COMEX silver inventories are draining at an alarming rate, with registered stocks hitting their lowest level in over a decade, signaling a full-fledged short squeeze. Market data reveals a sharp contraction in deliverable metal held in exchange-approved warehouses, exacerbating physical supply strains, delivery risks, and price volatility.
Inventory Collapse: 22% Drop from Peak
According to Trendforce, total COMEX silver inventories peaked at 500 million ounces in 2025. Since September, stockpiles have contracted by 117 million ounces (22%), leaving current inventories at approximately 415 million ounces, the lowest since March 2025. More critically, registered inventories—silver available for futures delivery—have plunged to levels unseen in a decade, as metal either shifts to eligible (private) storage or exits the system entirely.
Financial research firm The Kobeissi Letter posted on X on Jan. 28: “COMEX silver inventories are falling: Silver inventories in COMEX warehouses have fallen -34 million ounces from their high, to 415 million ounces, the lowest since March 2025. The stockpile has dropped -117 million ounces, or -22%, since September’s peak. Falling silver inventories indicate strong physical demand as short sellers struggle to find actual metal to deliver against their futures contracts.”
Industrial Demand: AI and Solar Absorb Physical Silver
Analysts attribute the inventory drain not to speculative trading but to a structural shift: silver is transitioning from a financial asset to a strategic industrial commodity. AI chip manufacturers and solar panel producers are aggressively withdrawing physical silver from vaults to secure material for semiconductors and photovoltaic cells. This demand for physical metal over paper claims has drained registered supplies to near-critical levels.
Short Squeeze in Full Swing
The Kobeissi Letter elaborated on the market mechanics: “When these traders cannot find enough physical silver to buy, they have to pay higher prices demanded by sellers. This pushes silver prices even higher, which then forces more traders to buy to avoid losses, tightening market conditions even further.” Its conclusion: “The silver short-squeeze is in full-swing.”
Exchange-held inventories are often evaluated alongside futures open interest, industrial consumption, and global mine output. Continued withdrawals from regulated warehouses can reduce immediately available supply, amplify volatility, and heighten sensitivity to delivery risk across global silver markets.
Market Implications and Outlook
In the near term, the scarcity of registered silver is likely to propel prices higher. Longer term, if industrial demand remains robust, the COMEX silver ecosystem may face structural recalibration, with widening spreads between futures and physical. Investors should monitor registered inventory replenishment rates and industrial procurement trends for further signals.