Silver Is On A Tear Today

Could be Force Majeure silver coming.
Force majeure in the silver market refers to contractual clauses invoked when uncontrollable events—such as mining strikes, natural disasters, or severe supply chain disruptions—prevent the delivery of physical silver
. Recent concerns highlight potential shortages, including low COMEX inventory and high demand, which could lead to cash settlements instead of physical delivery.
Key Aspects of Silver Force Majeure

• Definition: A legal clause relieving parties from fulfilling contracts due to unforeseen, uncontrollable events (e.g., pandemic, war, labor strikes).
• Supply Chain Disruptions: Events like the strike at the Peñasquito mine in Mexico or disruptions in the Middle East can trigger such declarations, affecting global supply
  .
• Market Impact: If a major exchange (like COMEX) or supplier declares force majeure, it can lead to massive price volatility and force cash settlements for derivative positions (futures, ETFs) if they cannot supply physical metal.
• Current Risks: A growing 176-million-ounce deficit, coupled with central bank hoarding and increased industrial demand, has increased the risk of delivery failures.
• Distinction from Default: While some fear a "force majeure default," others argue that a lack of inventory alone does not constitute force majeure unless caused by an "Act of God" or similar external event; otherwise, it is a contractual default.

Examples include CME Group declaring force majeure due to "operational limitations" on a NYC gold depository in 2012.

 

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And it just dipped under $88. Still up for thaw day.

 

Poker hand boys?

 

Just bought another roll of silver half dollars. These are collectibles to me, so I'm not too worried about the price (actually I think silver has been undervalued for the past few decades). I guess I'm in the minority buying 90 percent silver right now - my understanding is that retail is largely offloading.

 

If what you buy means more to you than the money you spent to get it it doesn't matter what you paid.

 

I have felt the silver price could seriously run with the way the national debt and money printing grow exponentially. I think the silver bugs were right - not the extreme types calling for $1,000+ silver, but there were respected doubters that silver could go to $100+ this cycle. Then again, I wouldn't be shocked if silver hits $1,000+ - nothing shocks me anymore. I was buying when silver was below $20, so I am DCAing a bit. If silver were to fall to $50 or below, I'd probably back up the truck so to speak through an ETF. So one way or another I'd eventually make my money here.

 

But what you like. If silver goes up, good for you. If silver drops, let it drop until it levels off. Then buy more, all you can. The more you buy, the more you can average your purchase price down overall.
IE. If you buy a silver dime for $8 and the price drops do you can buy another dime at $6, you paid $7 for each dime. If you can buy 3 dimes at $6 then you paid $6.50 each. Buy 9 at $6 and you cost is lowered to $6.20 each.

 

And it’s back up thirty cents in trading so far. Up, down, back up.

 

According to Numista, a Mercury dime has a melt value of $6.40 right now. I think that's cheap. Yeah, I know, I remember when I was buying them for $2.00-2.25, but even then I knew it was an insane buy. I think one of the reasons why 90% silver is selling for melt or slightly below it (the half dollars I just bought were at or slightly below) is because retail holds this and retail is selling. So coin shops are flooded with this silver and have no way to flip it for profits, leading to cash problems. Sooner or later the refineries will get caught up. This leads me to believe, once they are caught up, a lot of the 90% will get melted if retail does not buy, which is not a bad thing as it makes the coins more scarce. I for one was never opposed to vintage sterling silver getting melted, as I felt it would give the collections that are preserved more value.

 

My understanding is that virtually ALL contracts are settled in cash, not the actual underlying commodity (just like in "Trading Places" ).

Nobody delivers silver...or oil....or frozen concentrated orange juice.

 

No, just absconded roll of quarters 30% below melt.

 

That's how it has worked traditionally. The buyers just roll it over in paper to another contract due at a later date.
Over the past year and a half to now, demand has been for physical delivery like never seen before. The places that are demanding physical delivery need physical silver, not settled contracts for cash. That just means they have to go buy it from other sources that may not be as reliable over time. The Comex has been reliable but the demand is draining the supply. It can't go on like this and something will have to give. What comes of it I have no idea. If you do a search it is estimated there are 350 paper contracts sold for every 1 actual oz of silver. That works until it doesn't.

"COMEX registered silver—the inventory available for immediate delivery against futures contracts—is currently around 81.7 to 88.78 million ounces. As of early March 2026, this represents a tight supply, with over 59% of that registered inventory **demanded for delivery in a single month**.
Key COMEX Silver Data (March 2026):

• Registered Silver (Available): ~81.7 million ounces.
• Total Inventory (Registered + Eligible): ~349 million ounces (Total much of this amount is just stored here by investors and not available for sale. This also assumes it even exists in physical form).
• Open Interest: ~567.7 million ounces.
• Delivery Demand: March First Notice Day showed 10,526 contracts (52.63 million ounces) standing for delivery. "

Note, we have not seen the supply rebound since the demand increased last year.

 

Agreed. Since I started investing in silver almost 15 years ago, I have heard about a potential "force majeure." I think this is one of those terms that sounds scary that is thrown around by silver dealers. The markets are largely electronic or "paper" - it just is what it is. Sooner or later the markets have to account for the underlying metal, but if there is too much of a difference this will eventually be arbitraged or closed in by the paper traders - even if this means increased volatility here and there. I also think the silver bugs underestimate just how much silver is out there. Now is it possible there will be an extreme shortage where everyone is just loading up on silver and it's nowhere to be found? Well, considering I just bought junk silver for melt on eBay, it doesn't seem we are anywhere near that. But what do I know? I'm just a random poster.

 

To put the number of registered in perspective, 24 US refiners in 2024 combined to refine from primary and secondary sources, 77 million ounces of silver domestically over the entire year of 2024. So if a year's worth of domestic production all went to the Comex it wouldn't cover a couple months of deliveries.

Refiners no doubt working at max capacity right now so maybe 2026 will be a new record year with all that has been sent into them. There are some that feel above ground silver supply is so abundant that there is no fear of it ever being scarce. But anybody can throw numbers around and write articles now, including AI, so who knows what to believe.

 

I just think the market is a bit more efficient than many assume. Here's another way to look at it - amateur hour here, so economists and logistics experts can chime in. You have people buying silver coins for well below melt, and even some shops are selling it below melt. You can argue this is due to a lack of refining capacity, but my thinking is if industry so desperately needs this silver, Wall Street would almost overnight create new Apmexes or facilities to buy up all of this silver below melt and refine it almost right away with new equipment. I mean, these people are supposedly willing to buy up American homes to turn Americans into renters by playing the long game, so something similar could be done with all of this below melt silver. One way or another this would reach an equilibrium.

I don't want to sound negative here, because the market is looking bullish overall. With AI and the demands of industry, the days of cheap silver seem over. And actually, I wouldn't mind silver getting remonetized so we could eventually buy mansions with our Franklins. I'm just skeptical of shortage talk after hearing it for so many years. Perhaps there is a shortage at this point, but maybe it's exaggerated a bit - or can get fixed with the current pace of melting. I think the main contention could simply be reduced to "where is the silver price headed?" based on assumptions about where the equilibrium will be reached with all of the data and moving parts out there. This is a dynamic system where we are almost all clueless. Anyway, I am rambling right now so apologies ahead of time for taking anyone's time.

 

Reminds me of the story of the guy who bought pork bellies on margin and had to end up accepting the order...

 

In theory yes. I would just say buying homes is easy. You just sign papers. Buying land and building refineries takes time and is more difficult but good point. Maybe we will start to see more refineries come online. They seem to be the bottle neck.

 

If you don't mind me asking, where are you?