COMEX Silver On Pace To Be Drained In Under 3 Months, China's Silver Inventories Down 88% Since Their 2021 Peak - The Global Physical Silver Market Is On The Brink

The global physical silver market is on the brink.

If March sees another wave of physical demand, especially from industrial or sovereign entities (possibly amid de-dollarization or hedging), the system could snap.

The silver market is flashing red — and any spark could detonate a broader repricing of precious metals.

COMEX silver inventories are being withdrawn at an unsustainable pace — 15 million ounces last week alone, with a 3.2M oz/day pace in early February.

At this rate, the Registered category (the portion available for delivery) could be emptied in under 3 months.

Physical silver in the Western world is disappearing.

The COMEX is the Western benchmark for global silver pricing.

If it is forced to default or cash settle due to insufficient deliverable metal, it could cause a price re-rating globally, especially when considered alongside SHFE vault depletion and rising demand from industrial and sovereign actors.

Nearly 100% of February open interest (OI - open trading contracts) have already been delivered against — just 5 days into the month.

If March (a historically large delivery month) sees a similar demand for delivery, it would create a 380 million ounce physical shortfall, more than all of COMEX silver inventories combined.

We are now going into the 6th consecutive year of a structural silver deficit (~200M oz annually, or ~20% of global supply).

The COMEX operates on fractional reserve settlement — only a fraction of contracts are expected to stand for delivery.

But this month’s behavior shows that assumption breaking down.

Any sustained surge in physical delivery requests could break the market mechanism itself.

This is eventually what will happen.

Why This Is More Alarming Than the COMEX Situation

• COMEX (Western market) has more leverage, speculative trades, and "paper" silver going around.

  • SHFE and SGE (Eastern markets) are more physically tethered—China is the largest silver industrial user (solar, electronics, EVs).

• When these inventories dry up, it reflects actual supply starvation—not just trading flows.

Physical Silver Is Being Vacuumed Up Globally

• SGE silver inventories (separate from SHFE) just lost 43 tonnes in a single week, underscoring accelerating pressure even within China’s physical trading ecosystem.

• Whether it’s retail, sovereigns, or industrial consumers, metal is clearly being pulled out of registered vaults and not coming back.

Shanghai Inventories Are Vanishing

• SHFE silver inventories are down ~88% from their peak in 2021—dropping from ~3,000 tonnes to just ~350 tonnes today.

  • The comment that much of China’s silver was exported to London in 2025 to ease global physical stress makes it worse now—because they can’t do that again.

The story is loud and clear: supply is vanishing while demand persists.

This imbalance will eventually force a repricing event—potentially sudden, and potentially very large.

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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.