🚨1-Year Silver Swap Rate at -2.841%
🚨1-Month Silver Lease Rate at to 1.11%
Â
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.
Â
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.
Â
The 1-year silver swap rate remains a massive -2.841% however, so a major structural shortage remains in the market.
Â
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.
Â
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).
Â
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).
Â
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.
Â
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.
