You might still be fooled by the story of the "industrial demand surge." This round of silver's疯狂 rally, to put it plainly, is a precise siege of funds in a low inventory environment— a textbook-level squeeze play.

From the supply side, there is no shortage of goods. The global silver production in 2025 is expected to be 31,800 tons. Even with the added demand from photovoltaics and new energy sources, it’s barely balanced. Where is the real problem? Deliverable spot inventories have already reached a critical point.

Data speaks: The London Delivery Warehouse has only 233 tons left, a ten-year low; a major futures exchange’s silver warehouse receipts have fallen below the warning line of 519 tons, plummeting over 80,000 kilograms in a week; overseas COMEX inventories have decreased by nearly 4 million ounces simultaneously. Combined, the three core markets have less than a thousand tons of deliverable spot— you read that right, in the thousand-ton range.

But that’s not the whole story. Meanwhile, futures short positions are accumulating逆势. Domestic silver futures holdings soared to 820,000 lots, with nearly 70 billion yuan of capital accumulated; overseas speculative net long positions surged by 12,000 lots in a week. On one side, nearly exhausted spot inventories; on the other, endless short positions— this is the opportunity for longs to hunt.

When longs start demanding physical delivery en masse, shorts immediately face the dilemma of having no goods to deliver. The spot leasing rate once soared to 35%, making it difficult to borrow high-priced goods for delivery. Contract liquidations have become inevitable. The market is forced to buy back short positions at higher prices, and the squeeze is about to trigger. This also explains why the Shanghai silver monthly increase reached 38.36%, leading the global markets.

Exchange position limits and margin adjustments? They can’t stop this trend. Restrictions on opening positions and margin calls only exacerbate liquidity shortages, allowing small funds to trigger massive volatility.

This is not just a commodity rally; it’s a precise hunt by funds exploiting inventory gaps. As long as deliverable inventories are not substantially replenished, the short squeeze will not stop. And once the last short is liquidated, this fund-driven feast will end abruptly amid mutual long liquidation.