Silver supply squeeze: COMEX vaults and the March 2026 crunch

0:00The world's largest silver exchange, COMEX, has 103 million ounces of silver available for delivery right now. And just in a month's time, they're facing over 400 million ounces of open contracts. It's like having 100 pizzas and 400 very hungry people showing up for dinner. The first notice day for March delivery is February 27th, a day you might want to write down. That's less than a couple of weeks away as I'm recording this. And the vaults of COMEX are draining at 785,000 ounces.

0:43I'd like it to be just that every single day. So the math doesn't work. Something has to break. Whether you own silver or thinking about it, you just want to understand what's happening in the financial system, what happens in the next 30 days could reshape metals pricing for years and also the economy because you can't spell AI without metals. So maybe you're a tech investor, doesn't matter, this affects you.

1:07So today Winston and I are going to show you exactly what's happening inside those vaults, why March is the date everyone's watching, and how you can position yourself whether this thing blows up or it fizzles out. My name is Felix Prehn. I'm an ex-investment banker. I've seen how the industry actually works on the inside. One of my mentors is a former London Metal Exchange market maker. So we've got quite a lot of insight over here, especially Winston, he's friends with all the traders.

1:39So I'm not going to give you the sanitised version they show on CNBC. I'm going to show you the real mechanics of how these markets move and why. I'm also the founder of the GOAT Academy where my retired Wall Street mentors teach regular people like you institutional strategies. I'm also the co-founder of Trade Vision where we keep track of the data and the news. Our mission here is very simple. Take the playbook Wall Street uses to profit, often at your expense if we're honest about it, and put that into your hands.

2:11And right now there is something happening in the silver market that the mainstream media is barely covering. They're too busy telling you about the next meme stock or the latest Epstein email. You always have to ask yourself when there's a circus, what are they distracting from and why? So what I'm about to show you is not conspiracy. It's math. It's public data from the COMEX itself. And if you want to understand it, you'll be ahead of 99% of investors. You're going to go and wake up in April wondering what the heck just happened.

2:48So before we dive in, let me explain what COMEX actually is because most people have no idea. COMEX is the commodity exchange. It's where silver and gold futures are traded. It's technically part of the CME Group, which is the Chicago Mercantile Exchange. And it's the official price setting mechanism for all precious metals in America, sort of the world, but mostly America.

3:29Now where it gets a little more exciting is that COMEX is what we call a paper market. Most people trading there never touch physical silver. True story, I went to school with a friend and his dad was in the gold business and he was meant to take it over and he was allergic to gold, which is kind of an interesting random side story. You can apparently be allergic to gold.

3:54Now COMEX allows you to trade contracts, promises, and those promises are not settled for the physical metal but for profit, for cash. So it's sort of like going into a restaurant. I'm a vegetarian so the steakhouse analogy is not the greatest here. But imagine you go to a restaurant, 95% of people are in there and they're just exchanging pictures of food and then they go home. They don't consume the actual food. So that's kind of how you picture that.

4:30And then COMEX has two categories and this is really important to understand. They have silver in their vaults which is registered, which means it's available for delivery. It can leave the vault. This is the stuff that when somebody says give me my metal, COMEX will hand it over. And then there is the eligible silver. And that's silver that's sitting in COMEX's vaults but it belongs to somebody else. It is not available for delivery unless the owner wants to move it, sell it.

5:14In other words, eligible silver is like if your neighbour parks his car in your garage. Yes, there is a car there and your parking spot, but it is not your car. That's basically what eligible is. So when COMEX tells you, what they often do is they look at total inventory, they love to include both numbers. It makes the vault look fuller than it actually is. So it'd be like you saying, look at those are my 12 car parking spaces, I have 12, well 11 Ferraris and one Honda Civic, and only the Honda Civic is yours and the other 11 are other people's Ferraris. That's kind of what COMEX does.

6:04And as of February 2026, COMEX has about 103 million ounces of registered silver. Total inventory, which is the number they always give you, is over 400 million, but that's irrelevant because that isn't their silver. So 103 million is the number that matters. The rest is just noise.

