A US regulator just said the silver market is structurally broken

On April 16, the Chairman of the US Commodity Futures Trading Commission publicly endorsed legislation that would break up the geographic concentration of silver depositories approved for COMEX deliveries.

This is the first time that an existing US precious metals regulator has formally aligned with the decentralization logic. The bill may or may not be passed. The support has already changed the landscape.

Silver is trading around $73 today, which is approximately 40% below the January 29 all-time high of $121.67 and approximately 11% below the April 17 intraday peak. The price of paper is misbehaving relative to the original photo, a pattern this research has tracked since The cycle of losses became impossible to ignore.

The mismatch between fundamentals and price has a structural explanation. And last week, for the first time in the history of the US silver market, the regulator responsible for overseeing that structure stood up at a Congressional hearing and said so.

There are 8 deep dives in this week’s Premium Silver Catalyst issue, and in this article, I’ll focus on one of them.

The Silver Act and what the CFTC Chairman said

On April 16, at an oversight hearing of the US House Agriculture Committee, CFTC Chairman Michael Selig publicly supported System integrity through Licensed Vault expansion and resiliency actuation (Silver Act), HR 8007Introduced by Representative Russ Fulcher (R-ID) and Representative Mark Harris (R-NC) on March 19, 2026.

Key provision of the Bill: Derivative clearing organizations will have to select at least Two approved depositories per US time zone (Eastern, Central, Mountain, Pacific) for precious metals futures delivery. Today, each of the 11 CME-approved silver depositories is located within approximately 150 miles of New York City.

The bill’s stated motivation, as expressed by Representative Fulcher, “cites the significant supply and price dislocations in global precious metals markets over the past year.” Industry support comes from Money Metals Depository (whose CEO Stephen Gleeson is also a contributor) rise of silver), an independent commercial vault operating out of the New York concentration area.

Why does support matter more than bills?

The political path is uncertain. HR 8007 is in committee and has no scheduled markup hearing. It cannot extend this session.

This is secondary to what actually happened on April 16.

The Trump-appointed CFTC Chairman (the current head of the agency that oversees US commodity futures markets) walked into a Congressional hearing and publicly aligned himself with the argument that the geographic concentration of approved silver depositories is a national security risk and a source of price dislocation. He pledged the CFTC’s support for the legislation. The regulator told Congress that market structure is a problem.

The CFTC already has discretionary authority over depository approval criteria. The Chairman’s support of the Silver Act means that even if the bill never reaches a floor vote, the CFTC’s stance on the concentration question has been publicly stated and is now on the record. This changes the regulatory background regardless of the legislative outcome.

The system that is being tried to be fixed

Geographic concentration has a cost. When 100% of the accepted silver vaulting is clustered in one geography, the physical metal has to travel: to New York for COMEX delivery, back to London for in-loco London settlement, back and forth between the two during tariff scares and ETP redemptions. That is not an abstraction. In January 2026, 33.45 metric tons removed from COMEX registered inventories in a single weekAbout a quarter of the registered pool at that time, as the tariff fear cycle forced metal to move from London to New York and back again.

In October 2025, the World Silver Survey 2026 documented a more severe episode. ETP allocations absorbed so much of London’s available free float that by the end of September “free silver” fell to 17% of total London inventories. One month lease rates increased from 1% to more than 30% in a matter of weeks. The survey described this as the result of institutional language in the market leading to “low degrees of freedom”, a system with very few buffers.

Both episodes go back to the same single-point-of-failure design: approved vaulting is so tightly concentrated that a surge in demand or a change in metal flow creates an acute, temporary shortage with no geographic safety valve.

If the Silver Act is enacted and implemented, the first-order impact is logical, by adding sanctioned vaulting in the Mountain and Pacific time zones, where most US silver is actually mined: shorter metal transport distances, fewer bottlenecks, less acute exposure to single-point-of-failure disposal events.

The second order effect matters more to the silver investor. When sanctioned vaulting is dispersed geographically, it is structurally difficult to maintain the paper-physical disconnect. Price discovery becomes more responsive to actual supply and demand. Lease rates are less likely to be volatile as in October, as the market operates with more degrees of freedom rather than less.

For an investor whose thesis depends on a six-year cycle of losses eventually being reflected in the price (the basis behind both). rise of silver and this newsletter), this is a structurally bullish development. The Silver Act doesn’t change silver tomorrow. This addresses one of the structural reasons why silver continues to misbehave relative to its documented fundamentals.

Catalyst #76: Market Transparency, Reducing the Effectiveness of Manipulation In rise of silver Describes exactly this dynamic. The CFTC Chairman’s April 16 testimony is, to my knowledge, the first example of a current US precious metals regulator validating that criticism on the record. Trigger #58: London Bullion Market Stress Indicator The London side describes the mechanism: The October 2025 lease rate increase was the catalyst that was being activated in real time.

Outlook

At around $73, silver is down about 40% from its all-time high on January 29 and about 11% below its intraday peak on April 17 when Iran briefly opened the Strait of Hormuz. The dollar’s strength, the collapse of armistice optimism and the Fed transition now actively underway have caused paper prices to be in a consolidation: The Senate Banking Committee voted 13-11 on April 29 to advance Warsh’s nomination, the full Senate vote is expected the week of May 11 and Powell’s term expires on May 15. A further decline or extended range trade is entirely possible from here.

The basics remain unchanged. Six years of losses are documented and growing. The World Silver Survey 2026 has confirmed this two weeks ago. Mine production remains stable despite a 42% annual average price decline in 2025. COMEX registered inventory covered only 13.4% of total open interest. And now the agency responsible for overseeing the futures market has publicly acknowledged that the structure of that market contributes to the problem.

full silver catalyst Issue #14 includes seven additional Deep Dives: Silver’s continued suppression in the Battle of Hormuz despite a textbook stagflation event; With the first information day on April 30, the COMEX May delivery cycle was up with 153 moz in paper open interest against 77.12 moz of registered metal; Solar demand reset and Fraunhofer ISE factor-of-10 silver reduction success with forward trajectory to 2030; Greater Bay Technology’s A-Sample solid-state battery rollout with Tesla Cybercab production, Joby’s Dubai eVTOL launch confirmed, and SpaceX’s 1,000th Starlink by 2026; India recorded a 25% trade increase on the Akshaya Tritiya festival as the price of silver tripled in Indian rupee terms; And Fresnillo’s Q1 confirms that Mexico’s production is in structural decline for the third consecutive year. The Catalyst dashboard, institutional price targets, and watchable events through July are all included. As this marketplace evolves, I encourage you to follow along to get rise of silver With 2 weeks free access to the Silver Catalyst newsletter.

Thank you.

silver engineer