COMEX Silver Inventory Crunch Intensifies. July Deliveries Devour 31% of Registered Stock

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Silver (XAG) is undergoing a severe correction phase since its peak in January 2026 (~$120/oz) down to current levels of $58 (Western spot) and $64.79 (Shanghai). This 52% retracement reflects a conflict between strong physical fundamentals (green industrial demand, COMEX inventories under pressure) and macroeconomic headwinds (hawkish Fed, strong dollar, Iran ceasefire). Data from July 13, 2026 shows a massive injection of 1.18 Moz into COMEX inventories, but July deliveries have already reached 29.74 Moz, or 31% of the registered inventory.

The gold/silver ratio at 69.3 indicates silver’s relative underperformance compared to gold, but remains historically high, suggesting catch-up potential if macro conditions ease. Our cross-analysis (Steelldy 2.4, Steelldy 3.8, Steelldy Behavioral Matrix 2.1) leads to the following conclusions: (a) The probability of a bullish squeeze on silver remains high in the medium term (55% over 6 months) due to persistent physical demand and the fragility of the registered/open interest ratio (18%). (b) The 95% VaR over 1 month is -12% (rate hike scenario), but the expected 6-month return is +18% (3-regime HMM model).

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The Shanghai silver premium remains high at +11.5%, indicating robust Asian physical demand despite a price correction. China’s silver concentrate imports through Shanghai and Shenzhen are increasing, according to our flow data. COMEX data shows a significant injection of 1.18 million ounces into registered stocks on July 13, the largest since March 2025, primarily from Brink’s and Asahi. This suggests new bars arriving or stocks being moved to approved vaults. The registered/open interest ratio is 18% (94.9 Moz out of ~520 Moz), below the 20% threshold, signaling potential tension and squeeze risk if delivery demand intensifies. July deliveries (29.74 Moz) already represent 31% of registered stocks, and if the pace continues, registered stocks could fall below the critical 80 Moz level by month-end. Our data reveals discreet accumulation of long silver futures positions by institutions, with the institutional buy/sell ratio rising from 1.2 to 1.8 in two weeks, indicating strong hands are growing interested. Conversely, CTAs remain net sellers, liquidating an estimated 2.4 million long contracts. This divergence between institutional and CTA positioning is typical of regime transition phases.

A quantitative model using TVP-VAR with 5 variables (silver, gold, DXY, US real rates, GPR index) identifies three regimes via a 3-state HMM. Regime 1 (“risk-on, weak dollar”) shows positive elasticity to gold (+0.85), negative to dollar (-0.42) and rates (-0.55). Regime 2 (“risk-off, strong dollar”) has reduced gold elasticity (+0.60) and higher sensitivity to dollar (-0.70) and rates (-0.80). Regime 3 (“geopolitical crisis”) features an independent risk premium and 0.90 gold-silver correlation. Current HMM probabilities are 58% regime 2, 32% regime 1, and 10% regime 3, with regime 2 persisting for 6-8 weeks. A Monte Carlo simulation of 100,000 six-month spot price trajectories using GARCH(1,1) with jumps and TVP-VAR parameters yields a median of $65, a P10 of $42 (recession+rate hike), and a P90 of $92 (squeeze+rate cut). Probability of exceeding $70 by December 2026 is 45%, and falling below $50 is 25%. Analysis of squeeze risk using a VPIN model (0.78, above the alert threshold of 0.75) and Kyle’s Lambda (0.0032, up 40% since April) indicates increasing illiquidity and confirms a risk of dislocation if physical delivery demand accelerates.

_{SILVER PHYSICAL STRESS INDEX (SPSI) = 74.5 (high stress zone, critical threshold 70).
The SPSI is a silver-specific index focused on the physical microstructure (COMEX inventories, deliveries, Shanghai premium, lease rates). It serves as an early warning indicator of squeezes and supply-demand imbalances.}

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