Will Trump’s Threat to Increase Tariffs on Europe Spark a Financial Crisis?

I normally would not subject you to a lengthy piece of economic analysis, but I think we’re at a Buffalo Springfield moment, i.e., the opening lyrics of their iconic song, For What Its Worth (see below). There is a YouTube channel with a tiny following, but the news he is reporting is important and could signal that we are in the early stages of a major financial crisis. The channel is called, Metals and Markets. I cannot vouch for the analyst… He may be an AI creation. Regardless, the news he is reporting about a developing silver Arbitrage Trap seems legit and is back up by data.

The video centers on Trump’s threat to levy a 10% tariff on imports from eight EU nations plus the UK (including the LBMA hub in London), effective February 1, 2026, escalating to 25% if no Greenland deal is reached by June 1. This is framed as a “black swan” event disrupting global silver flows.

He analyzes a geographic arbitrage trap, i.e., locking physical silver in U.S. borders (e.g., COMEX vaults) and starving London’s LBMA of supply, potentially leading to a “two-price world”: a higher trapped U.S. price and a supply-starved London price. In Q1 2025, millions of ounces of physical silver shifted from London to New York vaults (anticipating restrictions), but now this metal is “trapped” as tariffs deter exports.

The unnamed analyst describes silver as the “Achilles heel” of the banking system due to its industrial uses (e.g., solar panels, semiconductors, missiles), where non-price-sensitive demand could worsen shortages. Gold, by contrast, is seen as a central bank monetary anchor. The analyst warns of a physical liquidity trap forcing violent repricing, driven by supply chain realities rather than speculation. Banks may face dilemmas like spiking prices to draw out sellers, cash settlements (eroding trust), or force majeure (admitting delivery failures). I would note that the price of silver increased by $3 an ounce in the nine hours that passed after he recorded this video (posted at the end of this article).

Trump’s threatened tariffs represent a structural break in silver markets, acting as a one-way valve that traps US silver, shatters global pricing, and could propel silver above $100/oz due to impossible supply dynamics (limited downside to $85, but unlimited upside). The analyst believes that industrial demand will fuel the spike, with the next 14 days (until February 1) critical for Greenland talks and market signals. This isn’t just volatility—it’s a collision of paper promises and physical reality.

This is why I am posting the Buffalo Springfield video first… Most of you know the opening lines: There’s something happening here…

Here is a partial, but lengthy, transcript of the analysis:

Trump’s 10% tariff, which escalates to 25% if no Greenland deal is reached by June 1st, has created what I’m calling a one-way valve in the global silver market. It has effectively trapped millions of ounces of physical silver within United States borders, leaving the London markets to starve on their existing inventory.

And here’s the stake. If the LBMA cannot borrow metal from the Comex vaults in New York to cover their short positions, the global pricing mechanism breaks down completely. We’re not talking about a price squeeze that takes silver from $90 to 110. We’re talking about a fundamental fracture in how this metal is valued globally.

We’re looking at a scenario where physical silver could legitimately trade above $100 per ounce.

Not because of investment demand, but because of a structural impossibility in the supply chain. I’m going to walk you through three things in this video. First, I’m going to explain exactly how this geographic arbitrage trap works and why it matters more than any other factor in the silver market right now. Second, we’re going to run the actual stress test math on what happens when that 10% becomes 25%. And third, I’m going to share my personal battle plan for the Monday Open and the next 14 days because I’ve been in this market long enough to know that when the music stops, you want to already be sitting down. . . .

As of this afternoon, around 2:30 p.m. Eastern Standard Time, silver was trading at $89.94, down 1.62% from Friday’s close. Gold was at $4,596.87, down 0.28%. Now, if you just looked at those numbers, you’d think the market was reacting rationally. Tariffs typically mean a stronger dollar, and precious metals usually dip on strong dollar news. The algorithm saw tariffs and executed their standard playbook. But here’s what the paper market doesn’t understand yet. The physical reality happening underneath those ticker symbols. While paper prices dipped slightly on Friday, the bid ask spreads started widening. Not dramatically, not in a way that would trigger CNBC alerts, but if you’re watching the actual physical dealers, you saw it.

The spread between what someone will pay for an ounce and what someone will sell for started stretching… and the Friday night surprise, the actual tariff announcement that happened after the LBMA had already closed for the weekend. London doesn’t even know they’re in a trap yet.

Let me give you some context that makes this even more insane. In the first quarter of 2025, we watched dozens of millions of ounces of physical silver flee London vaults and land in New York. The bullion banks thought they were being smart. They were front running the section 232 review that everyone knew was coming. The section 232 review is the mechanism the administration uses to determine if imports threaten national security. And silver as a strategic mineral used in everything from solar panels to missiles was obviously on that list.

So the banks did what banks do. They moved their metal ahead of potential restrictions.

They repositioned their physical inventory from the LBMA into comx warehouses thinking they’d be safe from any supply chain disruptions. And now with one announcement with one weekend tweet the door has been locked from the outside. The metal is trapped in New York and the banks just lost their ability to play whack-a-mole with physical shortages across the Atlantic.

How a Geographic Arbitrage Trap Actually Works

How a geographic arbitrage trap actually works. Let’s slow down here. I’m going to teach you a concept that most retail investors have never heard of, but that institutional traders live and die by. It’s called a geographic arbitrage trap. Here’s the simple definition. This occurs when the cost to move an asset between two global exchanges becomes higher than the price difference between those exchanges. When that happens, the flow of supply completely paralyzes.

