The spotlight has once again turned to the COMEX silver market, where a sharp rise in physical delivery demand is fuelling concerns about the sustainability of current inventory levels.
On Wednesday, 275 March silver delivery notices were issued, representing approximately 1.375 million ounces of silver. However, what caught market participants off guard was a simultaneous increase in open interest. Rather than declining into the contract’s final trading phase, open interest in the March contract rose by 106 contracts, bringing the total to 296.
This late-stage increase is highly unusual and suggests a last-minute push for physical delivery. With the March contract now reaching its final trading day, expectations are that at least those 296 remaining contracts will stand for delivery—potentially removing an additional 1.5 million ounces or more from COMEX inventories.
Relentless Physical Demand
While the COMEX has not defaulted, the ongoing pattern is becoming increasingly difficult to ignore. Daily withdrawals of over one million ounces have continued at a steady pace, placing persistent strain on available stockpiles.
This trend reflects a broader shift in market dynamics, where participants appear more inclined to take physical possession rather than roll contracts forward. Such behaviour often signals tightening supply conditions beneath the surface of the paper market.
Is a Breaking Point Approaching?
The key question now is not whether pressure exists—but how long it can continue. Sustained outflows at this scale are unlikely to persist indefinitely without consequences.
Historically, periods of intense physical demand have preceded significant price dislocations, particularly when confidence in paper-backed supply begins to erode. Whether this moment represents a tipping point or simply another phase in the ongoing silver market cycle remains to be seen.
For now, one thing is clear: the steady drain on COMEX silver inventories is accelerating, and the market is watching closely for what comes next.
