(Kitco News) - A massive physical drain of silver from COMEX warehouses is accelerating, signaling profound stress in the global delivery system even as a fundamental “structural change” is redefining gold’s role as an asset, former bullion bank executive Bob Gottlieb said Thursday.
In an exclusive interview with Kitco News, Gottlieb revealed that 29 million ounces of silver have been physically removed from COMEX warehouses in just the last two weeks. He also issued a stark warning about the opaque platinum market, suggesting the situation there may be even more dire.
The physical exodus comes after a turbulent week that saw gold plunge nearly 5.5% on Tuesday, from a high of over $4,360 to a low near $4,120, before rebounding. Silver saw an even more dramatic drop of 7.5% on the same day.
A Physical Squeeze in Silver
The most acute stress is in the physical silver market, centered on a dramatic reversal of flows between the world’s two most important trading hubs: the COMEX in New York, which is the primary U.S. futures exchange, and the London market, the world's largest center for physical trading.
Gottlieb explained that the London vaults were depleted of their readily available metal, or "free-floating stock," by a perfect storm of demand. "The free floating stock [in London] went from 305 million down to maybe 125 million ounces... and that has created this entire tightness," he said.
This shortage in London has now caused a violent reversal. The premium for spot silver in London has made it highly profitable for banks to take physical metal from the COMEX and ship it back across the Atlantic. “We went from 530 million ounces to approximately 501 million today, so that roughly 29 million ounces of silver has been shipped out of the states,” Gottlieb revealed. This trend is corroborated by daily warehouse reports from the CME Group, which have shown a consistent decline in silver inventories throughout October.
Gottlieb put a shocking number on the scale of the supply deficit: “I believe we need another 100 to 150 million ounces physically in London for the market to normalize.”
Gold's "Structural Change"
This physical pressure is occurring as gold undergoes what Gottlieb calls a “different kind of rally” driven by a structural change in how it's viewed by the world's largest financial players.
"The entire central bank world is diversifying away from the dollar, and they're doing that via gold," Gottlieb said. He pointed to a stunning development at the European Central Bank. "They just announced that the number-two holding in their reserves is gold, and surpassed the euro. They hold more gold than they hold their own currency," he noted.
According to a recent ECB report, gold made up about 20% of global official reserves at the end of 2024, surpassing the euro's 16% share.
A "Healthy" Washout, A "Dire" Warning
Gottlieb characterized the week's dramatic price crash as an “extremely healthy” event designed to purge speculative excess from newer investors he calls “week longs.”
However, while the silver squeeze is gaining attention, Gottlieb issued a stark warning about the even less transparent platinum group metals market. He highlighted that London PGM organizations, unlike the LBMA, do not publish any inventory statistics. "Why aren’t they doing that... unless the situation is a little more dire than it was in the gold and silver market?” he asked.
The Section 232 Wildcard
Looking ahead, Gottlieb stressed that all eyes should be on the upcoming Section 232 critical mineral analysis for silver. This investigation, initiated under the Trade Expansion Act of 1962, grants the President the authority to impose tariffs or other restrictions if an import is deemed critical to U.S. national security.
A formal designation of silver as a critical mineral could have dramatic consequences for the market. The most likely outcome would be tariffs, which Gottlieb warned would halt the physical drain from the COMEX and create a significant price premium for silver inside the United States.
A more extreme, though less likely, outcome could see the government move to restrict exports or secure domestic inventories, effectively nationalizing a portion of the supply for strategic purposes like defense, AI, and the energy sector.
Gottlieb argued that imposing restrictions would ultimately be a "disservice to the United States" because, unlike with automobiles, tariffs "will not produce one ounce more of silver in the United States," as over 70% of silver is mined as a byproduct of other metals. The investigation, initiated by an executive order on April 15, 2025, will evaluate the impact of critical mineral imports on U.S. national security.
For Gottlieb's full, in-depth analysis of arbitrage mechanics, the future of price discovery, and what he's watching into year-end, watch the full Kitco News interview HERE.