Housekeeping: Good Morning.
TL/DR
Trump has threatened to implement sweeping tariffs on Mexico and Canada for Saturday Feb 1.
This potentially can greatly affect the flow of Silver into the US from these two countries.
One key indicator of distress is the Exchange for Physical or EFP.
The EFP has been reflecting this potentiality over the past two months.
While this risk is no longer a surprise, it is very real and could serve as a disruptive moment in the metals markets.
The video above covers the situation as published in a very recent very relevant report by Bank of America.
We walk through that report and make it accessible for subscribers.
The situation.
President Trump has promised to implement sweeping Universal style tariffs on February 1st.
Starting with an update on that promise and why it’s relevant to Silver:
Two days ago, China’s competitor to ChatGPT, called DeepSeek, made headlines in the USA as a potential game changer in the AI world. The DeepSeek platform holds itself out to be better, less expensive, and open source..
This, if all true, would have major negative ramifications on US capital markets as a proxy for our OpenAI ecosystem of stocks.
What does this have to do with Silver.. You may rightly ask.
In a world bifurcating along protectionist lines as nations try to secure old supply chains while building and ensuring new ones for critical resources (including metals)—it turns out it has a lot to do with Silver indirectly, but very materially.
Trump’s problems with China create collateral damage and trade relationships with Mexico and Canada. Those trade relationships are key for silver and gold imports into the United States.
President Trump reacted strongly to the DeepSea news and to what he no doubt views as an attempt to “dump” a foreign product onto American soil not unlike what Japan did in the 1980s with semiconductors and steel.
He reiterated his plans to enact tariffs on neighboring countries Mexico and Canada for starters.
Scott Bessent, fresh from his acceptance as Secretary of the Treasury, also endorsed universal tires being used. The combination also served to show the world that the two men were on the same page.
While tariffs on Canada and Mexico (the two main targets of the threatened tariffs) may not seem to have anything to do with China, it actually has plenty to do with them.
If China is the problem, it would also be reasonable to ask, “why tariff allies?“
The answer given by Trump’s staff describes it as a way to prevent China from using a backdoor to get goods to us.
The truth of the matter is this: among other things, he is flexing tariff muscles so China can see it. These would be presumably easier victories and would serve as example and momentum for the coming confrontation with China on trade .
This is not unlike a video game, where the final strongest “boss” is not attacked until after lesser opponents have been vanquished.
This brings us to silver, and perhaps gold as well. If tariffs are implemented, then that could have a very disruptive effect on the flow of the metal from these two key countries into the US.
In the video above, you will see that Mexico and Canada are very large contributors of silver to the United States.
For the past month or so, the silver EFP has been reflecting a concern for this eventuality. Simply put the EFP is a spread that measures by its use the flight of metal in and out of the United States of America with the London vaults at the other end of the supply chain.
What the EFP has been saying, or rather conveying as a function of vault levels rising, is now very obvious. The United States has been importing silver and gold into its vaults for the past two months at a torrid pace.
The Comex vaults have been transferring metal from London to the US in what is likely preparation for the tariffs threatened to be implemented on February 1.
Which brings us to the video..
The proximate reason for unlocking this video for you all is simple. Trump has threatened tariffs, he has reiterated those threats, the deadline for implementing is Saturday, and perhaps most importantly: the EFP has not reflected a return to stability despite rising US vault levels. It continues to reflect fear And unfinished business with regards to domestic Silver .
And so that’s why we are resending it today with a much larger preview for free subscribers as well.
