BloFin Research: Silver’s Physical Tightness is a Bullish Signal

COMEX (US) silver’s registered inventory has fallen to 13-14% coverage of outstanding open interest, while March 2026 delivery was unusually high and SHFE(Shanghai) futures now trade at a 12% premium to COMEX, together signaling extreme tightness that creates upside pressure on the silver price

• Registered silver on COMEX stands at 76M oz against 576M oz of open interest, implying 7.5x leverage and 13.4% coverage, well below the 15% threshold associated with delivery stress.
• SHFE silver traded at around $84/oz, against COMEX price of arounrd $75/oz, a spread of $9-10/oz(12-13%), reflecting strong Asian demand.
• The setup is bullish, thin coverage ratio, high delivery demand, and a persistent cross-market premium raises the probability of eventual upside repricing.

Silver reached a record near $121.64/oz in January 2026, then pulled back sharply into the high $60s and low $70s. However, the price selloff and the physical delivery data moved in divergent directions.

Physical silver continued leaving COMEX vaults, which is the world’s primary price-setting venue for silver and the benchmark against which global physical supply is measured, which make its registered inventory the most direct observable proxy for deliverable supply stress.

The Registered Inventory Tightness

COMEX silver inventory is divided into two categories. Registered silver carries a warehouse warrant and is immediately available for delivery against a futures contract. Eligible silver is stored in COMEX-approved vaults and meets exchange quality standards, but is not currently warranted for delivery, it requires re-registration before it can fulfill a contract.

Eligible metal can become registered if the owner chooses to issue a warehouse warrant, making it available for delivery. However, eligible silver is privately owned, and the owner must voluntarily decide to issue a warrant and convert it. While the paperwork is fast (usually 24–48 hours), the decision is entirely up to the owner. They may be holding it for their own clients or long-term investment, have it pledged as collateral elsewhere, or simply not want to release it into the delivery pool during a squeeze.

Only registered silver provides the exchange’s actual delivery buffer. As of late March 2026, registered stocks stood at approximately 76.0M oz. Against that figure, total silver futures open interest was approximately 576M oz, implying a coverage ratio of 13.4%.

A coverage ratio below 15% is the threshold that exchange analysts historically flag as stress territory. The current reading sits just below that level, not at catastrophic lows, but with a limited margin for incremental demand.

March Delivery Was Unusually Large

The March 2026 delivery cycle drew approximately 9,212 contracts, equal to roughly 46.1M oz of physical silver. To contextualize that figure: 46.1M oz against 76.0M oz of current registered inventory represents approximately 60.6% of current available registered stocks absorbed in a single delivery month.

The registered inventory chart at the top of this article shows the cumulative effect: a sustained drawdown in warranted stocks that began accelerating in late 2025 and has continued through the March delivery cycle.

The SHFE Premium Confirms the Physical Bid Is Not Local

A persistent premium in Shanghai futures (SHFE) over COMEX is another signal for tightness in the silver market. As of April 1, 2026, SHFE silver futures traded at approximately $84.59/oz. COMEX May/Jun futures on the same date were quoted at $74.94/oz. The spread: roughly $9–10/oz, or 12–13%.

A spread of this magnitude, sustained since late 2025, is very significant. Buyers in Asia are pricing silver above the COMEX level, and they are not arbitraging away the premium, demonstrating the supply is genuinely constrained. The sustained premium in Shanghai also coincides with the acceleration in COMEX delivery demand.

Price Outlook: Bullish Direction, Unstable Path

The structural case for higher silver prices rests on three converging signals: coverage ratio, delivery velocity, and cross-market premium. As registered stocks decline relative to open interest, the market has less capacity to absorb incremental physical demand at current prices. Elevated March delivery demand, if sustained, continues to compress that buffer. And the SHFE premium confirms the physical bid is not a COMEX-specific artifact, it is global.

When a 12–13% premium persists between the world’s two largest silver futures venues, one of two things eventually happens: COMEX prices rise to close the gap, or supply flows from West to East until the premium compresses. Both outcomes are bullish for COMEX silver. The first is direct repricing. The second drains additional metal from an already thin registered stock pool.

However, it should also be noted that the near-term path is not clean. Paper liquidation, particularly in a macro risk-off environment, can continue to push futures lower regardless of what physical inventories are doing.

Disclaimer: The information provided herein does not constitute investment advice, financial advice, trading advice, or any other sort of advice, and should not be treated as such. All content set out below is for informational purposes only.

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