Silver Strain Globally Has Eased, but Even Bigger Issues Remain…

Silver has certainly grabbed a lot of headlines over the last six to nine months. And supply tightness played a key role in the fireworks we’ve seen when it comes to the white metal. The movement of silver out of the U.S. has helped ease market tightness, but an ongoing structural supply deficit makes the metal vulnerable to future squeezes.

Silver went on an incredible run late last year after taking off in October as a silver squeeze gripped the market. The metal opened in 2025 at about $29 and didn’t crack $40 until September. When the year ended, the price sat at nearly $72. At its peak, silver was up 147 percent intra-year. The average price came in at $40, a 42 percent increase.

A convergence of factors, from market dynamics to logistical problems, led to the October squeeze and a second squeeze late last year that briefly drove silver prices over $100 in January.

While the market dynamics that got us here might be difficult to untangle, the situation is about as basic as it gets.

There’s not enough new silver supply being pulled from the ground. The silver market recorded a supply deficit for the fifth consecutive year in 2025.

As we mentioned a week ago, last year demand outstripped supply by 40 million ounces, driving the 5-year market deficit to 716 million ounces. To put that into perspective, total silver mining output last year was 846 million ounces. And Metals Focus forecasts another 46-million-ounce supply deficit this year.

The stage was set months earlier when tonnes of silver moved from London to New York due to tariff worries. As President Trump began levying tariffs in April 2025, silver streamed into the U.S. CME silver holdings, eclipsing the record set during the pandemic at 531 million ounces.

Meanwhile, metal bled from London vaults.

Much of the silver remaining in London was already committed to ETFs. That left very little “free float” metal to provide liquidity to the London market. According to Metals Focus, the share of London silver stocks, not allocated to ETPs, fell to just 17 percent by the end of September 2025.

That set the stage for the first squeeze, and a surge in Indian silver demand last fall was the pin that popped the bubble.

Initially, Indian buyers were primarily sourcing silver from Hong Kong, but they reportedly shifted more toward London during the Chinese Golden Week Holiday in the first week of October.

But London vaults were already tapped out.

As the squeeze intensified, silver lease rates exceeded 200 percent, reflecting the strain in the market.

After a healthy correction in January, the market has stabilized, with silver prices settling in a range between $70 and $85 an ounce.

The movement of silver out of the U.S. to parts of the world in shortage helped to settle the market.

About half of the departing metal went to London. However, there was a significant increase in silver exports to the UAE and Hong Kong.

While the amount of silver in London vaults has barely budged this year, the amount of “free float” silver available for trading or delivery has increased as metal committed to ETFs dropped after the price correction. Global silver ETF holdings have declined by around 70 million ounces (5 percent) year-to-date.

Currently, the amount of free float silver in London stands at around 235 million ounces, the highest level since December 2024. That’s up approximately 116 million ounces since the low last September.

While the shuffling metal between the U.S., London, the Middle East, and Asia have taken the strain off the silver market, this has not solved the fundamental problem.

It’s like a game of musical chairs. Everything seems fine while the music is playing. However, when it stops, there are going to be problems.

Let’s get an update here on the price action for the week.

Gold is up an even $100 or 2.2% now on the week and checks in at $4,726 an ounce.

Silver is up $5 and currently trades at $81.09 an ounce as of this Friday morning recording.

Turning to the PGMs, platinum checks in at $2,052 an ounce, up 2.6% since last Friday’s close. As for palladium, the industrial metal is actually down $50 or 3.2% to check in at $1,491.

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