Silver hits all-time high as London squeeze upends market
Demand for havens has also been aided by recurrent US-China trade tensions, threats to the Fed’s independence, and a US government shutdown
[MELBOURNE] Silver prices touched an all-time high above US$52.50 an ounce, as a historic short squeeze in London added momentum to a rally that’s been fuelled by surging demand for safe-haven assets.
Spot prices rose as much as 0.4 per cent to US$52.5868 an ounce in London, surpassing a peak set in January 1980 on a now-defunct contract overseen by the Chicago Board of Trade, when the billionaire Hunt brothers attempted to corner the market.
Concerns about a lack of liquidity in London have sparked a worldwide hunt for silver, with benchmark prices soaring to near-unprecedented levels over New York. That’s prompting some traders to book cargo slots on transatlantic flights for silver bars – an expensive mode of transport typically reserved for gold – to profit off higher prices in London. The premium was at about US$1.75 an ounce as markets opened on Tuesday (Oct 14), down from a spread of US$3 last week.
Silver lease rates, which represent the annualised cost of borrowing metal in the London market, surged to more than 30 per cent on a one-month basis on Friday, creating eye-watering costs for those looking to roll over short positions. Lease rates for gold and palladium also tightened, signalling a broadening pull on London’s bullion reserves, following a rush to ship metal to New York earlier this year.
The silver market “is less liquid and roughly nine times smaller than gold’s, amplifying price moves”, Goldman Sachs Group analysts wrote in a note. “Without a central bank bid to anchor silver prices, even a temporary pullback in investment flows could trigger a disproportionate correction, as it would also unwind the London tightness that drove much of the recent rally.”
The four main precious metals have surged between 55 per cent and 82 per cent this year, in a rally that’s dominated commodity markets. Gold’s advance has been underpinned by central-bank buying, rising holdings in exchange-traded funds, and rate cuts by the Federal Reserve. Demand for havens has also been aided by recurrent US-China trade tensions, threats to the Fed’s independence, and a US government shutdown.
On Monday, analysts at Bank of America hiked their end-of-2026 price target for silver from around US$44 an ounce to US$65, citing persistent market deficits, elevated fiscal gaps and lower interest rates.
Traders remain on edge ahead of the conclusion of the US administration’s so-called Section 232 probe into critical minerals, which includes silver, as well as platinum and palladium. Fears that the metals could be swept up in new levies have exacerbated market tightness, partly laying the foundations for the squeeze in silver after a major drawdown of freely available supplies in London.
Spot gold was little changed at US$4,109.16 an ounce at 7.36 am in Singapore, after climbing as much as 2.5 per cent on Monday to a fresh record. Silver was up 0.1 per cent, while platinum and palladium also gained. BLOOMBERG
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