Recently, there have been some outrageous phenomena in the precious metals market. The Federal Reserve is arguing fiercely internally, and margins are being raised wildly, yet gold and silver prices are climbing all the way up. What on earth is going on?

Josh Fair, CEO of Scottsdale Mint, recently spoke frankly— the contradiction between the paper trading market and the physical trading market has reached a critical point. The Fed is split 9:3 in votes, bond traders bet there’s an 80% chance the Fed will hold steady, but Fair thinks none of that really matters anymore.

His view is particularly blunt: "Central bank policies are no longer the main factor; scarcity is the true king of pricing. What’s driving the market now is geopolitical logic, which is the real dominator of metal prices." He said this on Tuesday.

The CME is playing even more aggressively. Silver futures margins were directly raised from $25,000 to $32,500, a 30% increase, using quite radical measures. The aim is to push up the cost of holding positions to suppress prices. Of course, this triggered a wave of liquidations, and by Wednesday, silver dropped to $72 per ounce.

But even so, Fair remains bullish. The short-term impact of raising margins cannot change the long-term logic—geopolitical demand is the driving force.