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China's "Silver Capital" and India's Largest Refinery Are Sold Out Of Silver While Borrowed Money In Stock Market Makes New Record High for 4th Consecutive Month
Yongxing is out of bars, India (≈25% of demand) blew through refinery stock, lease/borrow costs scream, and Western inventories thin—paper can’t conjure metal. Gold is <5% of global wealth (vs ~25% in the ’70s) as reserves pivot from debt to collateral that can't default; a simple allocation shift (U.S. 2%→20%) implies ~17,800 tonnes—~6 years of mine supply, ~13 years if global. Translation: leverage inflated everything else; scarcity will reprice gold & silver—fast.
Luke Lovett
October 20, 2025
China’s “Silver Capital” just ran out of bars.
That’s not a meme—it’s physical demand smashing into finite supply in the world’s biggest buyer zone.
When retail shelves are empty, refiners queue orders, and lease rates scream, price isn’t being pushed by tweets; it’s being pulled by scarcity.
Why it matters: China is the largest industrial consumer of silver in the world. If Chinese buyers can’t get metal locally, they’ll bid it away from London/NY—exactly when Western inventories are thinning and shorts are paying up to borrow.
Bottom line: Empty cases in Yongxing = real squeeze. That’s the asymmetry: tiny available float, exploding use (solar/EVs) + monetary demand. Small dollars can move silver a lot.
India—about 25% of global silver demand—just blew through refinery stock for the first time ever.
That’s the world’s biggest retail buyer hitting the shelves so hard the back room is empty. Read the signal, not the headline:
When China’s silver hub and India’s buyers are both cleaned out, it’s not hype—it’s global scarcity.
Leverage can spoof futures prints, but it can’t conjure bars. Empty vault bins + rising lease rates = paper chasing physical.
Implication: the two largest demand engines are pulling metal from everywhere at once. In a market with tiny tradable float, that’s jet fuel.
Asymmetry: a small incremental bid on a small available supply can move silver a lot—and we’re watching that setup lock into place.
Gold was ~25% of global wealth in the late ’70s; today it’s <5%.
Translation: four decades of credit-fueled assets (stocks/real estate/bonds) ballooned, not gold. Leverage made everything else look richer, pushing gold’s share to starvation levels.
If institutions merely “rebalance” from 5% → 10% (still below history), that’s trillions of new demand chasing a tiny float. You don’t need a crisis—just a modest allocation shift— for price to gap higher.
Asymmetry: crowded, over-levered paper on one side; under-owned base-layer collateral on the other. A small tide back toward collateral can move gold a long, long way.
⚠️ Liquidity & Funding Stress
Signal | Latest Level | Interpretation | Zone |
|---|---|---|---|
10-Year Swap Spread | −19.55 bps | Still deeply negative → collateral premium extreme; dealers prefer synthetic over real Treasuries. | 🟠 Orange |
Reverse Repos (RRP) | $4.102 B | Emergency cash buffer still near dry—pressure valve limited. | 🔴 Red |
USD/JPY | 150.72 | Yen stress & carry heavy; intervention risk lingers. | 🟠 Orange |
USD/CHF | 0.7928 | Near fear extreme—capital edging to hardest-fiat safe zone. | 🔴 Red |
3-Year SOFR–OIS | 28.25 bps | Elevated & sticky mid-term funding stress. | 🔴 Red |
SOFR Overnight Rate | 4.30% | High print—ongoing compression in overnight funding. | 🔴 Red |
SOFR VOL | $3.045 T | Massive reliance on overnight funding to keep pipes flowing. | 🟠 Orange |
🪙 Gold & Silver Market Stress
Signal | Latest Level | Interpretation | Zone |
|---|---|---|---|
SLV Borrow Rate | 19.23% (1.0M shares avail., −15.12% rebate) | Still expensive to short; borrow availability rebounded, but squeeze risk remains elevated. | 🔴 Red |
COMEX Silver Registered | 171.57 M oz | Deliverable supply thin; slow bleed persists. | 🔴 Red |
COMEX Silver Volume | 195,510 | Heavy churn—aggressive repositioning continues. | 🟠 Orange |
COMEX Silver Open Interest | 177,015 | Firm—shorts still under pressure as conviction builds. | 🟠 Orange |
GLD Borrow Rate | 0.53% (3.2 M shares avail., 3.58% rebate) | Tightening showing up in gold—early shortage signal. | 🟠 Orange |
COMEX Gold Registered | 20.97 M oz | Thin but steady physical backing. | 🟠 Orange |
COMEX Gold Volume | 611,632 | Explosive turnover—near/at record churn as institutions rotate to real collateral. | 🔴 Red |
COMEX Gold Open Interest | 487,299 | Conviction intact as metals reclaim monetary primacy. | 🟠 Orange |
🌍 Global Yield Stress
Signal | Latest Level | Interpretation | Zone |
|---|---|---|---|
UST – JGB 10-Year Spread | 2.342% | Japan/US rate gap still wide—global funding distortion persists. | 🟠 Orange |
Japan 30-Year Yield | 3.115% | BOJ cornered; long-end pressure elevated. | 🔴 Red |
U.S. 30-Year Yield | 4.607% | Long end repricing; collateral layer still shaking. | 🟠 Orange |
Gold’s slice of global reserves is jumping not because reserves are bigger—but because faith in paper is smaller.
What that means in a max-leverage world:
The “safe stash” is shifting from IOUs to ounces, so there’s less balance-sheet cushion for anything priced on promises. Liquidity thins.
Swings get sharper. Fewer dealers step in front of falling knives, so moves are bigger and faster.
Funding pain rises. More gold in reserves → sovereign bonds are less attractive → higher interest costs → more issuance → more fear → more gold.
Margin debt just hit $1.13T—a 4th consecutive monthly record.
Here’s how this plays out:
More leverage → thinner liquidity → bigger, faster moves.
A tiny rise in volatility can flip portfolios from “I got this” to “sell anything.”
When the margin clerk shows up, narratives don’t matter—the quality and quantity of the collateral does.
This isn’t bearish for everything—it’s bullish for the base layer that can’t default.
Leverage manufactures fake demand. Prices rise not because value improved, but because credit poured in. That pushes everything further and further above their real values—stocks, credit, real estate—until the credit slows.
If just 10% of U.S. portfolios lift gold from ~2% → 20%, the buy ticket is ~17,800 tonnes—about 6 years of world mine supply.
If the world copies the 60/20/20 playbook, we’re staring at ~13 years of mine output. That can’t be met with “more leverage.”
You can lever stocks; you can’t lever new ounces into existence. So the only release valve is price—a lot higher, fast, until demand and supply meet.
Translation: the asymmetry in gold is brutal—tiny allocation shifts from giant pools force a multi-year production squeeze. That’s why this rally is just getting started.
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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.
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