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
delivery.

It is the first time a sitting US precious-metals regulator has
formally aligned with the decentralization argument. The bill may
or may not pass. The endorsement has already changed the
landscape.

Silver is trading around $73 today, roughly 40% below the January 29
all-time high of $121.67 and about 11% below the April 17 intraday
peak. The paper price is misbehaving relative to the fundamental
picture, a pattern this research has tracked since the deficit cycle 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 in 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 a US House Agriculture Committee oversight
hearing, CFTC Chairman Michael Selig publicly endorsed the System Integrity through Licensed Vault Expansion and Resilience
Act (the SILVER Act), H.R. 8007, introduced March 19, 2026 by Rep. Russ Fulcher (R-ID) and Rep.
Mark Harris (R-NC).

The bill’s core provision: derivatives clearing organizations must
select at least two approved depositories per US time zone (Eastern, Central, Mountain, Pacific) for precious metals
futures delivery. Today, every one of the 11 CME-approved silver
depositories sits within roughly 150 miles of New York City.

The bill’s stated motivation, as articulated by Rep. Fulcher, cites
“significant supply and price dislocations across the global
precious metals markets over the past year.” The industry’s backing
comes from Money Metals Depository (whose CEO Stefan Gleason is also
a contributor to Silver Rising), an independent commercial vault operating outside the New York
concentration zone.

Why the Endorsement Matters More Than the Bill

The political path is uncertain. H.R. 8007 is in committee with no
scheduled markup hearing. It may not advance this session.

That is secondary to what actually happened on April 16.

A Trump-appointed CFTC Chairman (the sitting 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
CFTC support for the legislation. The regulator told Congress the
structure of the market is a problem.

The CFTC already has discretionary authority over depository
approval criteria. The Chairman’s endorsement 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. That changes the regulatory backdrop regardless
of legislative outcome.

The Mechanism This Is Trying to Fix

Geographic concentration has a cost. When 100% of approved silver
vaulting is clustered in one geography, the physical metal has to
travel: to New York for COMEX delivery, back to London for loco
London settlement, between the two during tariff scares and ETP
redemptions. That is not an abstraction. In January 2026, a single week saw 33.45 Moz drawn out of COMEX registered
inventories, roughly a quarter of the registered pool at the time, as the
tariff fear cycle forced metal from London to New York and back
again.

In October 2025, the World Silver Survey 2026 documented a more
serious episode. ETP allocations absorbed so much of London’s
available free float that “free silver” dropped to 17% of total
London inventories by end-September. One-month lease rates went from
1% to over 30% in a matter of weeks. The Survey called it a
consequence of the market having “fewer degrees of freedom,”
institutional language for a system with too little buffer.

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

If the SILVER Act is enacted and implemented, adding approved
vaulting in the Mountain and Pacific time zones where most US silver
is actually mined, the first-order effect is logistical: shorter
metal transport distances, fewer bottlenecks, less acute exposure to
single-point-of-failure settlement events.

The second-order effect is what matters more to a silver investor.
When approved vaulting is geographically dispersed, the
paper-physical disconnect is structurally harder to sustain. Price
discovery becomes more responsive to actual supply and demand.
Volatility in lease rates like October’s becomes less likely,
because the market operates with more degrees of freedom rather than
fewer.

For an investor whose thesis depends on the six-year deficit cycle
eventually showing up in price (the premise behind both Silver Rising and this newsletter), that is a structurally bullish
development. The SILVER Act does not move silver tomorrow. It
addresses one of the structural reasons silver keeps misbehaving
relative to its documented fundamentals.

Catalyst #76: Market Transparency Reducing Manipulation
Effectiveness in Silver Rising describes exactly this
dynamic. The CFTC Chairman’s April 16 testimony is, to my knowledge,
the first instance of a sitting US precious-metals regulator
validating that critique on the record. Catalyst #58: London Bullion Market Stress Indicators describes the mechanism on the London side: the October 2025
lease rate spike was that catalyst activating in real time.

The Outlook

Silver at around $73 is roughly 40% below its January 29 all-time
high and about 11% below the April 17 intraday peak reached when
Iran briefly opened the Strait of Hormuz. The paper price is in a
consolidation driven by dollar strength, the collapse of the
ceasefire optimism, and the Fed transition now actively underway:
the Senate Banking Committee voted 13-11 on April 29 to advance
Warsh’s nomination, with the full Senate vote expected the week of
May 11 and Powell’s term ending on May 15. A further decline or an
extended range trade from here is entirely possible.

The fundamentals remain unchanged. The six-year deficit is
documented and widening. The World Silver Survey 2026 confirmed it two weeks ago. Mine production is flat despite a 42% annual
average price in 2025. COMEX registered inventory covers 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.

The full Silver Catalyst Issue #14 covers seven additional Deep Dives: the Hormuz
war’s sustained suppression of silver despite being a textbook
stagflation event; the COMEX May delivery cycle with 153 Moz in
paper open interest against 77.12 Moz of registered metal, with
First Notice Day on April 30; the solar demand reset and the
Fraunhofer ISE factor-of-10 silver reduction breakthrough, with a
forward trajectory through 2030; Greater Bay Technology’s A-sample
solid-state battery rollout alongside Tesla Cybercab production,
Joby’s Dubai eVTOL launch confirmation, and SpaceX’s 1,000th
Starlink of 2026; India’s Akshaya Tritiya festival recording 25%
trade growth against a silver price that has tripled in INR terms;
and Fresnillo’s Q1 confirming Mexico’s output is in a third
consecutive year of structural decline. The Catalyst Dashboard,
institutional price targets, and Events to Watch through July are
all included. To follow this market as it develops, I encourage you
to get Silver Rising with complimentary 2-week
access to the Silver Catalyst newsletter.

Thank you.

The Silver Engineer