🔥🔥LBMA liquid free float vault stock is a shallow pool again and we are on the cusp of the next phase of the physical silver market squeeze.🔥🔥
Public data indicated that the LBMA's silver free float vault stock at the end of March was up to a healthy ~7K metric tons (~228M ozt). This was about 195t less than I had forecast. Because my forecast is derived from import/export factors applied to COMEX withdrawals, the forecast overshoot tells us UK exports (LBMA draining) is running higher than "normal". I'll explain.
In January, the UK (LBMA) exported almost as much silver as it imported. The net silver import for the UK in January was only ~2% of the total import for the month (ie. 98% of the import was matched by an export). This was far outside the three month average covering October through December where the net silver import was ~80% (ie. ~20% of the import was matched by an export). In January, UK export data also indicated that silver was exported to Hong Kong (China) for the first time in at least a year.
Because my forecast for LBMA free float is calculated using factors on imports/exports applied to COMEX withdrawals, I noted that my forecast would be on the high side if UK exports were higher like they were in January than if they were closer to the 3 month average from October through December. Because my forecast did end up on the high side, I think there is a very good chance that UK exports have remained high (and likely because the LBMA has been delivering silver to China and India).
This is significant because it indicates that the drain rate on LBMA silver increased significantly in January and appears to have continued through today. We'll have confirmation in the coming weeks and months when we finally get UK export data for February and March (export data is released months after the fact).
As imports and exports are essentially netting out, the gains for LBMA free float vault stock can only be attributed to one source - cannabalizing LBMA vaulted ETF stock. To this end, SLV has been the main source for LBMA liquidity as it gave up 625 of the 800 total metric tons (78%) that were shed by London based ETFs in March.
For about a week now, I have been commenting that SLV appears to have reached the bottom of it's vault stock draining. Since March 19, when SLV's London vault stock dips below 402M ozt, it rebounds up again. For context, the last time SLV's London vault stock was around 400M ozt was late November when the spot price for silver was around $56/ozt. The ratio of SLV's London vault stock to the spot price is absurdly low right now. I expect SLV will begin adding London vault stock again soon and that is going to put pressure on the LBMA liquid free float vault stock.
With all that said, Thursday provided some strong clues that the LBMA's current liquid free float vault stock is now a shallow pool (I guess exports to China/India have been strong). On Thursday, JPM executed their monthly "3M ozt NYC drain, LBMA gain" swap (see reply below for details). SLV added 3.4M ozt to their London vault stock. That same day, the silver 1mo lease rate rose sharply. The 1mo lease rate is an indirect measure of liquid free float tightness in the LBMA silver market.
It would seem that SLV adding silver to it's London vault is already indicating that the LBMA supply of silver is tight. As SLV continues to add vault stock (as the silver price rises), it's going to continue pressuring LBMA vault stock (and 1mo lease rates).
When you consider this situation, the impetus for the opening of the COMEX faucet this week becomes clear. COMEX daily withdrawals since Apr 10 have averaged ~2M ozt.
For context, COMEX withdrawals (and therefore exports to London) had been on a decline with a record *weekly* low on Apr 3 (400K ozt) and not much better the week ending Apr 10 (1M ozt). I say record low - I'm talking about for 2026 where *daily* withdrawals have averaged 1.5M ozt (March), 2.5M ozt (February) and 2.3M ozt (January).
LBMA liquid free float stress pressures the COMEX to provide support. The COMEX is responding so far and the run rate for COMEX (ie. the estimated time that COMEX vault stock will last considering a given withdrawal rate) using the average withdrawal rate of the last 5 working days is shrinking fast. At the current 5 day withdrawal average, the COMEX has less than 4 months of run rate left. If the 5 day withdrawal average rises to the February daily average, the run rate shrinks to just 2.5 months.
For context, on Thursday, April COMEX withdrawals exceeded Apr26 contract delivery requests. The only other time this has happened in the last two years was this past February. As little silver has moved out of the COMEX Registered vaults lately, this looks like the bullion banks sending silver to London to support the LBMA.
Silversqueeze!
P.S. This really should have been a premium post in a subscription service.