Silver inventories on COMEX drop below 80 million ounces. What does it mean for silver prices?

Silver inventories on COMEX have dropped below 80 million ounces, a level that is likely to heighten the risk of a physical delivery squeeze.

COMEX registered silver inventories stood at 79,968,749.314 ounces as of May 12-end, while eligible silver inventory was recorded at 233,206,562.518 ounces. The total combined inventory stood at 313,175,311.832 ounces, data showed.

This marks a sharp 41% decline from the 532 million ounces recorded in October 2025.

Analysts believe the fall in COMEX registered silver inventories below the 80-million-ounce mark represents a critical turning point for the global silver market.

“Since the ‘Silver Squeeze’ began in 2021, these stocks — representing the actual metal available for delivery to buyers — have declined by more than 45%. This shift has transformed silver from a surplus commodity into one characterised by a chronic shortage,” said Vandana Bharti, Research Head – Commodity, at SMC Global Securities.

COMEX silver inventory refers to the physical silver stored in vaults approved by the CME Group. This metal serves as a backing for silver futures contracts traded on COMEX.

COMEX silver inventories are broadly classified into two categories:

1. Registered Silver

Registered silver carries a warrant and is readily available for delivery against futures contracts. This is the portion of inventory that can immediately satisfy physical delivery demand in the market.

2. Eligible Silver

Eligible silver meets COMEX specifications, including a minimum purity of .999 fineness and bar weights ranging between 1,000 and 1,100 troy ounces. However, it is not currently warranted for delivery against futures contracts.

If eligible silver is converted into registered inventory, the amount of deliverable supply increases. Conversely, when registered silver is shifted into the eligible category, the immediately available supply for delivery declines.

At present, market concerns are centred around the sharp decline in registered silver inventories, which has tightened the pool of metal readily available for delivery and heightened fears of a potential physical supply squeeze.

‘Stress Zone’ and Liquidity Squeeze Risks

The current coverage ratio — physical silver versus paper contracts — has tightened to 15.4%. In trading parlance, any level below 15% is considered a “stress zone”.

“With nearly 6.5 paper claims for every ounce of physical silver, even a modest increase in investors seeking physical delivery could trigger a liquidity squeeze. If shorts — sellers without physical holdings — are forced to rapidly cover positions to meet obligations, it can lead to parabolic price spikes,” Bharti explained.

The five-year average of silver inventories currently stands at around 100 million ounces. Historically, whenever inventories fall significantly below this level, the market tends to establish a higher support base. Even during broader economic sell-offs, silver prices have shown resilience under such conditions.

“This is because industrial buyers from sectors such as solar energy and electric vehicles have low inventory as a signal to hoard supply at any cost. Furthermore, as silver becomes scarcer than gold, the Gold-Silver Ratio typically contracts, meaning silver often outperforms gold in percentage terms during bullish cycles,” said Bharti.

Kaveri More, Commodity Analyst – Technical Research at Choice Broking, also believes that the decline in COMEX silver inventories below 80 million ounces is a significant stress indicator that raises the risk of a physical delivery squeeze — a scenario where holders of paper contracts increasingly demand physical metal that may not be readily available.

“The fall in silver inventories is being viewed as a strong bullish signal for silver prices, as tightening exchange supplies continue to fuel concerns of a physical shortage in the market. Historically, similar inventory drawdowns have triggered sharp rallies, with silver prices previously surging from $72 to $89 per ounce in May 2026. The broader upside trajectory now points towards extended targets of $98–$110,” More said.

While macroeconomic headwinds such as elevated interest rates and a firm US dollar could still create intermittent pressure, the tightening supply backdrop leaves silver vulnerable to sudden upside spikes if delivery demand intensifies again, similar to the move witnessed in January 2026, she added.

Overall, More believes the structural bullish outlook for silver remains intact.

Silver Price Outlook

In the current environment, if silver delivery requests exceed 10% of the registered inventory in a single month, COMEX silver prices could move towards the $95–$100 per ounce range, according to Bharti.

For the Indian market, the ongoing physical tightness and robust global demand could push MCX silver prices towards ₹3.20 lakh per kg on the higher side, she noted.

“Ultimately, the shrinking 80-million-ounce buffer leaves the exchange highly sensitive to delivery shocks. With industrial demand remaining strong, the structural deficit in silver is no longer merely theoretical — it is a reality reflected in depleted vault inventories,” Bharti said.

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.