Key Takeaways:
COMEX silver inventories have fallen by half since October 2025, with delivery demands reaching 165 million oz. in Q1 2026 alone, exchange data show.
"The ability of Western futures exchanges to suppress silver prices through paper settlements is rapidly running out of fuel," Eric Sprott, founder of Sprott Asset Management, said.
COMEX deliveries totaled 203 million oz. in 2024 before ballooning to 474 million oz. in 2025. The first quarter of 2026 alone saw 165 million oz. delivered, with no sign of slowing. The Shanghai Futures Exchange, which requires physical metal for settlement, is quoting silver at $86/oz, an 11% premium to the COMEX and LBMA price of $77/oz. That spread reached as high as 45% during peak volatility.
The arbitrage will collapse if no new physical supply emerges, potentially triggering a short squeeze that could push silver past $150/oz, according to Sprott. Silver miners could see gains of 10X to 40X at that price, he said.
Why Supply Bailouts Have Dried Up
Industrial demand for silver has surged across AI data centers, EVs, solar panels, and smartphones, with humanoid robots the latest addition. Asian markets have maintained premium pricing regardless of COMEX or LBMA price drops, while export restrictions, high VAT of 13% or more, and logistics hurdles prevent bullion from flowing back to Western exchanges. Both the US and China have designated silver as a critical mineral, further limiting export possibilities. Large industrial users such as Samsung have begun making direct deals with silver mines at substantial premiums, bypassing third-party resellers and reducing available supply for COMEX.
Sprott's Silver ETFs Position for the Squeeze
Sprott Physical Silver Trust (NYSE: PSLV) has ramped its inventory to 216.93 million oz., adding 7 million oz. in January alone as part of a $2 billion at-the-market equity program. All proceeds are dedicated to buying London Good Delivery bars stored at the Royal Canadian Mint, with none lent out or returned to COMEX or SHFE pools. PSLV is the second-largest silver holding ETF behind SLV. Sprott Silver Miners and Physical Silver ETF (NASDAQ: SLVR) holds significant stakes in First Majestic Silver, Silvercorp Metals, and other miners, offering exposure to both physical metal and mining equities.
If Sprott's $150/oz target is reached, silver mining stocks held in SLVR could appreciate 10X to 40X, according to his estimates. Even half that gain would outperform most asset classes, given that analysts have published price targets ranging from $100 to $300/oz for silver this year.
This article is for informational purposes only and does not constitute investment advice.
