Back to the Futures! What's Going On With Silver at the COMEX? -

Something unusual happened at the COMEX last week. A large amount of silver left the CME vaults.
In this episode of the Money Metals Midweek Memo, host Mike Maharrey breaks down the numbers. He explains exactly what happened and the ramifications, highlighting the silver market's tight supply. 
This week, Mike also engaged in some myth-busting, explaining why higher interest rates aren't necessarily bearish for gold and silver.
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Mike opens the show with a trip down memory lane.
<blockquote>
"It was December 1930, early in the Great Depression. The Bank of the United States in New York was in deep trouble. Despite implications you might draw from the name, the Bank of the United States was a private institution serving a large number of immigrant families and small businesses. 
"As confidence in the institution crumbled and negotiations for a rescue merger failed, depositors rushed to withdraw their savings. On December 11, state banking authorities closed the bank. With more than 400,000 depositors, it was the largest U.S. bank failure up to that point measured by deposits. 
"As Time reported, the run followed weeks of quiet withdrawals, months of rumors, and failed merger efforts."
</blockquote>
Mike notes that panics are a feature in a fractional reserve banking system because everybody knows all of the money they depositied isn't there. Banks are only required to hold a portion of customer deposits as a reserve. The rest can be loaned out.
<blockquote>
"We can debate the pros and cons of such a system, but regardless of your position, you have to admit that it comes with inherent risks."
</blockquote>
Then Mike drops the bombshell.
<blockquote>
"Did you know we have basically the same kind of system in the silver futures market?"
</blockquote>
Mike explains that a futures contract promises the delivery of a certain amount of silver at a certain price at a certain time.
<blockquote>
"Most of the time, futures traders don’t take physical delivery of the metal. They just roll over the contract. As a result, there is a lot more paper than there is metal. Like our fractional reserve banking example, it’s all well and good until a lot of people suddenly want their metal."
</blockquote>
Mike notes that it's unclear exactly how many paper claims exist for every ounce of silver. We often see numbers as high as 250:1.
<blockquote>
"I wouldn’t be surprised if that’s true, but I’ve not been able to find verifiable data to back this up. What I did find is that mid-September, there was a little over five paper ounces of silver circulating for every ounce of registered physical silver in COMEX vaults. You can see the problem. If even half of those holding contracts demanded physical delivery, the COMEX would devolve into meltdown mode."
</blockquote>
Mike parses the data, revealing that over 7 million ounces of silver flowed out of the COMEX system between Sept. 10 and Sept. 17.
<blockquote>
"For perspective, the 7.2-million-ounce silver outflow equals about 223 tonnes, roughly 2.1 percent of the total COMEX inventory. This doesn’t indicate a looming silver shortage, but it is a notable metal outflow. It could become significant if physical deliveries become a trend."
</blockquote>
Mike proceeds to explain how the COMEX futures market operates, distinguising between registered silver, eligible silver, and total physical inventory, providing context for the silver drawdown. He also points out that the amount of silver leaving the COMEX last week was 25 percent higher than during the first week of the October silver squeeze, but about half the outflow of the peak week. 
<blockquote>
"However, it’s important to note that unlike during the October squeeze, registered inventories (silver available for delivery) increased last week. The squeeze drained nearly 14.2 million ounces from the registered category. In other words, last week’s movement signals strong physical withdrawals from COMEX vaults. However, it is not putting the same pressure on COMEX’s deliverable supply as we saw in October because plenty of registered metal remains.
"Looking at the big picture, last week’s drawdown does not indicate an imminent shortage of physical metal. It could be a one-off event. However, if this level of silver outflow becomes a trend, it could lead to another silver squeeze."
</blockquote>
Mike then puts the futures activity in context with supply and demand dynamics and the broader silver markets, noting that demand has outstripped supply for five straight years, with another market deficit forecast for 2026.
<blockquote>
"When the market runs a supply deficit, people who need metal have to source it from existing above-ground stocks. That generally requires higher prices to incentivize those who hold it to release it."
</blockquote>
Mike notes that the drawdown in above-ground silver supply of around 473 million ounces over the last 15 years.
<blockquote>
"All of this to say that the supply-demand dynamics are extremely bullish for silver, and the tightness in the physical market means there is always the underlying chance for another squeeze. It just takes the right confluence of dynamics to light the fuse."
</blockquote>
Mike also argues that silver is underpriced right now, creating a buying opportunity for investors. He highlights some Money Metals <a href="https://www.moneymetals.com/buy/specials">specials</a> for folks interested in taking advantage of "silver on sale."
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Mike wraps up the show with a little myth-busting. 
<blockquote>
"Conventional wisdom holds that because they are non-yielding assets, gold and silver become less attractive in a high-interest-rate environment and tend to face significant price headwinds. However, conventional wisdom isn’t always wise. A higher-rate environment can indeed be bearish for gold and silver, but historically, that hasn’t always been the case."
</blockquote>
Mike points out that there are many parallels between the 1970s and today, with stagflation, high inflation, and rising interest rates, and uses data from the era to show how interest rates and the gold price rose in tandem.
<blockquote>
"So, conventional wisdom clearly broke down in the 1970s. A high interest rate environment was not bearish for gold. Interest rates and gold rose in tandem.
"But why?
"Because you must account for real interest rates."
</blockquote>
Mike explains real rates and how to calculate them. He then uses data Adam Sharp parsed to show that real rates were low in the 70s due to persistently elevated inflation. 
So, yes, nominal rates are going up. But so is inflation. That means real rates aren't nearly as high as they seem if you're listening to talking heads on TV.
<blockquote>
"The lesson here is don’t sell your gold just because you think the Fed is going to raise rates. You might be sorry!"
</blockquote>
Mike closes the show with a call to action, urging listeners to call 800-800-1865 and talk with a Money Metals precious metals specialist today.
<h2>Articles Mentioned in the Show</h2>
<a href="https://www.moneymetals.com/news/2026/09/14/beyond-the-cpi-the-complete-inflation-story-august-2026-005198">Beyond the CPI: The Complete Inflation Story — August 2026</a>
<a href="https://www.cmegroup.com/solutions/clearing/operations-and-deliveries/nymex-delivery-notices.html?utm_source=chatgpt.com" target="_blank" rel="noopener">The CME’s delivery notice and warehouse report</a>
<img src="https://www.moneymetals.com/uploads/content/gold-price-vs-10-year-treasury-yield-1969-1980.png" width="700" height="409" class="mx-auto float-left p-3" alt="" />

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