How Much Silver Is Liquid and Really Available To Market As A 'Free Float'

The Market Speaks Of Gross Shortage

Early this year, it was noted in this Substack that while 75% of London silver vault holdings are bars for Exchange Traded Funds (ETFs), of the remaining 25% (the ‘float’) vaulted in London only a small portion appeared to be actually available to market (the ‘free float’).

The basis for this statement was that while approximately 200 million (M) silver oz. of silver vault float (ex. ETFs) remained in London at the end of February 2025, the implied lease rate was surging to very high levels indicating an intensifying silver market shortage.

Only A Small Portion Of London’s Silver Vault Float Is Free Float Available to Market

Since late in the spring of 2025 two things can be noted regarding the latest London vault holdings of silver shown in Figure 1 below:

1. Almost all of the increase in London vault holdings of silver have been silver ETF holdings that are theoretically not available to market. (While Jeff Currie, Goldman Sachs’ Global Head of Commodities Research at that time, did tell us in November 2021 that silver ETFs purchased silver then immediately sold claims against their clients’ silver into the market suppressing silver market demand and silver prices, it is likely that this illegal practice has been curtailed given the widespread attention that it garnered in the silver investment community.)

2. The London vault silver float has been relatively constant at 140M oz. or 4,341 tonnes (see red lines in Figure 1) since late spring 2025 while now even the 1-year lease rate for silver has surged above 5% signifying an intense silver supply shortage in London. The constancy of the level of the vault silver float while silver prices and now even the the 1-year silver lease rate (Figure 2) has surged indicates that large part of this silver float is privately held and merely located in London vaults - there appears to be very little liquid silver in London available to market.

Figure 1 - London Vault Silver Holdings; source: LBMA, GoldChartsRUs.com

Figure 2 - London Implied Silver Lease Rate (1-Year Lease Term); source: Bloomberg

In 2021, the LBMA started publishing daily average London gross turnover data for gold and silver trading in a quarterly newsletter called the LBMA Precious Metals Market Report although these reports give data on daily gross turnover in some cases at a mere 15% relative to their monthly published ‘net settled’ data in comparison to that which they previously reported. It is difficult to know what to believe. Without an explanation from the LBMA, it smells a bit gamey.

Be that as it may, the LBMA’s Q1 2025 data indicate that ~ 600M oz. of silver were traded each day in London implying promissory note contract claims for between 1 billion (B) oz. and 2B oz. of silver in the London silver market. Assuming the data are correct.

If the 140M oz. London silver float is, as it appears, closely held and not available to market (i.e. a London free float near zero), there is a serious silver liquidity problem brewing in London.

To date, silver appears to have been imported into London to meet ETF demand. Where is the silver going to come from to meet the continued growing silver investment demand and billions of oz. of standing market claims in London that is the world’s largest physical gold and silver market?

So How Much Silver Is Available As a ‘Free Float’

The global silver supply deficit was initially estimated at 200M oz. for 2025. Then New York vault stocks of silver increased by 200M oz. early in 2025 and have now stabilized at higher levels. Given current circumstances, that silver is not going back to London.

Rising London silver lease rates accompanied by a very rapidly rising price for silver, largely static silver vault holdings in New York and a static London float are important signals. And if there is word of silver delivery default in the London market that signal will quickly lead to other demands for delivery against standing contracts unwinding the entire leveraged London silver market.

Also remember also that silver is a Giffen Good meaning that price rises initially draw added demand to the market before shortage is resolved.

In the face of all this, the market is telling us that there is very, very little liquid silver supply in the form of a free float - much of the global silver production is forward bought by industrial users and added investment demand is increasingly revealing to the world how tight this market is.

Given the tension visible in the silver market right now (prices and lease rates), silver bars of the correct form that are truly liquid and available in the London and New York markets for delivery may be measured in the 10s of millions and not in 100s of millions of oz.

Nobody truly knows the exact number but either way, market action says we are soon going to find out.

Best regards,

David Jensen