BOTH East (SHFE) and West (COMEX) Continue to Bleed Physical Silver, Silver Futures Traders Positioning Update, Silver Miners Suggest Short-Term Bullish Price Action For Silver, China Continues To Load Up On Gold

BOTH East (SHFE) and West (COMEX) Continue to Bleed Physical Silver

• SHFE Vaults: 

  • Losing ~62,559 kg/day → vault drained in <6 days.

    • That’s panic-level drawdown.

• COMEX Physical Deliveries: 

  • Already surpassed all of last February’s physical deliveries—just 6 days into the month.

• COMEX Vault Withdrawals: 

  • Over 3.5 million ounces removed in one day; registered silver down to ~102M oz.

Reading Between the Lines

What we’re seeing isn’t normal market behavior—it’s a stress fracture in the system:

1. Price is crashing, yet physical silver is vanishing.

   1. This is not demand drying up—this is leveraged positions collapsing while real demand accelerates.

2. Vault inventories are unsustainable.

   1. You can't keep delivering physical at this pace.

   2. A “failure to deliver” or force majeure could erupt (analysts calling for this in March).

3. Paper markets (COMEX, SHFE) are showing signs of intervention—margin calls, suspensions, rule changes—all designed to delay an inevitable repricing.

4. Volatility “loading” is correct.

   1. The system is building toward an asymmetric event: violent short squeezes or revaluation when trust breaks down.

Futures Positioning: Paper Price Dump Doesn’t Match Trader Behavior

The COT report (Commitments of Traders):

• Large reduction in open interest across non-commercial and commercial positions.

• Net changes suggest traders closed both long and short positions, rather than aggressively flipping bearish.

Miners Aren’t Confirming the Crash

• SIL (Senior Silver Miners) is only down ~18% from highs, while silver is down 36%.

• Normally, miners would overreact to a commodity decline—but they’re holding up better, which is bullish divergence.

China’s 15-month gold buying streak as its real estate sector implodes, reveals a strategic pivot:

…exit a debt-driven, deflationary spiral and move toward hard-asset resilience.

With property once comprising ~30% of GDP, the collapse has shattered domestic confidence, strained local governments, and forced Beijing to backstop credit risk with real assets—like gold.

The West will follow.

In a global economy where the power players are headed towards bankruptcy, what matters is who will have the best collateral (commodities’) and the resources to protect them (military strength and alliances).

The debt can be offset by re-valuing gold much, much higher.

This will happen…

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Luke Lovett
Cell: 704.497.7324
Undervalued Assets | Sovereign Signal
Email: [email protected]

Disclaimer:
This content is for educational purposes only—not financial, legal, tax, or investment advice. I’m not a licensed advisor, and nothing herein should be relied upon to make investment decisions. Markets change fast. While accuracy is the goal, no guarantees are made. Past performance ≠ future results. Some insights paraphrase third-party experts for commentary—without endorsement or affiliation. Always do your own research and consult a licensed professional before investing. I do not sell metals, process transactions, or hold funds. All orders go directly through licensed dealers.