The global silver market has experienced an unprecedented strain as demand from India collided with long-standing supply pressures, pushing prices to record highs before a sharp, abrupt drop., according to an exclusive article by Bloomberg.
The spark for the squeeze was India’s festive season, particularly the Dhanteras holiday, when hundreds of millions traditionally buy precious metals to honor the goddess of wealth. This year, social media-driven hype, led by influencers like investment banker Sarthak Ahuja, encouraged a shift from gold to silver. As a result, Indian buyers quickly depleted local inventories, sending premiums above international prices to unprecedented levels of $5 per ounce.
Supply constraints in other regions amplified the crisis. China’s temporary shutdown for a national holiday limited deliveries, while London’s bullion vaults, which underpin global pricing, were largely locked in exchange-traded funds. The surge in silver ETF investments, driven by fears over US dollar stability, further reduced the free float of physical metal. JPMorgan, a key supplier to India, confirmed it could not deliver additional silver until November, highlighting the global ripple effect.
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The bottleneck triggered chaos in London, where borrowing costs for silver briefly hit annualized rates of 200 percent. Traders reported extreme volatility, wide bid-ask spreads, and unusual arbitrage opportunities, signaling a market nearing dysfunction. Historical parallels were drawn to the Hunt brothers’ 1980 cornering attempt and Warren Buffett’s 1998 squeeze, though experts note that current conditions stem from genuine supply shortages rather than speculative manipulation.
Industry analysts cite a confluence of factors: a solar industry boom driving industrial silver demand, preemptive US tariff shipments, and the recent retail buying surge. Physical silver inventories remain critically low, and logistical hurdles in transferring stock from New York or China to London mean the market could remain under stress for weeks.
By last week, prices had surged above $54 per ounce before tumbling, reflecting both the intensity of the buying spree and the relief from incoming supply. Market watchers say the episode underscores the fragility of global silver supply chains and the outsized influence of concentrated, seasonal demand.
