Silver just made an all time high weekly close.

We are seeing signs of increasingly extreme scarcity in the silver market.

During the vast majority of yesterday’s sell off, from 10:37 AM to 3:16 PM…

there were zero shares available to borrow in the largest silver ETF in the world — a complete short squeeze on the supply side.

The SLV borrow rate spiked to a staggering 20.08% yesterday.

When traders want to short SLV—betting the price will fall—they first have to borrow the shares.

The borrow rate is the “interest” they pay to do it.

So when that rate explodes to 19% and there are no shares left to borrow, it means every possible short has already piled in.

The market is stretched to its limit—there’s enormous pressure to keep the lid on price, yet hardly any supply left to enforce it.

It can look like sellers are in control because price wobbles or dips under that weight.

But that’s a mirage.

What’s really happening is synthetic selling—borrowed shares flooding the market while no new physical silver actually trades.

Once that artificial pressure runs out of fuel, price has a way of snapping violently back toward reality.

The LBMA, far more opaque than its U.S. counterpart (the COMEX), acts like a stagehand adjusting the lighting—painting prices on screens to preserve calm—while behind the scenes, real metal tightens.

Futures dumping gives the illusion of weakness, but the cost to short paper silver is soaring, and physical buyers are paying above spot to secure real supply.

The “price” now reflects pressure to preserve appearances, not genuine equilibrium.

This is how the world looks when a debt-based system runs out of trust: numbers hold steady on the surface while tangible assets slip beneath it.

They can paint the tape in London, but they can’t conjure the bars disappearing from vaults.

Here’s the x-ray, no fluff:

• CME hiked margins → spot dipped. 

  • That’s not “everyone selling,” it’s forced deleveraging:

    • raise the cover charge and some traders step back, so the screen price wobbles even if the real metal is tight.

• PSLV steady + recent vault adds = London Good Delivery bars getting pulled into a do-not-touch vault.

  • Every bar ring-fenced there is one less bar floating to settle elsewhere.

• COMEX draws + registered→eligible = metal migrating from “deliverable now” to “hands off.”

  • Not a collapse—more like battening the hatches.

  • When inventories move that direction and withdrawals continue, it screams preference for custody over convenience.

• SLV creation + ~20% borrow fee is the tell: shares were created (supply on paper) while the cost to short exploded.

  • Translation: lots of people leaning on the price with borrowed shares, but it’s expensive and crowded, which is how squeezes are born.

• China’s SFE/SGE discount + vault bleed = demand that’s starved by price controls and FX plumbing.

  • If they actually want inflow from the West, they’ll have to bid higher.

• Big picture (late supercycle math): paper needs optics; physical needs atoms.

  • When funding stress kicks up (margin hikes, SOFR jitters) you can nudge the quote, but you can’t mint bars.

  • The divergence—tight borrow, rising premia, inventory migration—means the market is using paperwork to manage scarcity.

Bottom line: the tape can blink, but the underlying story is collateral scarcity creeping into daylight.

If that continues, the next meaningful move is up, and it tends to be fast when crowded shorts run out of oxygen.

⚠️ Liquidity & Funding Stress

🪙 Gold & Silver Market Stress

🌍 Global Yield Stress

Most of the “silver in LBMA vaults” isn’t actually available—about 86% is tied to ETFs/ETCs, and a big chunk of the rest is allocated to specific owners.

Translation: the headline inventory is a museum count; the true “free float” is razor-thin—functionally near zero when big buyers show up.

In a late-stage debt super-cycle, paper claims multiply faster than metal bars, so the system leans on screens and swaps while the atoms get spoken for.

That’s why London feels squeezed: you can juggle claims, but you can’t mint bars.

If India or any large allocator pulls hard on physical, the bid must move up to coax metal loose—fast.

Watch the telltales: persistent ETF capture, allocated creep, rising premia, and “borrow pain.” When those line up, the screen price is signaling control, not abundance.

Half of JM Bullion’s 100-ounce silver bars—one of America’s largest precious-metals dealers—are currently out of stock.

• Real-world demand > dealer supply. 

  • People aren’t buying quotes; they’re buying bars, and dealers can’t restock fast enough.

• Supply chain is tight from end to end. 

  • When retail shelves empty, it usually means the wholesale pipe (recyclers → refiners → fabricators → dealers) is already running hot.

• Paper price ≠ physical reality. 

  • Screens can dip, but if bars vanish, the market is signaling scarcity where it counts—atoms, not tickers.

• Late-supercycle tell. 

  • In a world stuffed with IOUs, the crowd is quietly rotating into base-layer collateral (silver) and the pipe is choking on that shift.

• Next step is premiums. 

  • If this persists, dealers raise premiums to pry metal loose; if that fails, price has to move.

Shanghai just raised the brakes on gold and silver trading because demand and volatility are blowing past what their old limits could contain.

When an exchange lifts margin requirements and price limits after a rally, it’s not cooling speculation—it’s trying to keep the system from breaking under the weight of real buying pressure.

In plain English: people are moving out of paper promises and into hard collateral, fast.

The Shanghai Futures Exchange—the largest physical metals hub in the East—is widening the pipes to handle the surge.

That’s what happens late in a debt super-cycle: when trust in credit erodes, money stampedes back toward tangible assets.

You can tweak margins, raise limits, or slow the tape—but you can’t stop capital flight from paper to metal once it begins.

Why I Use HardAssets Alliance

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• 100% insurance of metals for market value

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• Delivery anytime or vault-secured across 5 global hubs

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.