Silver price suffered a steep decline yesterday, falling roughly 6% as hotter U.S. inflation data hit precious metals and triggered another round of selling across markets.
But Macro Liquidity analyst Sunil Reddy argues that the move may not have been a straightforward case of investors abandoning silver.
His reasoning comes from activity in the iShares Silver Trust, better known as SLV.
Reddy pointed out that SLV shares outstanding increased by around 450,000 shares during the selloff, representing roughly 400,000 ounces of additional silver backing.
That creates an interesting divergence: silver prices fell heavily, but the ETF itself expanded.
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Why the SLV Data Is Interesting
Reddy’s thesis focuses on how ETF liquidity can work during periods of heavy demand.
Authorized participants and market makers can provide SLV shares to buyers and manage their underlying silver exposure separately. New ETF shares can later be created against silver backing.
During a fast selloff, leveraged traders can also be forced out, stop-loss orders can trigger and momentum traders can move to the short side.
That produces additional sell-side liquidity.
Reddy believes this can create an opportunity for previously established short positions to be covered at lower prices before additional SLV shares are created to meet continued demand.
Yesterday’s silver crash is a positioning event rather than clean, fundamental liquidation. Here is the mechanism that matters. When demand for SLV becomes very strong, market makers and APs do not necessarily rush out and immediately source physical silver for every new buyer. They can temporarily meet that demand by selling or shorting SLV shares into the market, while managing the underlying silver exposure separately. That works as long as they can later either create new SLV shares against physical silver or buy those shorted shares back. Now look at what a violent selloff accomplishes. Price is pushed sharply lower. Leveraged longs are forced out. Stops are triggered. Momentum traders turn short. Weak holders panic. Liquidity suddenly appears on the sell side. That creates the perfect environment for shorts established at higher prices to be covered much cheaper. This is why yesterday’s SLV data are so interesting. Silver fell roughly 6%. Yet SLV shares outstanding increased by 450,000 shares, equivalent to roughly 400,000 oz of additional silver backing. If this were simply investors abandoning silver, you would expect the opposite: falling demand, redemptions, and declining shares outstanding. Instead, we got a sharp price collapse while the ETF itself expanded. That divergence matters. My interpretation is that at least part of this selloff was likely about positioning and liquidity management: drive price lower, flush leveraged longs, create liquidity, cover shorts at better prices, and then satisfy persistent ETF demand through new share creation. I cannot prove from SLV data alone that the entire move was deliberately orchestrated, but the flow certainly does not look like a market where underlying demand simply disappeared. Price was crushed. SLV demand was not. That is the part I would pay attention to.
— Macro Liquidity by Sunil Reddy (@Macrobysunil) October 15, 2026
His chart also shows unusually elevated SLV short-sale volume around previous periods of market stress.
Silver Demand Did Not Simply Vanish
The strongest part of the argument is the change in shares outstanding.
If the silver decline had been driven purely by investors exiting SLV, one possible outcome would be ETF redemptions and fewer shares outstanding.
Instead, Reddy says SLV added approximately 450,000 shares.
That does not prove the selloff was intentionally engineered.
Reddy himself acknowledges that SLV data alone cannot establish that conclusion.
It does, however, complicate the idea that silver fell simply because underlying investor demand disappeared.
Read also: Analyst Who Nailed Silver Price Prediction in 2026 Says the Crowd Is Wrong Again
What This Means for Silver Price
The distinction is important for the next move.
If the decline came primarily from weakening fundamental demand, silver could remain under pressure for longer.
If leverage, positioning and short covering played a large role, price could stabilize faster once forced selling fades.
Silver recently dropped from around $60 toward the mid-$50s before beginning to recover.
The $55-$56 region is therefore the first area to watch. Holding that zone would support the case that the latest decline was a liquidity-driven flush rather than the start of a deeper fundamental repricing.
For now, the SLV data does not prove manipulation.
What it does show is that ETF demand did not disappear at the same time silver prices collapsed, and that makes the latest selloff more complicated than the price chart alone would indicate.
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