As part of our ongoing coverage of key global market movements, Tradeiators highlights critical developments in the precious metals sector, where silver is witnessing unprecedented dynamics that are capturing the attention of investors and market observers alike.
Silver prices have surged past $50 per ounce, approaching all-time highs, amid a deepening supply crisis in the London market.
Spot prices peaked at $51 per ounce — a 3.7% increase — before giving up some of those gains. At the same time, the cost of borrowing silver for one month in London soared to a record annualized rate of 35%.
Gold and palladium also posted notable gains.
This sharp rally follows a more than 70% increase in silver prices since the beginning of the year, significantly outpacing gold’s performance. The rally is largely driven by investors seeking safe-haven assets in the face of financial instability in the U.S., concerns over inflated equity valuations, and rising threats to the independence of the Federal Reserve.
Earlier this year, fears of potential U.S. tariffs on silver imports prompted a major inflow of the metal into New York, leading to a steep drop in available inventories in London and a reduction in lendable silver supply there.
It’s worth noting that most of the silver stored in London backs exchange-traded funds and is not readily available for purchase or lending in the open market.
This shortage has disrupted the traditional price relationship between the New York and London markets. What is typically a modest premium — just a few cents — has flipped into a discount of more than $2.50 per ounce below spot prices.
While the price differential could incentivize some traders to ship cheaper U.S. silver to the U.K. to take advantage of higher prices, the ongoing supply crunch continues to drive the market, pushing prices toward historical highs.
Silver is now approaching the record of $52.50 per ounce, which was set in 1980 on a contract that has since been delisted from the Chicago Mercantile Exchange.
That record was set during a well-known attempt by the Hunt brothers — Texas oil billionaires — to corner the global silver market. They amassed over 200 million ounces of silver, driving prices above $50 before the market collapsed to below $11.
In the latest session in London, spot silver rose 1.5% to $50.02 per ounce as of 1:03 p.m. local time. Palladium gained 2%, gold posted modest gains, and platinum was little changed.
Source: Bloomberg
