London silver surged past $50 per ounce, a level unseen since 1980, fueled by a short squeeze.

Silver Market Turmoil

London's silver market experienced an unprecedented surge this week, pushing prices above $50 an ounce, a level rarely seen historically. This dramatic rally has disrupted the market, causing liquidity to vanish and significantly increasing borrowing costs for those short on silver. Traders are resorting to extraordinary measures, like flying silver bars from New York to London to capitalize on inflated premiums.

Factors Driving the Spike

Unlike the 1980s Hunt brothers incident, this surge isn't attributed to a single entity attempting to corner the market. A combination of factors, including rising investor demand, dwindling inventories, and concerns about U.S. tariffs, have contributed to the price increase. A surge in Indian demand, coupled with shifting sourcing practices, has significantly drained London's available silver supply.

Market Conditions and Risks

London's silver vaults have steadily depleted, with freely available silver plummeting drastically since 2019. The London Bullion Market Association is actively monitoring the situation as prices soar and bid-ask spreads widen considerably. Concerns linger about potential U.S. import tariffs under Section 232, further complicating the market and causing uncertainty among traders.