SUPPLY SIDE OF THE SILVER EQUATION REMAINS RIPE FOR A STRONG BULL MARKET CONTINUATION

🚨1-Year Silver Swap Rate at -2.841%

🚨1-Month Silver Lease Rate at to 1.11%

After bottoming at 1.02% on Feb 10th, silver lease rates began creeping higher, peaking at 1.86% on the first trading day of March.

Chart courtesy Karel Mercx @KarelMercx

The 1-month lease rate has been declining the 5 trading days since, and is back down to 1.11% Tuesday.

The 1-year silver swap rate remains a massive -2.841% however, so a major structural shortage remains in the market.

For those new to the silver market:

The swap rate is the rate at which dealers lend or borrow silver via spot vs. forward transactions.

It’s closely tied to the silver lease rate (the cost to borrow silver, often low or negative in tight markets) & GOFO-like differentials (though GOFO is gold-specific).

When the market is in backwardation (near-term prices higher than future), the effective swap can be negative, indicating physical demand pressure where borrowing silver costs money (negative lease/swap).

This negative differential signals strong physical demand/distortion: physical silver is ~2.841%% more expensive than 1-year forward delivery, incentivizing rallies until supply normalizes.

Combine the strong 1-year silver swap rate with the historic pace of silver inventory drawdowns across the COMEX & SHFE (combined deliverable inventory for both exchanges is now just 88 million oz), and the supply side of the silver equation remains ripe for a strong continuation of the bull market.