The Great Silver Squeeze of 2025: What We’re Seeing (and What It Means For You)
From Friday onward, our phones didn’t just light up – they stayed lit.
Customers, partners, and even people inside the industry were calling with the same question: “What on earth is going on with silver?” I had to turn off my phone so I could get some sleep over the weekend..
By Monday morning, it was clear this wasn’t just another blip on the price chart. Something deeper was happening in the plumbing of the precious metals market itself.
Yes, prices were setting records. But at the same time, retailers were posting “sold out” notices. Refiners were suspending silver purchases. And for the first time in years, some sovereign mints were quietly warning that production costs were climbing faster than they could adjust.
That’s the backdrop for what I want to explain – not the panic, but the process.
Here’s what’s actually happening behind the scenes.
The view from the loading dock, not the silver price chart
The message up and down the industry was the same: Financing physical silver suddenly got expensive, and that jams the physical pipeline.
In order for this to make sense, you have to remember, unlike virtually every other financial asset, silver bullion is tangible. Now, here’s a blueprint of the basic plumbing:
- London, the hub for wholesale silver, is tight.
Spot silver in London traded at unusual premiums to New York futures (a flip into “backwardation”). So silver prices between London and New York diverged, a classic symptom of market stress. According to Bloomberg, some people are actually renting cargo jets to fly silver bullion from New York to London to profit on the difference in prices.
- Lease rates spiked.
The one-month rate to “borrow” silver recently jumped from 1-2% to 30% annualized, breaching 100% at the very short end. This is an unmistakable sign that immediate, good-delivery metal is scarce.
- Lease rates really matter to refiners.
Lease rates really matter to refiners. Most refiners finance their working inventories through metal leases rather than outright purchases. This lets them process and ship metal without taking on direct price exposure to silver, since they can hedge silver price changes during the refining cycle. When lease rates spike, the cost of doing business rises sharply – and some refiners simply take a time-out until financing conditions normalize.
- High lease costs made refining scrap silver too expensive.
Some refiners stopped buying silver completely last week, then tiptoed back Monday with lower offers. This is exactly how lease spikes ripple through the real world.
- Inventories that backstop London have been shrinking for years.
Less than one third of all London’s vaulted silver is actually available.
That makes any rush tighter and faster – especially with India pulling hard into festival season, per the Financial Times.
Overall, this has all the signs of a physical squeeze first, a paper squeeze second. And that order matters for how it resolves.
What it means for silver’s price short-term
- Prices punched record territory.
Reaching $53+ in London at the peak! The premium over New York has already narrowed from the ~$3 extremes as air shipments are booked. Note this is exactly what we’d expect in an efficient market, as arbitrage does its job.
- Volatility stays high while financing is tight.
Lease rates are the tollbooth for refiners and mints: If the toll is steep, some traffic just stops. When that eases, the difference between spot and futures prices should normalize. Some share of the panic premium can bleed out quickly – how much? Based on history, I think about $3, but that’s just a guess. What does matter is it’s a short-term adjustment.
- The long-term backdrop still supports higher silver prices.
Structural deficits, industrial pull (especially solar), and shrinking inventories mean there’s much less slack in the system. That’s why you’re seeing mainstream forecasts like Bank of America moving its 2026 silver target to $65 on Monday, via Reuters.
Could we get a sharp pullback if London tightness resolves faster than investor flows? Yes – several banks have warned about that exact dynamic in an illiquid market. Peter Reagan discussed this yesterday (second story here). But without huge change in supply-demand dynamics, any dips in price are likely to be met by enthusiastic investment.
What I’m doing for customers (and what I told my friends)
I won’t sugarcoat it: In a true physical squeeze, availability overrules price.
Here’s how I frame it:
- If you’ve been meaning to diversify with physical metal, act while supply is flowing.
I can’t promise what’s available tomorrow; I can tell you what we can provide today. That’s the honest state of play. We’re shipping customer orders daily; product availability, price and premiums fluctuate constantly.
- You might need to be flexible on product.
When lease rates spike, sovereign-mint premiums can jump first, and they can jump fast. During physical squeezes, silver bullion bars are often in very short supply. Just ask your Precious Metals Specialist what’s the best buy today, they’ll give you a straight answer.
- Expect volatility.
Silver price moves more than gold’s – both on the way up and on the way down. If you’re new to the space, I strongly recommend adopting a long-term view. You’re buying at today’s price – and price doesn’t matter again until you retire and you’re ready to begin liquidation. (Trust me, I watch the price charts enough for everyone.)
If you want to diversify your savings for the long run, focus on your allocation, not this week’s drama.
Quick FAQ (the questions I’m getting in real time)
Q: Are sovereign mints really pausing silver coin production?
Not exactly. What we’re seeing broadly is higher premiums and selective delays in production, not a universal shutdown. Some mints own metals directly; others rely on suppliers that are exposed to the lease rate issue we discussed previously.
Q: Is this the Hunt Brothers 2.0?
No, simply because there’s no single corner here. This is a modern liquidity squeeze based on a number of factors:
- Scarcity in London vaults
- A LOT of recent investment inflow
- Logistics and financing frictions.
Some industry veterans still say the severity rivals 1980 in specific metrics (backwardation, lease spikes), but the causes are very different.
Q: Where could price be by year-end?
Short answer: It’s path-dependent.
If lease rates normalize and the London premium collapses, you can get a fast $1–$2 give-back (even inside a longer-term uptrend). The medium-term forecast from major banks – $65 by end-2026 – rests on the same forces driving gold’s price higher. Deficits and inflation and lower interest rates, not yesterday’s airfreight arbitrage.
Bottom line
If you want physical diversification, don’t delay. Today, we have silver; we’re filling orders; and we’ll keep it up for as long as we can. Tomorrow’s availability is out of my hands.
Meanwhile I’ll do my best to fill you in on what’s moving behind the scenes. I know that financing costs, backwardation and arbitrage aren’t everyone’s cup of tea – so thank you for your patience.
Sources
- Bloomberg: on the London squeeze, airlifting bars, and lease-rate stress.
- Financial Times: Record prints and why bars are moving by air.
- Jerusalem Post explainer: backwardation and lease-rate mechanics in plain English.
- Reuters: Bank of America’s $65 silver (2026) forecast.
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