Silver Closing in on $60

After a massive new breakout last week, silver rallied to over $58 and traded in that range throughout this week. We're looking at a literal double in the silver price here in 2025 with only a few short weeks left in the year.

Our listeners will remember that there was a mini silver squeeze last month that helped propel the price up to $54 for the first time ever. At the time, analysts explained the situation as a temporary displacement of metal.

Last spring, significant amounts of silver flowed into the U.S. due to tariff worries. This led to a shortage of metal in London. According to Bloomberg, the amount of free float silver (metal not committed to ETFs or other funds) dropped from a high of 850 million ounces to just 200 million ounces, a 75 percent decline. Metals Focus estimates that the available metal dropped as low as 150 million ounces.

Unprecedented silver demand in India pushed the silver market over the edge. With gold at record highs, Indians turned to silver. This put further pressure on London supplies.

The market ultimately adjusted with metal flowing back from New York to London, easing the squeeze.

However, after a pause, silver has again resumed its climb. As an ANZ Group analyst put it, “Shortages in the global market as a result of the recent squeeze in London are still being felt.”

It’s not so much that there isn’t enough silver in London. The problem is that there simply isn’t enough silver anywhere.

The recent flow of silver into London has shifted the squeeze to other centers.

Warehouses associated with the Shanghai Futures Exchange report the lowest silver inventories in nearly a decade. They're so low that China will be banning silver exports starting next month.

Meanwhile, silver lease rates have climbed, reflecting strong demand and a limited supply of available metal.

This isn’t a problem that can be solved by moving metal from one warehouse to another. The issue is that demand has outstripped supply for several years – and it's slowly but surely pressuring the available stockpiles.

According to Metals Focus, silver is on track for its fifth straight structural market deficit.

After setting a record in 2024, industrial demand is expected to drop by about 2 percent due to the price pressure. That will drive overall demand down by around 4 percent. However, with mine output flat, there still won’t be enough metal produced to cover the offtake.

Metals Focus projects demand will outstrip supply by 95 million ounces this year. That would bring the cumulative 5-year market deficit to 820 million ounces, an entire year of average mine output!

To make up the supply deficit, silver users will have to draw from existing above-ground stocks. That will likely require higher prices.

Even with higher prices, it is unlikely that mine supply will quickly grow to erase the supply shortfall.

Silver mine output peaked in 2016 at 900 million ounces. Up until last year, silver production had dropped by an average of 1.4 percent each year. In 2023, mines produced 814 million ounces of silver.

It appears that for the next few years at least, we will have to depend on drawdowns of above-ground stocks to meet the silver supply deficit.

Silver is also getting a boost from expectations that the Federal Reserve will continue easing monetary policy.

The U.S. recently added silver to its list of strategic minerals. This could add to demand pressure and supply shortfalls.

Meanwhile, fear of a sudden premium on silver in America has made some traders hesitant about sending the metal out of the country, offering little prospect of relief should the global silver market tighten further.

There are also worries that the U.S. could impose tariffs on silver to protect the domestic supply.

These fundamental supply and demand dynamics should continue to support the silver price at least in the near to mid-term.

As for up the moment market action here, silver is currently trading at $58.74, up nearly $2 on the week or 3.2%.

Gold is essentially unchanged at $4,228. Platinum is down 1.7% to trade at $1,657, and finally palladium is off 0.5% to come in at $1,482 an ounce as of this Friday midday recording.

Moving to other news, somebody dropped nearly $11,000 of gold into two Salvation Army kettles in the Chicago area.

According to the Salvation Army, eight gold coins showed up in two separate donations at the Red Kettle campaign outside a pizza place. The haul included a 1-ounce American Gold Eagle valued at over $4,200, along with seven other smaller coins.

As a bonus, the Salvation Army can hold on to the gold for a while if it wants to, without worrying about the relentless devaluation of dollars courtesy of the U.S. government and the Federal Reserve.

Virtually every year, we hear stories about generous donors pitching gold into Salvation Army kettles. Gold donations have been reported in Arizona, Pennsylvania, Michigan, California, and other states in recent years.

These gold donations almost always make the news. That’s because everybody recognizes the value of gold. A quarter is a quarter (unless of course you have a Pre-1965 quarter that is 90 percent silver), and a dollar is paper. But gold – now we’re talking about real money!

If you are still looking for a last-minute Christmas gift, perhaps you should consider the gift of gold or silver. We can guarantee your gift won't end up in a garage can next year. And it will likely be worth more than when they opened it.

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