David reviews the state of physical silver availability by examining withdrawals and inventories across China, the Shanghai Gold Exchange, COMEX, and the LBMA. He notes that Shanghai silver withdrawals in 2025 were near record levels and that early 2026 activity suggests a similar pace, indicating sustained physical demand flowing into China.

COMEX inventories have experienced sharp swings. Stocks rose significantly in 2025 due to tariff-related arbitrage that pulled metal from London, then declined rapidly as silver was shipped back out. Although recent draw downs exceeded 100 million ounces, total inventories remain above early-2025 levels. However, the critical issue is not total ounces but the relatively small registered category that is actually available for delivery, which heightens delivery risk when demand spikes.

In London, headline LBMA silver holdings appear large, but Morgan emphasizes that the estimated free float is far smaller, roughly a fraction of reported totals. This silver often supports multiple paper claims, reducing transparency and true availability. When combined with modest reported stocks in Chinese exchanges, Morgan estimates that readily accessible, unencumbered silver across major exchanges is limited relative to annual global physical demand of roughly 200 million ounces.

He concludes that while above ground silver stocks are often cited in the billions of ounces, only a small portion is commercially available at any given time, and much of it is steadily moving east. With silver now designated a critical mineral and governments potentially rebuilding strategic stockpiles, physical demand is likely to remain strong. Morgan expects ongoing tension between physical market realities and paper trading mechanisms, with consolidation in the near term, but ultimately argues that physical silver availability will assert itself over paper pricing structures.

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