In my X post I warned against the sudden wave of euphoria that greeted SEBI’s February 26, 2026 decision to force Indian physical silver ETFs to value their units off domestic spot prices rather than the LBMA fixing plus import adjustments.
“Isolation from global LBMA physical flows,” I wrote, is real on paper — but let us not confuse regulatory housekeeping with a structural relief valve for the global market. The rally we are living through is not about valuation formulas in Mumbai; it is about physical metal disappearing into vaults. And that disappearance is still happening exactly where it matters most: London.
Let me be crystal clear, as I was in my previous LinkedIn piece “All’angolo: il rally dell’argento, spiegato bene.” The global silver market is one shared tank. The truly scarce resource is not the total above-ground stock — it is the circulating, lendable, deliverable metal in LBMA-approved vaults. My chart showed it plainly: total London stocks look respectable until you subtract the black line of silver already “entitled” to the big international physical ETFs. What remains — the red line — has collapsed to record lows. Every new unit created in those London-entitled ETFs acts like a bottling machine: metal is taken out of the lendable pool and locked away for investors who now own a direct claim on bars sitting in JP Morgan, HSBC or ICBC Standard vaults in the City of London. That is the physical corner. That is what drives the convex, reflexive surge on COMEX.
Silver global annual supply (mining and recycling - which fully includes melted collectibles/silverware and coin scrap) was 1,015.1 million ounces (Moz) in 2024 (latest actual data). It is forecast to rise 1.5% to a decade-high 1,050 Moz in 2026. A well documented, years-long structural deficit between Total Supply and Total Demand continues to exist for the six-th straight year and projected at ~70Moz.
Now contrast that with the Indian physical silver ETFs — Nippon India, ICICI Pru, HDFC, SBI and the rest — whose combined AUM recently crossed ₹1.17 lakh crore. Indian silver ETFs hold roughly 3,000+ tonnes (~96–100 million ounces) as of early 2026, after explosive growth (+23 Moz in Dec 2025 +13.5 Moz in Jan alone). That’s meaningful for India (nearly one quarter of the country’s silver imports), but tiny in the global picture, where global silver ETF holdings stand at 844 Mo (–1.13 billion oz), 600Moz of which are vaulted off LBMA’s stocks. That’s why London “available” float (total LBMA stocks minus ETF-entitled metal) is THE spot to monitor – and the exact fragility I highlighted in my other earlier post - to detect material support (or lack thereof) to NY Silver Prices.
What does actually change (and what does not)? Only NAV valuation switches from LBMA fixing plus import adjustments to pure Indian exchange polled spot prices (MCX-style domestic settlement prices) as per the latest SEBI decision.
Physical reality stays identical: Indian ETFs still hold 30 kg LBMA-spec bars in Indian vaults, creations/redemptions happen in India, and the silver is imported into the country. No change to sourcing, storage, or “entitlements” in London LBMA vaults. Indian buying sequesters metal outside London, so it never directly tightened the red-line “circulating” stock in my chart.
These vehicles do not entitle their unit-holders to a single ounce of LBMA-vaulted silver in London. Their silver sits in secure Indian vaults (Deutsche Bank Mumbai and others), in 30 kg LBMA Good Delivery bars, yes, but physically and legally isolated on Indian soil. Creation and redemption happen in India. Delivery, if ever demanded, is Indian. The SEBI rule simply removes the last cosmetic link to the LBMA fixing in the NAV calculation; it does not move one gram of metal back into the London pool, nor does it reduce Indian buying pressure on global refiners. The silver these ETFs import and lock away was never part of the “red line” in my London chart to begin with.
So when I read breathless commentary claiming that “SEBI has broken the global silver squeeze,” I smile the same wry smile I gave in my X thread. The Indian ETFs were already structurally outside the London bottleneck. The Rest of the World’s major physical silver products — the ones listed in New York, London and Zurich — remain 100 % tethered to LBMA vault entitlements. Their inflows continue to drain the very circulating stock that keeps the rally alive. COMEX prices will therefore keep dancing to the same tune: London tightness plus relentless financial demand. The SEBI tweak may make the Indian product slightly cleaner and more attractive to local retail, perhaps sustaining inflows at the margin. But marginal Indian buying outside London does not refill the red line. It does not ease the corner. It does not change the reflexive mechanics I described.
The rally remains real, powerful, and — exactly as I cautioned — fragile. And while global the geopolitical picture continues to remain in flux, thus lending inertial support to a bid for "safe assets", financial capital moves like a shark. Yesterday it discovered silver; tomorrow it may swim elsewhere. When that day comes, the difference between an Indian ETF unit (claim on metal in Mumbai) and a global ETF unit (claim on metal in London) will matter enormously to the price action. But until then, let us not over-excite ourselves about domestic valuation rules. The tank is still emptying where it counts.
The corner is still on.
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