*This follows my previous post regarding Iran risks & oil surge.*
*The market action will likely be intense this month, and I opted to do a follow-up post on another aspect of the markets I am monitoring - precious metals & paper-decoupling.*
*Some may have already read my liquidity analysis (summary - near record bank liquidity tightening, however signals show crisis is not imminent, although it would be wise to assume this adds some downward market pressure with the SRF so far steadying the ship).*
**COMEX**
Of crucial note, the COMEX Registered silver inventory is currently sitting at a precarious 88.19 million ounces, while the March 2026 Open Interest represents a claim of over 230 million ounces.
To call this a manageable delivery cycle would be a gambler's take; it is a 2.6:1 leverage ratio that is increasingly difficult to defend as we enter the March first delivery window.
Specifically, on First Notice Day (Feb 27), over 52 million ounces, or 60% of total deliverable stock, stood for immediate physical settlement. This is not a standard roll of paper contracts. There is realisation that little beats physical assets, or fully-backed physical assets.
The exchange’s primary defense mechanism is Rule 701. The law is clear in that it allows the CME Group to invoke emergency actions and force a cash settlement if physical delivery becomes an impossibility.
If Rule 701 is triggered, holders are settled at a paper price ~$90-95, while the physical metal in the real world is trading significantly above this. The decoupling is now a substantial risk to paper holders.
**The Physical Priority**
From a commodity perspective, the transition to fully-backed such as PSLV or true in-hand silver is the only logical hedge against this decoupling risk for paper silver holders.
Parallel to this, miners like First Majestic (AG) are adopting a Strategic Withholding model, keeping supply off the market until the paper-physical schism is resolved, as an alternative option.
**My Timing/Monitoring Datelist**
There are four critical dates where the COMEX issues will leach into the broader market:
* March 2 (Monday): First Delivery Day. Monitor for a failure-to-issue report.
* March 11: US CPI release. A hot inflation print coupled with vanishing silver vaults
* March 15: Tax and Margin Peak. Personally looking to harvest SQQQ gains for rotation into PSLV.
* March 27: Last Trade Day. If Open Interest still exceeds inventory, Rule 701 declaration may be certain.
LFG & GODSPEED
🍀
***Currently moved into PSLV, SQQQ, UAMY.***
**Feel free to leave a comment & say hi! :)**