Let me give you an analogy that makes this crystal clear. Imagine you have two wallets. Your left pocket, let’s call it London, is completely empty and you’ve got a bill due that you need to pay immediately. Your right pocket, New York, is stuffed full of $100 bills. Normally, you just move some cash from your right pocket to your left pocket and solve the problem. But here’s the catch. Every single time you move a $100 bill from your right pocket to your left, the government intercepts it and takes $25 as a tax. You’re technically rich in one pocket and functionally bankrupt in the other. And you can’t fix the problem without losing 25% of your wealth in the process. That’s a geographic arbitrage trap.

Now, let’s apply this to silver markets today. The United Kingdom, specifically the LBMA, is critically short of physical silver. They’ve got obligations. They’ve got contracts. They’ve got delivery demands from funds and industrial users who need actual metal, not paper promises. Under normal circumstances, this wouldn’t even be a problem. And when London gets short, they just arrange a shipment from New York. Metal moves across the Atlantic every single week. It’s part of the global flow that keeps prices synchronized between exchanges. The mechanism works like this. If silver is trading at $90 in New York and $91 in London, arbitrage traders will buy in New York, ship it to London, sell for a $1 profit, and pocket the difference after shipping costs.

That constant flow of metal from low price to high price zones is what keeps global markets balanced. But with a 10% tariff and eventually a 25% tariff, that metal can never economically return to the United States without the banks taking a massive loss. Think about what that means. If you’re a bullion bank and you ship a million ounces from New York to London to cover a short position, you’ve just made that metal 25% more expensive to ever bring back. The result is that two separate prices for silver are about to emerge. I’m calling them the trapped US price and the starving London price.

And when those two prices decouple, when the arbitrage mechanism breaks down completely, we’re going to witness something that hasn’t happened in modern precious metals markets. Let me walk you through the actual math because this is where theory becomes reality. Scenario A, the 10% friction. At $90 per ounce, a 10% tariff adds $9 to the cost of every single ounce imported into the United States.

What does that mean practically? It means that if silver is trading at $90 in New York and $95 in London, it’s still not profitable to ship metal from London to New York because you’d pay $9 in tariffs and lose $4 on the trade. This immediately creates a floor for US physical metal. Domestic silver cannot fall below the London price minus the tariff cost or arbitrage would kick in and equalize things. But here’s where it gets dangerous.

Scenario B, the 25% nuclear option. If no Greenland deal is reached by June 1st, and I personally think the odds of a deal are lower than the media is suggesting, the cost to bring silver back into the United States jumps by $22.50 per ounce at current prices. Let me say that again. $22.50. 50 cents per ounce.

Now, the LBMA is rumored to be critically short. I don’t have exact figures because the banks don’t publish their short positions in real time, but based on the inventory draw downs we saw in Q1 of 2025, we’re talking about potential exposure in the range of 50 million ounces or more. If they need 50 million ounces to satisfy delivery obligations, and the United States is the only source of available physical metal, the premium required to move that metal has to exceed the 25% tariff.

Here’s the calculation that should terrify anyone short silver right now. Current price $89.94 (NOTE: As of 22:38 hours Eastern time, the spot price of silver is $92.81 bid). Add 25%. That’s $11242. That is the mathematical break even point for global silver flow under the 25% tariff scenario. $11242 is not a speculative price target. It’s not a hopeful projection from a gold bug who thinks the dollar is going to collapse. It’s the minimum price required for arbitrage to function under the new tariff structure.

Now, look at the Comex inventory charts. I was looking at them a few hours ago, and here’s what you need to understand. The registered silver, the metal that’s available for delivery, isn’t moving. It’s sitting there. Not because there’s no demand, but because the banks can’t afford to let it leave. Every ounce that exits a US vault is an ounce that becomes 25% more expensive to replace.

The smart money has already figured this out. They’re not selling. They’re not shipping. They’re sitting on their metal and waiting for London to blink.

Now, I know exactly what the skeptics are going to say. I’ve been in this market long enough to predict the counterarguments before they even show up in the comment section. Skeptic argument. Number one, this is just a negotiating tactic for Greenland. Silver is a strategic mineral. It’ll be exempted before February 1st.

Here’s my rebuttal. Look at the section 232 review that was completed just days ago. Read the actual language. It purposefully left the door open for broad-based tariffs on all goods from the listed nations. If the administration wanted to exempt strategic minerals, they would have done it in the initial announcement. The fact that they use the phrase all goods is not an accident. It’s a pressure tactic designed to maximize economic pain and force concessions. And here’s the thing about negotiating tactics. They only work if the other side believes you’ll actually follow through. If you announce a 10% tariff with an escalation to 25% and then you immediately grant exemptions, you’ve shown your hand. You’ve revealed that it was a bluff. This administration doesn’t bluff on tariffs. We’ve seen this playbook before.

Skeptic argument number two. The UK isn’t even in the European Union anymore. The tariff won’t apply to them. Wrong. The announcement explicitly named the United Kingdom alongside the EU nations. Go back and read the press release. It’s right there in black and white. Eight EU nations plus the UK. Brexit doesn’t protect London from this. If anything, it makes them more vulnerable because they don’t have the collective bargaining power of the EU to negotiate exemptions.

Skeptic argument number three. The comics will just change the rules. They’ll allow cash settlement or adjust delivery terms to avoid a squeeze. This one actually has some merit. The exchanges have changed rules before when things got tight. But here’s what the skeptics miss. Changing the rules doesn’t create physical metal. If the LBMA has contracts that demand physical delivery and they can’t source the metal because of the tariff trap, no amount of rule changes in New York solves their problem in London. You can’t settle a physical delivery obligation with a PDF file derivatives, with leasing agreements, with accounting tricks that let them count the same ounce of silver in three different places. But you can’t tariff your way out of physics. Time is not on their side.

I don’t think this is propaganda, but I’m interested in what you think.