6:30So here is where it gets just a little bit alarmist. This is not a doom and gloom video, but it's a little bit urgent. Registered silver is down 70% since 2020. Registered means the stuff they actually own. So you could just say COMEX silver inventory is down 70%, the real inventory. We have almost 785,000 ounces of silver walking out of the door every single day, and the drain is accelerating, it isn't slowing down.

7:02So if you think about this, we had 300 something million in 2020. Now we only have 103, almost a million walking out every single day. How long do you think this is going to last? So I want to give you a simple framework to understand what's happening and what's about to happen. I call it the silver vault framework. Winston came up with it. We call it the VPP framework. It is vault, pressure, position. So first we verify what's actually in the vault and then we understand the pressure that's building and then we position ourselves accordingly.

7:53So let's start with the vault part. We've already established that the amount of silver in the vaults is 103.5 million. If you want to be precise, as I'm recording this, that's what's in the vault. But that isn't actually all sitting in one place. COMEX vaults are spread across multiple facilities managed by different banks and different depositories. And the number changes every single day.

8:18Now in January of 2026, almost 50 million ounces left those vaults. Now why is that bonkers? Because if you go back two years, so this year is 2026, but if you look at just 2024 when the world was still blissfully unaware about silver, only 6.8 million ounces walked out of that door. So this is a massive increase. It's a 7x increase in silver leaving the vaults.

8:56Now the official explanation from the exchanges is this is normal market activity. Yeah, right. 7 times more deliveries is normal. It's just like how your credit card bill being 7 times higher than usual is normal spending. Maybe that's what your wife's trying to tell you. But dig a little deeper and it isn't just COMEX. It isn't just an American New York, Chicago problem. Shanghai silver inventories at their lowest since 2016. The London Metal Exchange, where one of my mentors used to be a market maker, is at historic lows. So it's like musical chairs and the music is getting very, very quiet.

9:42Now China has classified silver as a strategic material and they put export controls on it. So you can't just export the stuff anymore. China's one of the biggest silver processors by the way. And the US has also classified it as a strategic material. So we're not talking conspiracy theories here. We're talking government public policy.

10:03And then there is a number that you watch if you understand this market a little bit more, which is actually the one thing that tells you whether there is lots of silver or whether we are kind of short of this stuff, and most people never get to hear about this. This is called the silver lease rate. You might want to write this down. A lease rate is what it costs to borrow silver, physical silver.

10:25Now why would you want to do that? Well, say you want to short silver because you're a Wall Street lunatic and you think, well, I've done this for the last 30 years, it's made me very wealthy, I'm going to keep doing it, and see how well that pans out. So what do you do? Well, you need to borrow physical silver. To borrow physical silver, you need to pay an interest rate to whoever owns that silver.

10:50So when you see all these people out there who are saying we pay you a dividend on your gold and silver, no, no, no. You are lending your gold and silver out to some lunatic trader on Wall Street or in Chicago and then you're getting a fraction of what they're currently paying to borrow it. It's the same high-risk automated setting that most brokerages have. Even I opened a new brokerage account, I opened an Interactive Brokers account because I started running a trading experiment.

11:23I wanted to have a fresh account, put a million bucks into it and so on. Different story. But there is an automated setting at the beginning that says share lending is switched on. Earn money with share lending. It's automatically on. And that's the same thing. You're lending it out to somebody else. If that somebody else goes out of business, what happens? Well, what you lent them is gone, right?

11:45If you lend your car to your lunatic neighbour and he drives it down a cliff and it explodes, well, it's gone, isn't it? What are you going to do about it, right? But to go back to the lease rate signal here, normally it costs less than half a percentage point to borrow silver because it's plentiful. They probably lease it out 5 times over, but that's a whole different story. So right now it's 8%. 8%.

12:10So when these lease rates spike, the interest rate spikes, it means it's hard to find physical silver. People are willing to pay, what is that, 25 times higher interest to borrow silver. Now that doesn't happen when the vaults are full because it's demand and supply, right? It happens when the vaults are empty and people are scrambling. But hey, COMEX says everything is just fine. So I'm sure they have a great official explanation why it's just business as normal.

