"For roughly a half century, the COMEX and LBMA have controlled the price of silver bullion through a paper derivatives tacit agreement - the exchange executes trades and settles transactions in accounts while the bulk of physical silver remains stationary and in storage."
Western bullion markets operate on a credit model in which customers hold paper claims on clearing banks, and most transactions settle through bookkeeping ledger entries. Shanghai Futures Exchange and similar systems use an ownership model requiring sellers to deposit physical gold or silver, with most trades resulting in physical delivery. Silver backwardation beginning in Q4 2025 has increased, with Chinese physical spot trades settling at a 12–13% premium over futures quotes. The premium trend has spread globally and is described as threatening COMEX stability. ETFs that hold physical silver or gold and silver, with redemption into physical bullion, are presented as potential beneficiaries of a price spike.
#commodity-futures #bullion-market-structure #physical-delivery-vs-paper-settlement #silver-backwardation #comex-and-lbma
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