A US Regulator Just Said the Silver Market Is Structurally Broken

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.

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, 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, 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.

Recent analysis has highlighted how increased market transparency can reduce the effectiveness of structural price distortions. 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.

Similarly, stress in the London bullion market—particularly the October 2025 lease rate spike—illustrates how tight physical conditions can rapidly surface when the system loses flexibility.

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.

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