The silver price is showing a deceptive calm on the surface, but underlying data reveals a growing imbalance between paper claims and physical supply that could trigger volatility. According to analyst Sir. Silver Quack, open interest is declining even as prices rise—a divergence that suggests the rally is not driven by fresh demand but by forced short covering and position adjustments.
The numbers are stark: approximately 522 million ounces of paper contracts exist on COMEX, compared to only 75.7 million ounces of registered silver available for delivery. This 6.9:1 ratio creates a fragile setup where a wave of delivery demands could disrupt the market. While the system can absorb some pressure, a concentrated move by large holders could accelerate price swings.
On the chart, silver rallied from $66 to nearly $96 earlier this year before collapsing back into the low $60s. A recovery attempt toward $80 failed, and prices have since slipped to the $72–73 support zone. The SMA-100 at $76.54 remains a stubborn resistance level. However, two bullish divergence signals have emerged near current support, hinting that sellers may be exhausting their momentum. If buyers reclaim the $76–80 range, the uptrend could resume; a breakdown below $72 opens the door to a retest of $61.
The broader concern is that the silver market may shift from being driven by paper speculation to physical fundamentals, especially if industrial demand or investor interest in real metal increases. This scenario historically leads to sharp, dislocating moves.
