A ”default” can occur if too many longs stand for delivery.This very well could happen and the likelihood has risen in just the last 2 trading days as open interest has increased rather than decreased. If 10% of the longs stood for delivery in Silver, the inventory would be wiped out. The fact that the “drop” in price was CAUSED by new shorts opening positions rather than longs scurrying away tends support the case that the long position is a resolute buyer with deep, VERY DEEP pockets. If they hold in and meet the margin calls created by the price drop AND higher (18+%) margin requirements as of yesterday, the shorts and the exchange itself have a very big problem on their hands as the availability to deliver on the open interest just does not exist.
If open interest does not decline after the drop in price and this latest margin hike (and maybe more to come) the odds of longs standing in a big way for delivery increases exponentially.