Recently, I’ve been watching the silver inventory data at the Shanghai Futures Exchange and have noticed some interesting signals. The inventory just dropped to 318.5 tons, a low not seen in over a decade. The last time it was this tight was at the end of 2015.

Even more astonishing is the extraction rate. In just a few months this year, over half of the silver inventory has evaporated. This isn’t a slow outflow; it’s a massive withdrawal in a short period. As the world’s largest consumer of precious metals, China’s physical demand really seems to have no upper limit.

Once the exchange inventory drops to this level, the risk of a short squeeze begins to emerge. With no real metal available for delivery, prices are naturally pushed higher. Shanghai now feels like a silver battle is underway. China is stockpiling silver at any cost. Will this trend spread to COMEX and London markets? It seems that the tight silver inventory situation may just be getting started.