Silver prices stabilized near $64/oz on June 11 after a significant pullback from early-2026 levels above $90/oz. The precious metal has been caught in the broader correction affecting the precious metals complex, but the physical market tells a different story: COMEX registered inventories cover only 13.4% of open interest, the lowest coverage ratio in years.
The inventory tightness reflects a structural deficit that has persisted since 2020. COMEX silver inventories have declined over 70% from their 2020 peak, with the drawdown accelerating in 2025 and 2026 as physical delivery demand surged. Some analysts warn that the ratio of deliverable metal to paper claims has reached levels that historically precede delivery squeezes.
Global silver supply remains constrained by declining mine output from primary silver producers and reduced by-product production from base metal mines. The Silver Institute projects a sixth consecutive annual supply deficit in 2026, with demand exceeding supply by 140–160 million ounces. Industrial demand, which accounts for over 60% of total consumption, continues to grow driven by solar photovoltaic, electronics, and automotive applications.
The LBMA and COMEX lease rates for silver have spiked at various points in early 2026, reflecting the physical tightness. This creates a technical backdrop where a short squeeze could rapidly drive prices higher, even as macroeconomic headwinds weigh on speculative positioning.
Silver's physical tightness creates significant upside risk for buyers exposed through industrial applications. The 13.4% inventory-to-open-interest ratio is a red flag for potential delivery squeezes. Consider securing physical silver supply contracts rather than relying on paper hedges, and watch COMEX delivery data for early signs of squeeze dynamics.