Despite all the empty talk about mounting "supply deficits" in China that has littered this and other platforms whenever #Silver is discussed, I have conspicuously shown here that the only genuine, measurable driver behind the parabolic rally—and subsequent crash—in the gray metal from September 2025 onward was the physical cornering of the London bullion stocks.
Surging demand for physically backed exchange-traded products (ETPs), whose entitlement bars are legally segregated from London LBMA vaulted silver bullion, created an unprecedented shortage of bars available for lending and non-ETP trades. This brought the London silver market to the brink of implosion in fall 2025 (check silver lending rates if in doubt).Swarms of retail investors—the classic bag-holders in financial scams (e.g., cryptos)—flocked to buy shares in physically backed ETFs and ETCs, siphoning 613 million troy ounces from the traditionally liquid London physical market out of the 894 million T.Oz vaulted in LBMA stocks by December 2025's end.
As I warned in a prescient (and largely ignored) post on X on January 16, 2026 - at the peak of the rally's entirely paper-based final leg - "it's the marginal straw that broke the horse's back.": without fresh ETP-related physical purchases to further deplete already low LBMA silver stocks—a trend I noted had ended in late December 2025—the rally was fueled by hot air and primed for collapse.
The ensuing implosion in NY Comex/CME silver prices (where most paper trades occur) has erased ~40% from the January 26, 2026 peak (just shy of $120/troy oz).
What now?
The key fundamental element in the driving seat remains unscathed: without clear physical stock depletion through ETP-related entitlement segregations, NY silver prices stay bogged down in narratives-trade ("US dollar debasement trades," "physical scarcity in China," "weaponization of critical minerals by the US/China") and other fables.
Pending the release of January's end-of-month London vaulted silver bar stocks, data I've monitored shows a modest 18 million troy ounce pickup (as of February 5, 2026) from late January's low of 571 million troy ounces in entitlements for the world's four largest ETPs (85% of physically backed silver ETPs holding LBMA vault entitlements). This confirms bottom pickers/dip buyers are indeed tentatively emerging, even as prices remain 2.5x higher vs this time last year.
From a physical supply/demand perspective—the only one that truly matters—conditions are looser than in late December 2025, consistent with NY silver prices around $50/troy oz.
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