The article does not point to anything in Basel III that treats paper silver and physical silver differently
“an 85% Required Stable Funding factor on all precious metals holdings, making unallocated positions prohibitively expensive for banks to maintain.”
The article is written by someone who fundamentally does not understand the entire framework.
0% risk weight for allocated physical gold/silver is a credit-risk treatment, because of course metal does not have credit risk; it never did.
HQLA — high quality liquid assets — is a totally different matter. it has to do with what you cans sell to cover short term liquidity needs. Stocks fit this category with a haircut. Because you can sell them in a day, but maybe at a loss.
Please describe to me the import of paper vs. physical silver. Who owns it, what do they do with it and how is it treated under Basel III. The article is a mess because it does not distinguish customer and prop positions.