The total inventory of silver has decreased approximately 31% from 532 million ounces at October 2025 to 366.25 million ounces as of February 20. More importantly, registered stocks (the amount of silver that can actually be delivered against futures contracts) have fallen under 90 million ounces, which is a psychological level, to just above 88 million ounces.
This is significant because open interest is currently more than 400% of the available registered stock, creating an extremely worrisome paper-to-physical imbalance, with a very real possibility of a liquidity event should contract holders start demanding delivery in earnest.
March Could Be the Breaking Point
March is likely going to be when all of that pressure will reach its breaking point. Many of the large financial services corporations like JP Morgan have already issued large amounts of precious metal delivery receipts, suggesting that there is a transition away from just rolling paper contracts to securing physical precious metal.
Industrial users have limited inventories and if they start to request delivery also, the demand could be enormous. Analysts have pointed out that Shanghai silver is already trading over $10 higher than the spot price in the Western world, which demonstrates how tight the physical market has been.
I think it is important to note that the recent price pullback has primarily been caused by technical reasons, such as margin increases from the CME Group and the forced liquidation of overextended margin buyers.
There’s not been a real decline in demand for silver, as industrial consumption is continuing at a rapid pace with limited increases in production from existing mines, and many of the largest banks in the U.S. still have a large number of shorts and people believe they are currently artificially depressing prices in the paper market with these positions.