The silver derivative markets (futures, options, promissory note OTC claims) require a minimum threshold of liquid free float vault stock (actual physical silver) be available in order to function. When liquid free float inventory falls below that threshold, the markets could break down in a disorderly fashion.
We know from October 2025 that the markets seized up when the LBMA's liquid free float ran dry. The LBMA's total free float at that time was about 3,400t.
At the beginning of February (about a week ago), I estimated the upper bound for the LBMA's total free float to be around 4,600t. Thus, it likely had an upper bound in the neighborhood of 1,200t of liquid free float.
Throughout the month of January, by my estimate, the LBMA's liquid free float grew by ~809t. CME silver stock reports claim that COMEX withdrawals totaled ~2,235t across the month. I believe that the bulk of that drain was shipped to London (whether directly or indirectly via Switzerland where it might have been recast). If we accept that ~90% of the COMEX withdrawals was shipped to London, that would be ~2,000t. Subtracting free float growth in January, the LBMA would have delivered (to ETFs, domestic actors, etc) or exported (to China, India, et al) ~1,200t of silver in January.
Thus, I estimate that the LBMA currently (at least, as of a week ago or so) had roughly one month's supply of liquid free float vault stock available.
Within the last week or so, silver lease rates in London briefly spiked from less than 1% to 6.1% before coming back down a bit to 2.7% recently. The elevated lease rates are evidence that the LBMA's liquid free float vault stock is thin as they try to satisfy demand from ETFs, India, China, et al.
The LBMA needs a constant flow of silver from the COMEX in order to satisfy this demand - at least 1,200t/month in order to maintain current liquid free float vault stock levels.
Over the last five days, COMEX withdrawals have averaged ~116t/day. At 20 working days/month, that rate projects to 2,320t for February. That's a healthy flow for the LBMA and should cause lease rates to subside as demand can be satisfied.
However, the COMEX cannot sustain that pace indefinitely. I analyzed the net drain on COMEX Registered and Eligible vault stock from October through December 2025. During those 3 months, ~60% of the net drain came from the Registered stock. If we accept that as a baseline, we can estimate a run rate for COMEX Registered vault stock as follows:
3,154t Registered / 70t/day withdrawals (116t * 60% = 70t) = ~45 working days left
That's just two months and one week of inventory left. The variables in this equation (LBMA delivery demand, COMEX drain rate) may change, but at current levels/pace, the COMEX is likely to run into trouble in April. Maybe they slow down the withdrawals and last another month - two at the most. I think by June we will definitely be seeing either the LBMA, the COMEX or both experiencing delivery defaults.
We know from October 2025 that the markets seized up when the LBMA's liquid free float ran dry. The LBMA's total free float at that time was about 3,400t.
At the beginning of February (about a week ago), I estimated the upper bound for the LBMA's total free float to be around 4,600t. Thus, it likely had an upper bound in the neighborhood of 1,200t of liquid free float.
Throughout the month of January, by my estimate, the LBMA's liquid free float grew by ~809t. CME silver stock reports claim that COMEX withdrawals totaled ~2,235t across the month. I believe that the bulk of that drain was shipped to London (whether directly or indirectly via Switzerland where it might have been recast). If we accept that ~90% of the COMEX withdrawals was shipped to London, that would be ~2,000t. Subtracting free float growth in January, the LBMA would have delivered (to ETFs, domestic actors, etc) or exported (to China, India, et al) ~1,200t of silver in January.
Thus, I estimate that the LBMA currently (at least, as of a week ago or so) had roughly one month's supply of liquid free float vault stock available.
Within the last week or so, silver lease rates in London briefly spiked from less than 1% to 6.1% before coming back down a bit to 2.7% recently. The elevated lease rates are evidence that the LBMA's liquid free float vault stock is thin as they try to satisfy demand from ETFs, India, China, et al.
The LBMA needs a constant flow of silver from the COMEX in order to satisfy this demand - at least 1,200t/month in order to maintain current liquid free float vault stock levels.
Over the last five days, COMEX withdrawals have averaged ~116t/day. At 20 working days/month, that rate projects to 2,320t for February. That's a healthy flow for the LBMA and should cause lease rates to subside as demand can be satisfied.
However, the COMEX cannot sustain that pace indefinitely. I analyzed the net drain on COMEX Registered and Eligible vault stock from October through December 2025. During those 3 months, ~60% of the net drain came from the Registered stock. If we accept that as a baseline, we can estimate a run rate for COMEX Registered vault stock as follows:
3,154t Registered / 70t/day withdrawals (116t * 60% = 70t) = ~45 working days left
That's just two months and one week of inventory left. The variables in this equation (LBMA delivery demand, COMEX drain rate) may change, but at current levels/pace, the COMEX is likely to run into trouble in April. Maybe they slow down the withdrawals and last another month - two at the most. I think by June we will definitely be seeing either the LBMA, the COMEX or both experiencing delivery defaults.
