Is the silver squeeze about to get worse?

[SINGAPORE] Silver is flashing red warning signs of a supply squeeze, with prices climbing back towards multi-year highs as surging borrowing costs, narrowing future spreads and entrenched structural deficits add fuel to the rally. The Silver Institute expects the trend to extend into a fifth straight year in 2025.

On top of tight supply, the metal is getting a lift from steady demand in green industries such as solar and electric vehicles (EVs). Meanwhile, talk of rate cuts by the US Federal Reserve, gold’s shine and the de-dollarisation buzz are all adding to silver’s price momentum.

Silver hit a 13-year high of almost US$40 per ounce on Jul 23, before easing to about US$36 by the end of the month. It has since recovered to around US$38 per ounce, “partly piggybacking on gold’s strength and the relative resilience seen in base metals”, said Edward Meir, senior metals analyst at Marex.