February 2026.
Ignore the screaming headlines. Ignore the fear creeping in as red numbers bleed across trading screens. The collapse of silver $XAG from $121 to $64 is not the end of a bull market, and it is certainly not a bubble bursting.
The truth is far darker.
This was a machine-engineered purge, a deliberate cleansing designed to strip retail investors of their positions. While the crowd panicked and ran for the exits, unseen hands were calmly tightening a trap — wiping the board clean before igniting a move that very few will be positioned to survive.
What follows is the evidence, drawn from data sources that 99% of investors never touch.
1. The 19:1 Leverage Game — A Knife at the Gambler’s Throat
On COMEX, the game is rigged before the first trade is placed. A large portion of traders control their entire silver exposure with barely 5% real capital, borrowing the remaining 95%.
With just $1,000, you are effectively controlling $19,000 worth of silver $XAG . A 5% rise doubles your account. A 5% drop, however, erases you completely. No warning. No mercy.
Once prices begin to fall, the machinery activates. Exchanges raise margin requirements in rapid succession — from 5% to 8%, then 11%, 15%, and higher. This creates a purely mechanical cascade of forced liquidations. Investors are not selling because silver has lost value. They are selling because they are being forced to sell.
2. The Smoking Gun: The Mass Exit of Weak Hands
COMEX Open Interest exposes what really happened beneath the surface. At the peak, the market carried 176,000 active contracts. After the crash, that number fell to 137,000.
That means 39,000 contracts were wiped out.
This was not long-term capital taking profits. It was tens of thousands of over-leveraged gamblers being thrown out of the market. What remains now are hardened positions held by investors with real capital, real conviction, and no fear of a single-digit price swing.
The purge is complete.
3. The Physical Market Is Screaming While Paper Prices Lie
As paper silver collapses on trading screens, the physical market in London, the global nerve center for silver, is telling the opposite story.
Silver lease rates have surged to 4.5%. In a normal market, this figure hovers near zero. A rate this high means professionals are willing to pay an extreme premium just to borrow physical silver for a short period of time.
At the same moment, the market has slipped into deep backwardation. Spot silver today trades higher than silver promised a year from now. This is highly abnormal. It signals urgency, desperation, and immediate shortage — the equivalent of paying extra for food right now because waiting is not an option.
Paper prices claim silver is dying. The physical market is shouting that supply is running dry.
4. Vaults Are Draining Across Two Continents
Ignore the price chart and watch the inventories.
In the United States, COMEX deliverable silver has fallen to multi-month lows. Metal continues to leave the vaults with no sign of returning. In China, Shanghai inventories have collapsed from 1.2 million units to roughly 350,000, with withdrawals continuing at a pace of 42 tons per week, even as prices fall.
If demand were truly gone, silver $XAG would be piling up in storage. Instead, it keeps disappearing. If silver were abundant, London desks would not be scrambling to borrow it at any price.
THE TRAP EXPOSED: A SPRING COMPRESSED TO ITS LIMIT
The drop from $121 to $64 was not a collapse. It was a reset. The house cleared out leverage, removed weak hands, and stabilized the stage for what comes next.
The $70 zone is rapidly becoming a structural floor. Forced selling pressure has been exhausted. There is no one left to margin call. At the same time, governments have begun moving quietly. China tightens silver exports. The United States designates silver as a strategic mineral.
Governments do not stockpile assets that are cheap and plentiful.
Final Message
What you are witnessing is a temporary dislocation between physical reality and paper pricing. While fear dominates the crowd, institutions are quietly absorbing the last remaining ounces from emptying vaults.
Years from now, this crash will be studied as a textbook example of how futures markets mislead the masses. The real question is not whether silver will recover, but whether you will still be holding real assets when this compressed spring finally snaps.
Don’t let them steal your conviction with digital numbers on a screen.
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This is a personal insights, not financial advice | DYOR
