Silver ETF Outflows: Speculative Unwinding Analysis

Based on my research, I can provide a comprehensive analysis of the sharp decline in silver ETF holdings and the underlying drivers.

The iShares Silver Trust (SLV) experienced a significant 132.45-ton outflow in 2026, representing the largest single-day reduction. This occurred against the backdrop of a dramatic market event on February 12, 2026, when silver prices plummeted 9.71% to close at $75.78 per ounce after reaching levels above $120/oz in late January 2026 [1][2].

The evidence strongly indicates that

. Here are the key factors:

• On February 6, 2026, CME Group raised maintenance margin for COMEX silver futures from 15% to 18% [3]
• This shift from a fixed-dollar to a percentage-based margin system meant that as prices rallied, margin requirements scaled automatically
• For a $120/oz contract (valued at approximately $600,000), the required capital increased from $90,000 to $108,000 — an additional $18,000 per contract [3]
• This created immediate capital calls for leveraged traders

• The silver market experienced a violent “leverage flush” as over-extended traders were forced to liquidate positions [1][2]
• Open interest had peaked at extreme levels, amplifying the impact of each liquidation
• The ratio of paper contracts to physical bullion reached 500:1 at the peak of the frenzy [2]
• Automated algorithmic selling cascaded through the market, accelerating the decline

• Institutional traders liquidated silver ETF positions to cover margin calls in
  other sectors
  , including a cooling cryptocurrency market [1][2]
• A strong U.S. jobs report (130k jobs added versus 70k forecast) strengthened the U.S. dollar, prompting large-scale institutional profit-taking [2]
• Hedge funds sold silver to raise cash when equity and bond markets declined

• The silver market is experiencing its
  sixth consecutive year of structural supply deficits
  [1][2]
• Global industrial silver demand is forecast to remain near record highs of approximately 680 million ounces in 2026 [4]
• Key industrial demand drivers include:
  • Solar PV capacity
    : Forecast to reach 665 GW in 2026, supporting 120-125 million ounces of silver demand [4]
  • Electric vehicles
    : Expected 14-15 million units, requiring 70-75 million ounces [4]
  • Grid upgrades and data center infrastructure
    : 15-20 million ounces [4]

This event highlighted the ongoing tension between silver’s role as a volatile monetary asset — prone to “mechanical” selling by leveraged traders — and its fundamental status as an indispensable industrial commodity facing increasing physical scarcity [1][2]. The outflows and price crash were driven by paper market dynamics rather than any change in underlying industrial demand fundamentals.

Factor	Impact
CME margin hike	Forced liquidation of leveraged positions
Cross-asset margin calls	Institutional sellers liquidated to cover other positions
Algorithmic selling	Amplified price decline through automated stop-losses
Physical vs. paper disconnect	Paper prices diverged from physical scarcity fundamentals

The 132.45-ton outflow from iShares Silver Trust was

driven by margin requirement changes and cross-asset liquidity pressures. Industrial demand for silver remains robust, with the market facing its sixth consecutive year of supply deficits. The battle between paper leverage and physical scarcity continues to define silver’s price dynamics, with the recent event illustrating how quickly leveraged positions can unravel when regulatory or market conditions change.

---

[1] Chronicle Journal - “Silver Slumps 9.7% in ‘Leverage Flush’ as $75.78 Support Tested Amidst 6th Year of Supply Deficit” (February 13, 2026)

[2] Financial Content Markets - “Silver Slumps 9.7% in ‘Leverage Flush’” (February 13, 2026)

[3] Discovery Alert - “CME Margin Hike Triggers Silver Price Crash in 2026”

[4] Equiti - “Strong industrial demand supports silver in 2026”