12:42But something about those normal market dynamics, and maybe they borrow the phrase seasonal adjustments, which is what the government does when they make up their data, flags a warning bell with me. So now we move to the second part of our framework, right? The Winston framework. We should have called it that.

13:03Pressure. March is a main delivery month for silver on COMEX. What does that mean? It means contract holders who have that paper silver, they can demand physical silver for their contracts. And the numbers are pretty staggering. There are about 500 million contracts for about 100 million in silver available. How does that even happen? How is that even legal?

13:30Anyway, that's what's going on there. So think about this. If just 10% of these guys, 10%, want at the end of the contract, they say, "I want silver. I don't want money. I want silver. I think it's worth more than the paper stuff the government keeps printing." Well, then you're looking at basically 53 million ounces leaving the vaults. There's only 100 million in there.

13:54Right now, what if 20% of those contract holders would say, "Well, look, I want physical silver." Well, then you're looking at about 100 million ounces leaving the vaults, and your vaults are now very empty. You could throw great, beautiful dinner parties in there, but other than that, they'd be fairly useless. People would walk in and say, "This is a place where once the most silver in the world was stored. Now it is empty."

14:20Now the first day that we're going to find out what's actually happening is February, write this down. February 27th. It's when the traders must declare if they want physical silver. So couple of weeks from now, and in the meantime, 785,000 ounces leaving per day. I'm mumbling my words because it's staggering, right? So you do the maths. Between now and the 27th, you're likely to see another 16 million ounces leave COMEX.

15:11I'm literally not permitted to draw these numbers. Conspiracy theorists, yeah, you get the idea. All right everybody. Now there's another piece of data I want to give you, and I appreciate this is fairly information dense, so I'm sorry about that, but this is just where we are. In February 2026, and we're only partially through that month, the delivery rate right now is 98%.

15:34What does that mean? It means 98% of people who can get their silver are getting it delivered, which is staggering. Over 18 million ounces so far delivered this month. So you kind of get the idea what's happening here. This is not a bunch of silver believers. These are traders, hedge funds. And what they're seeing is that they can buy paper silver at paper prices and then get physical silver for it.

16:11And maybe you have a better connection, but the silver dealers that I talk to, they say to me, "Yeah, you can have some silver, Felix. We'll deliver it into your vault in about June, July." And I'm like, "June, July? Are you guys mad?" Yeah, there just isn't any. So if you want to get silver now and you have enough money in your COMEX account, you just buy the paper stuff. You then convert it into the physical stuff. Now you get the physical silver, right?

16:36Why would people do that? Profit, greed, right? Hedge funds. But possibly, and that's what I'm thinking about is happening, and this is speculation obviously on my part, that the industrial users might be doing this. Say you're Elon Musk, right? You want to build the biggest chip manufacturing facility in the world. You're going to need a lot of silver to build all your robots and all your chips and everything else.

17:01So what do you do? Well, you can go to the miners and they say, "Yeah, you can have it in a year's time." You can go to the traders and they say, "You can have it in 6 months at this premium." Or you can go to COMEX and you can buy it at today's artificially suppressed price. Okay, just my humble opinion. Why wouldn't you just do that, right? And then you just store it.

17:21So what happens here if COMEX runs out of silver and what then the opportunity for you and I and my silver hound? Well, COMEX can do several things. COMEX could say, "We're going to give you cash instead of metal." They actually have that power in their rules to completely control everything. So they say, "Yeah, you wanted silver. Yeah, that's very nice, but we're going to give you dollars instead." The stuff we can print. It's legal under exchange rules.

17:52But it destroys their credibility as a price setting mechanism because they're basically saying, "We are mini silver. We're not really a silver exchange anymore." That's one way of dealing with it. The second scenario that they could do would be they change the rules, right? They could raise margin requirements to force people to sell their silver contracts. And they've done that just again, right? 3 or 4 times so far this year. Bonkers.

