Silver prices have spiked to unprecedented levels! In July 2024, they set an all-time high in rupee terms—₹114,875 per kg (approximately $41 per ounce). Demand for silver in India has surged. Consequently, the market has had a cumulative deficit of 678 million ounces in just the last four years. That’s a deficit of nearly ten months’ worth of anticipated mining supply in 2024.
The state of the global silver market has been poor overall, with demand outstripping supply for the last four years in a row. For the first half of 2024, the structural market deficit was the highest on record at 148.9 million ounces. The now-viral silver squeeze is making it increasingly difficult to find available silver in critical markets such as London. This perfect storm has raised a bad effect on pricing and availability.
In addition, since mid-2021, London’s silver stocks have fallen by one-third, adding to the already growing supply bottleneck. Additionally, the free float of silver has been decimated. It crashed from a high of 850 million ounces to a mere 200 million ounces — a staggering 75 percent drop. There are only 140 million ounces of above-ground silver available for trading, triggering a meteoric rise in borrowing costs. The overnight cost to borrow silver has ballooned to over 100 percent on an annualized basis.
The London bid-ask spread on silver has blown out dramatically. It has jumped from the typical 3 cents a pound to more than 20 cents a pound. Those conditions have produced an unusual climate in which liquidity remains perilously thin, moving some dealers to drastic solutions. Commodities traders are chartering container ships to move silver from New York to London. Specifically, they’re looking to cash in on the price premium that’s still available in the London market.
“What we are seeing in silver is entirely unprecedented. There is no liquidity available currently.” – Anant Jatia
At the same time, India is witnessing a silver import boom of dramatic proportions. In the first five months of 2025, these imports more than quadrupled, increasing by 431 percent over the same time last year to a jaw-dropping 544.1 tonnes. Demand, too, has surged through the roof. Domestic production cannot ramp up fast enough, resulting in silver being sold at massive premiums on local markets.
The recent price spike has rattled some traders. They’re looking to the new, exciting market fundamentals to see if anything can keep the music playing. A former managing director at JPMorgan Chase noted that “banks don’t want to quote each other, so the quotes get extremely wide,” which contributes to a growing illiquidity within the market.
“That’s creating this tremendous illiquidity.” – Former JPMorgan Chase managing director
The ramifications of these factors go far beyond just cost pressures. Investors and industrial users are long overdue for real demand for physical metal, not just that of leveraged financial instruments. David Jensen remarked on this shift, stating that “investors and industrial users are increasingly saying ‘we’ll take the metal,’ which spells the end for leveraged pyramid schemes such as the London precious metals market.”
Even as this market reconfiguration plays out, many analysts still expect positive supply dynamics going forward. A spokesperson for a precious metal refiner mentioned, “There’ll be a natural momentum for material to move back into London and hopefully things will normalize.” They further emphasized the need for mobilizing global balances, suggesting that “It’s just a question of mobilizing those balances that are sitting elsewhere in the world and moving them back to London.”
The silver market is seriously one of the coolest places right now. Historic price levels are being driven by a very delicate balancing of supply and demand factors. There too, local and global dynamics are in full swing. Stakeholders from every sector—government, business, and philanthropic—are eagerly awaiting how this plays out.