BLOOD IN THE VAULTS: 15% of Silver VANISHES in 24 HOURS

Summary

The video analyzes an escalating crisis in the global silver market, citing an official Shanghai Futures Exchange notice confirming a coordinated short attack involving 674 million ounces of paper silver and the banning of six linked account groups. While paper prices plunge amid systemic risk-off selling, physical silver is rapidly draining from COMEX and Shanghai vaults, with unprecedented delivery demands far exceeding registered supply. Repeated CME margin hikes signal exchange stress rather than stability. The script highlights a widening disconnect between paper suppression and physical scarcity, rising geopolitical and market turmoil, and a looming March delivery crunch that could force cash settlements, break exchanges, or expose structural flaws in paper silver pricing.

Takeaways

• 🚨 Shanghai Futures Exchange officially confirmed a coordinated short attack in silver, banning six groups of linked accounts for exceeding intraday position limits after 674 million ounces of paper silver were dumped in a single session.
• 📄 The dumped paper silver volume was nearly double annual global mine production, highlighting extreme leverage and systemic risk in paper silver markets.
• ⚖️ Official SHFE Notice No. 37 (Feb 5, 2026) marks rare regulatory acknowledgment of manipulation, signaling growing stress within global silver trading systems.
• 🏦 COMEX physical stress is intensifying, with nearly 100% of futures contracts settling physically versus a normal 1–3%, and registered silver falling to about 103 million ounces.
• 📉 Open interest on COMEX stands around 429 million ounces against shrinking registered inventories, creating a severe mismatch ahead of the March 2026 delivery period.
• 🔥 CME has raised margins three times in 10 days—20% for silver and 11% for gold—despite falling prices, indicating exchange fear over volatility and positioning risk rather than investor protection.
• 📊 Silver’s daily volatility (ATR) has reached record levels, meaning margin hikes are merely catching up to extreme price swings rather than preventing instability.
• 🧱 Physical silver is rapidly leaving vaults worldwide, including a 15% one-day drain at SHFE, reinforcing that low paper prices are accelerating real supply depletion.
• 🪙 Global physical demand remains strong despite falling prices, with investors in Singapore, China, Australia, and Thailand actively buying metal during sell-offs.
• 📈 SLV ETF trading volume hit a record 41 billion shares, signaling violent repositioning, forced liquidations, and systemic stress rather than normal market activity.
• 😨 Broader risk-off conditions are unfolding across markets, led by Bitcoin weakness, crypto liquidations, hedge fund equity selling, and heightened geopolitical tensions.
• 🔍 Silver sentiment is deeply bearish at prices where it was euphoric just months ago, showing a sharp disconnect between price and underlying physical fundamentals.
• ⚔️ The core conflict is paper versus physical: paper shorts suppress price while physical buyers drain supply, pushing the system toward a potential breaking point.
• ⏳ The March 2026 COMEX delivery window, now just weeks away, represents a critical stress test that could force cash settlements, rule changes, or expose failures in paper pricing mechanisms.

Q & A

What recent event triggered a crackdown on silver trading by the Shanghai Futures Exchange (SHF)?

The SHF confirmed that six groups of linked accounts exceeded intraday position opening limits on silver contracts, leading to the imposition of restricted position opening measures. This followed a massive coordinated short attack that dumped 674 million ounces of paper silver in a single morning session.

What is the significance of the CME's repeated margin hikes for silver futures?

The CME's repeated margin hikes, especially within a short 10-day period, indicate heightened stress in the silver market. These margin hikes are a response to extreme price volatility and risk, with the CME raising margins to protect the system from further losses. High margin requirements often reflect positioning risks and market instability.

Why is silver being hit harder than gold in the current market conditions?

Silver is being hit harder than gold because exchanges raise margins to manage stress in the system, and silver is facing more volatility. Silver’s lower prices are accelerating the drain on physical metal supplies, which causes greater strain on the market compared to gold.

What does the data on COMEX deliveries and open interest suggest about the silver market’s health?

The data suggests an increasing demand for physical silver. With COMEX deliveries in January 2026 reaching a high 49.4 million ounces and February's early days showing nearly 19 million ounces delivered, it indicates that more participants are opting for physical settlement rather than rolling over contracts. The open interest is much higher than the available registered silver, pointing to a potential shortfall in physical metal.

What role does Bitcoin play in the silver market’s recent downturn?

Bitcoin is being used as a leading indicator for risk-off behavior in broader markets. As Bitcoin has dropped significantly, silver and gold prices have also weakened, showing a correlation between Bitcoin's decline and the broader risk sentiment in financial markets.

What is the risk of the March 2026 delivery period for silver contracts?

The risk lies in the massive disparity between the open interest (around 429 million ounces) and the registered silver available for delivery (around 103 million ounces). If even 25-50% of the contracts demand delivery, there could be a severe shortfall, potentially forcing cash settlements or triggering a force majeure event, which could disrupt the market.

How does the physical silver market relate to the paper silver market in the current scenario?

The physical silver market is diverging from the paper silver market. While paper silver contracts are suppressing prices, the physical metal is being rapidly drained from vaults as buyers use lower prices to acquire it. This growing disconnect suggests that the demand for physical silver is outpacing supply, despite the pressure from paper-based silver trading.

What does the rapid drain of silver from Shanghai Futures Exchange (SHF) vaults signify?

The rapid drain of silver from SHF vaults, with a 15% drop in a single day, signals severe physical scarcity. This depletion of reserves highlights the growing tension in the market, where paper silver manipulation may not be able to keep pace with the real-world demand for physical metal.

What does the increase in trading volume in SLV (the largest silver-backed ETF) indicate?

The record trading volume in SLV, surpassing $41 billion, indicates violent position changes, forced liquidations, and potential capitulation in the silver market. This extraordinary level of activity is a sign of deep market stress and reflects broader risk-off sentiment in the financial system.

What are the potential outcomes of the ongoing silver market crisis?

The crisis could lead to several outcomes: the COMEX market might break down due to a shortage of physical metal, or margin hikes and risk-off sentiment could force more liquidations before the physical shortage overwhelms paper suppression. Another possibility is that silver prices could see significant volatility as the market tries to adjust to these conflicting pressures.