18:17They could impose position limits. They could make it harder for you to get delivery, which is exactly what they did in 1980, in 2011. And they could also simply phase out the present contracts. And they've introduced just a futures contract that has no right to underlying silver. It's just a piece of paper and it's just denominated in dollars. You get dollars if you make money. If you don't make money, you get less dollars. No silver in it, right?

18:49So COMEX could just become a silver-free silver marketplace, which would be a little odd. And then the third scenario is where paper silver and physical silver prices could diverge dramatically. And we're already seeing this, right? So Shanghai physical silver premium is about $40 above COMEX paper price, which is normal.

19:14And in a free market, what you would then do is, well, you get the physical silver at COMEX and you ship it to China and you'd make the money, right? Which is exactly what happened to gold at the beginning of 2025. It was cheaper to buy gold futures in London and then convert them into physical gold, which they had, and then ship the physical gold to the US where you could sell at a lot of profit. So of course there'll be a trader, there'll be a hedge fund guy who figures that out and he makes a margin. It's called an arbitrage trade. It's the sort of thing that I was looking for when I was a banker for a little while.

19:47Now what does COMEX say about it? Well, they say delivery issues are theoretical, as in we haven't run out yet, so stop asking me uncomfortable questions. You're likely to make this happen. Now can you see the tail going back there? He's dreaming about silver.

20:06Now what I learned from my mentors, guys who worked on these metal exchanges and worked on Wall Street, worked for big hedge funds and investment banks, is that markets repeat. Not exactly, but the patterns really rhyme. And they've shown me this playbook before. I've got people who are old enough to remember the 1980s Silver Thursday, right?

20:27What happened back then? Well, the Hunt brothers had accumulated a massive position in silver. Silver was heading towards $50. And what did the exchange do? Well, they just changed the rules. They implemented something called the Silver Rule 7. It limited trading to selling only. You could only sell, you could not buy. Imagine that. Imagine your brokerage says to you, "You can sell your stocks, but you can't buy any." Sounds mad, right? It's exactly what Robinhood did with GameStop, by the way.

20:58What's the result? Well, silver crashed from $50 to $10, 80% decline. So these guys might get desperate, and that is the risk that we need to be aware of. The Hunt brothers got wiped out. The exchanges, they said we're maintaining an orderly market. So markets are ordered to go in one direction because the house will always win, right? Remember that.

21:24Then we had the 2011 margin massacre again. Silver was ripping higher after the financial crisis. People somehow lost faith in banks. I have no idea why. Of course you want to give your money to bankers. Surely they got your best interest at heart. They're not thinking about their own bonuses. No, never. And silver again hits $49, almost to Hunt brother highs. And what happens? CME raised their margin requirements 5 times in 2 weeks.

21:54Margins, leverage traders had to sell. It created this massive cascade of selling and they crashed silver by almost 50%. So what's the pattern? Silver threatens to break out, the exchange changes rules, prices crash. We saw this in December. We've just seen this again.

22:11So be aware of this. The same playbook, the same players, the same outcome. And if you look at the guys behind Robinhood, by the way, you'll find that they will also lead back to Chicago. But I leave that digging up to you. Take a screenshot of this. This is the pattern. Happens again and again and again. Same players, same outcomes.

22:29Now, if I were a cynic, I would say, isn't it interesting that the exchanges only manage risk when prices go up? You never see them raising margins when silver is crashing, which is obviously clearly a funny coincidence. Nothing to do with anybody manipulating markets. But it was different in 1980 and 2011. That's also important to understand. In 1980, COMEX had plenty of silver. In 2011, the vaults were full. In 2026, the vaults are nearly empty. They can change the rules, yes, they can raise margins, yes, but they can't create silver that doesn't exist.

23:06Now, before we get into how we position ourselves on this, which is of course the most important part of this video, I want to share something with you. If you're watching this and thinking, I need to understand these patterns better, well, I put together a free mini masterclass. It was 2 hours and then I got it down to 45 and I got it down to 17 minutes because I appreciate many people have TikTok damaged brains. It'll teach you essentially how we learn the Wall Street rules of buying and selling. It teaches you the exact methods institutional investors use, which is what I've learned during my time as a banker and then since then from my Wall Street mentors. It's simply a free video. You can watch it on felix.org/getfree.

