# Why Silver Physical Indicators Matter Three independent indicators are simultaneously screaming shortage. When they all point the same direction, the signal is undeniable. ## The Three Indicators [[Silver Lease Rates]]: 8.5% (normal 0-1%). Signal: Banks have no silver to lend. [[Silver Swap Rates and Forward Curve]]: -7.9% (should be +3% to +5%). Signal: Cannot secure physical delivery at any rational price. [[Shanghai Silver Premium]]: 12% peak (normal 0%). Signal: Chinese buyers cannot get silver domestically. ## Why Synchronization Matters Each indicator alone would be concerning. All three together is definitive. Like medical diagnosis: High fever + chest pain + elevated cardiac markers = Heart attack, get to hospital. Silver market has all three symptoms: Can't borrow it (lease rates), can't secure future delivery (swap rates), can't get it geographically (Shanghai premium). ## The 100-Day Moving Average Test All three indicators currently above their 100-day moving averages. This means stress is not peaking, it's accelerating. The shortage is getting worse, not better. ## What This Pattern Predicts Historically, when physical indicators reach these extremes and continue rising, price spikes follow within 3-6 months. The indicators tell you: [[Silver Price Discovery - Paper vs Physical|Paper price at $72]] is disconnected from physical reality. Fair value based on physical stress: $100-130. Industrial users will eventually bid up [[COMEX Silver Futures]] to secure supply. The repricing will be violent, not gradual. ## The COMEX Problem COMEX futures (paper) drive price discovery with $50-100B daily volume. Physical spot market only $5-10B daily. The tail wags the dog. When industrial users discover they cannot take physical delivery at current prices, they stop trading paper and start buying physical at any price. That's when paper converges to physical violently. The indicators give you advance warning. By the time mainstream media reports "silver shortage," it's too late. ## Alert Levels Lease rates >10%: Physical crisis escalating. Swap rates <-10%: Delivery crisis imminent. Shanghai premium >15%: Panic buying in Asia. If all three hit these levels simultaneously, major physical delivery crisis imminent. Add to positions immediately regardless of paper price. February-March 2026 will be critical as [[China Silver Export Restrictions 2026|China export approvals]] lag and industrial buyers discover the new reality. Links: [[Silver MOC]] | [[My Silver Investment Thesis 2026]] | [[Silver Arbitrage Breakdown]] --- #silver #firstprinciple #systems