Contents
TL;DR: paper vs physical silver
What “paper silver” actually is
The ratio that matters
Registered vs eligible: reading COMEX inventory
Where the real metal sits: COMEX vs LBMA
Why the market can break
The early-warning signals
TL;DR: paper vs physical silver
“Paper silver” is a claim on metal: a futures contract, an option, an unallocated account, an ETF share. “Physical silver” is the bar itself. Most of the time the two trade interchangeably, which is why the paper market can be many times larger than the metal behind it. The system breaks when a meaningful slice of paper holders demand delivery and there isn't enough deliverable metal to serve them, a settlement stress that shows up as a violent price move long before any vault literally empties.
This note is the paper-vs-physical layer specifically: what the ratio is, how COMEX inventory buckets actually work, and why a stressed market gaps. For the full picture (the deficit math, COMEX vs LBMA inventories, and the gold/silver ratio), start with our pillar on the silver squeeze, explained.