23:47Check it out. Just watch that, write down the link or click on it down below in the description. And I'll do one better for you as well. I also have a daily free metals newsletter where we give you an opinionated version of what actually happens in the day. We give you all the data, what's important. There's a daily version, there's a weekly version. It's completely free of charge. Tens of thousands of people are on this. You can just select daily, weekly, or both. Pop in your email, you're done. It'll land in your inbox. You don't like it, you unsubscribe from it. And I think that'll help you understand better what's happening over the coming days and weeks because we're obviously in, well, some would say uncharted territory. I would say we're simply in the end phase of a pattern that we've seen many, many times.

24:31But we now need to understand the 3rd and final step of the silver vault framework, the Winston framework. How do we actually position ourselves? And this isn't financial advice. I'm not registered as anything other than as Winston's keeper. You do actually have to register dogs here which I think is a bit racist quite frankly. So not financial advice, draw your own conclusions, but I can tell you how I think about this and how the institutional guys approach this from, in my humble opinion.

25:03First we need to understand the fundamental backdrop. Silver has been in a supply deficit for 5 years. We're talking about 200 million ounces per year as a deficit. So since 2021, we've got about a billion ounces of silver that we are short of. Why? Well, first of all, we have demand. We have things like a solar panel. The solar panel needs about 20 grams per panel. Solar installation is growing exponentially because you all want to protect the whales or the dolphins or something, which I commend you for.

26:01EVs, they need 5 to 10 times more silver than a gas car. You have AI, you literally can't spell it without silver. There is silver in electronics and semiconductors. And the total industrial demand is about 700 million ounces per year and growing rapidly.

26:36So why don't people just mine more silver? We invest in silver miners because a lot of the time they make us a lot of money and I showed you guys before if you want a little bit of a watchlist there. Again, I'm not telling you to buy these, but if you just want to get a bit of a starting place in Trade Vision here, I have a watchlist of silver miners. Take a screenshot, some of the bigger ETFs and so on. And we can see what happened yesterday, but it might well be red by the time you're watching this. This is a fairly volatile market.

27:05But if you look at why they're not mining more quickly, this here is the answer to that. 80% of silver is a byproduct of mining copper, lead, zinc. Silver mines themselves are about a quarter of the market. So you can't just say, let's dig more silver up. Even if price doubles, it takes years to bring new mines online. And the lead and the zinc mines, where all the silver comes from, are not going to dig up more unless there is significantly more lead and zinc supply demand.

27:38Right, now we've discussed a lot. We've covered a lot. Proud of you for still bearing with me to really understand what's going on here. But we need to really understand the silver versus the paper stuff. The physical versus the silver ETFs like SLV, futures contracts, mining stocks, that's paper silver. Advantages are what? Well, they're very liquid, easy to trade. There's no storage cost, no insurance cost. No one's going to break into your home and steal it, which is why I always advocate private storage units. What are the disadvantages? Well, there's a counterparty risk. You might not get silver. You might get cash. And they may not track physical prices if this mad world where paper and physical is priced differently, which is where we are right now.

28:25Now, physical, coins, bars, and if you own those, there's no counterparty risk. It's yours, you own it. It's just it, but you got to store it. There's security issues. You will pay a premium when you buy it. And they're a lot less liquid. It's harder to sell than an ETF where you press a button.

28:44Now, the official position of the financial industry is that paper and physical silver are equivalent, which is true until it isn't. When Shanghai pays a $40 premium for physical silver over paper, well, it's not really equivalent anymore, is it? And I can't get my hands on any for 6 months, then there is an issue there.

29:09Now, I'm not saying, let me be very clear on this, that silver's going to go up tomorrow. They could change the rules. They've done it before. There could be short-term crashes. We've seen it just right, raise margins again. They could make buying impossible, all that stuff. So the risk is that the short-term guys are going to get burnt again. We've seen this many, many, many times. The opportunity, which in my mind is based on the fact that the vaults are nearly empty, the supply deficit isn't going to go away and industrial demand is growing, it isn't shrinking. So even if they paper over this next month or two, the fundamental problem remains.

