around April–May next year, the nomination track matters. Any perceived erosion of independence could weigh on the dollar and buoy gold.
Add stretched U.S. equity valuations and a hotter geopolitical backdrop. Geopolitics channels more directly into gold than silver, yet spillovers are real. These drivers don’t look transitory to Metals Focus.
The London–New York Dislocation: Tight Float, Not Empty Vaults
London didn’t “run out” of silver; most of it was spoken for. By late September, only about 13–14% of London stocks were not allocated to ETFs—an unprecedentedly thin float.
At the same time, Indian demand in September was “incredibly strong,” even with local prices at record highs ahead of dollar-price peaks. India pulled metal from multiple hubs, including London. Then very short-dated lease rates spiked toward 200%. Few, if any, trades likely printed at the peak, but “eye-watering” levels cleared.
That shock encouraged metal to flow from the CME to London. Yet after two recent “black swans”—the COVID air-transport halt and this year’s ETP surge—risk managers were slow to re-route stocks. Tariff uncertainty reinforced the caution. Inventories were ample in aggregate; they simply weren’t in the right place to lend.
Tariffs, Air Freight, and a Perfect Storm
In April–May, metal moved by air from London and Europe into the U.S. on tariff worries, and “Loco U.S.” silver was posted to the exchange. That drained London’s lendable pool just as ETF demand rose.
As lease rates screamed, metal began flying back to London—mostly by air. With borrowing costs so steep, few wanted weeks of “underwater” shipping. Speed trumped freight cost.
Structural Deficits Since 2021: The Big Tightener
Logistics alone don’t explain the tension. Since 2021, the silver market has run structural deficits that Newman calls “eye-watering.” The first big shortfall in 2021 was ~89 million ounces. Later deficits exceeded 200 million ounces.
Including Metals Focus’ estimate for this year, cumulative deficits approach ~800 million ounces. Some drawdowns showed up in identifiable stocks, much came from off-exchange inventories. That backdrop magnifies any localized squeeze.
Industrial Demand Near $50: Where It Bends—and Where It Doesn’t
Around $50 with volatility, some industrial users will thrift silver loadings if performance isn’t compromised. Metals Focus expects selective pushback.
But secular pillars remain. AI’s data-center buildout is a fresh tailwind, with second-order gains as AI ripples across sectors. In autos, EV growth has slowed, yet market share still rises. EVs use more silver than hybrids, and hybrids more than ICE vehicles. The gradient still favors industrial demand.
On investment, U.S. retail bar-and-coin demand has been soft, though it could stabilize or improve next year. Since late 2023, Metals Focus has tracked “decent” retail liquidations for roughly two years. Crucially, what’s been sold back is a small fraction of cumulative U.S. buying.
Why U.S. Retail Looks Quiet on Paper
Referencing Q3 data, Maharrey notes the U.S. was the only region with a decline in gold bar-and-coin demand, just seven tons—the lowest quarterly total since the 2017–2019 trough. Newman emphasizes that Metals Focus reports net demand: gross purchases minus gross selling. Gross buying is higher than the headline suggests; concurrent profit-taking drags the net down.
Liquidations began around Thanksgiving 2023 and intensified. High prices beget profit-taking. Psychology matters, too. Metals Focus sees many U.S. retail buyers as Republican-leaning; after Trump’s victory and unified government plus a Supreme Court majority, some felt less urgency to hold hedges and booked gains. Anecdotally, Money Metals even shipped a pallet of 1,000-ounce silver bars to India amid the frenzy, illustrating how far metal moved to meet demand.
Dates to Watch: New York on November 13, World Silver Survey in April
Newman points listeners to metalsfocus.com. He flags a near-term milestone: on Thursday, November 13, Metals Focus presents an interim 2025 view at a Silver Institute dinner in New York, ahead of the World Silver Survey 2026 release next April.
The Silver Institute plans to post the presentation online the day it launches. Expect deeper dives on liquidity crunches, the industrial impact of high prices, and ETF-driven flows—exactly the puzzles that defined this year.
The Bottom Line
Metals Focus remains constructive. Gold consolidating around $4,000 and silver above ~$47 after a vertical run signals resilience, not exhaustion. Dollar headwinds, questions over Fed independence, geopolitical unease, and periodic equity froth keep the wind at bullion’s back.
Silver’s setup looks especially tight. With cumulative deficits near 800 million ounces since 2021, a London float shrunk to 13–14% unallocated, and lease-rate spikes up to 200%, inventories can exist yet be stranded. When policy shocks, ETF flows, and logistics collide, prices don’t need much of a spark.
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