29:48So there are analysts out there who have $300 price targets on silver and others say it's $50 as a new floor and so on. And I'm not going to give you a specific number. I think that's just silly because nobody knows. It's just a number that you put out there because you want to get some clicks. But the supply and demand fundamentals are the tightest they've been in many, many decades, if not ever.

30:12So what do you actually do with this information? Well, here's my thinking. Step one is you watch for February 27th. Notice day. That's 27th of Feb, the first notice day for the March contracts. Watch how many contracts stand for delivery. I'll keep you up to date on that. Subscribe to the newsletter. We'll definitely keep you up to date on that.

30:54If this is, give you some numbers, if this is above, so greater than say 75 million ounces, things could get very interesting, very dicey. Be very interesting to see how COMEX reacts because they're going to be out of silver in a heartbeat. And then we can track the registered inventory at the COMEX daily, weekly, whatever. And again, if that drops below, if it's less than say 80 million ounces, well, you get to first notice day and you see your maths becomes one where they have a problem.

31:31And the 3rd thing is, and this is what nobody really seems to understand yet, is watch the lease rate. We're at 8%. If that goes up more, it's like maybe you've seen this on stocks that get shorted. There's the same thing. There is a borrow fee you got to pay. When that goes through the roof, you know you're at a point of no return. It's the market telling you physical silver is scarce. So our framework, verify what's actually available. Not the headline numbers, the real stuff that's available. You understand that now.

32:02Understand the pressure building, as in how many of those contracts are being converted into physical silver. And then you got to position yourself according to your timeline and your risk tolerance. Maybe just a few words on that. Silver is a highly speculative thing, right? It shouldn't be, but it is because the powers that be have been speculating with this very profitably for many, many decades.

32:24I would argue that gold is the less speculative long-term hold. Gold will probably do that. That's just my view of it, right? That's gold. Now, can we get a silver colour? Just assume blue is silver. Silver is going to do that, right? It wasn't blue, was it? No. But you get the idea.

32:45So you got to ask yourself, can you live with that? Is your stomach lining made for it? Right? If the last crash made you feel really uncomfortable and you didn't sleep well and you went home and you drank a bottle of vodka, you have too much silver. Very simple. And that's when I talk about risk tolerance.

33:04The biggest thing with risk tolerance is how much of a percentage of your portfolio is it? Say you have 10% of your money in silver, right? 10% in silver. What if the market crashes, say minus 30%? How much of your money have you lost? Tell you, 3%. Which might be manageable. It might be okay for you, right?

33:33You can obviously then make that calculation and say, well, what if I had 20% of my money in silver? If it's 20%, market goes down 30%, you just got to multiply the 2 figures. Well, now you've lost 6% of your money. And that's starting to feel pretty freaking uncomfortable. So you got to understand where you are at in terms of position sizing.

33:56Can you handle the downside? And all the smartest traders in the world I know, they only are concerned about this number. How much of my money is at risk? Right? That's really the important part here.

34:07So in short, the exchanges will tell you this is a normal market, all normal market activity. And yes, they're technically right because when the house always wins, rigging the game is possibly normal. Of course, I would not accuse COMEX of rigging the market. They are upstanding members of the financial industry, which isn't that high a standard really, is it? And I would know that as I should be one of them.

34:31So if you want to learn how to read these markets like the institutional buggers, if you want to understand the same tactics that Wall Street uses, the patterns that they use, watch the free masterclass that is down below at felixfriends.org/getfree and stay up to date with the story. Join the free newsletter. It's also down below there just to say thank you to you guys and give you guys some information that most people have access to.

35:00And I'll be here and Winston and I will break down the next bit of madness that's going to occur in the silver market. And I can assure you it's going to stay entertaining. All the best.

35:13One guy on Wall Street now controls the 2 most powerful people in financial markets. Not the president, not Congress, one billionaire investor you've probably never heard