The global silver market is currently in the grip of a historic and unprecedented short squeeze, driving benchmark prices in London past the per ounce mark for the first time since 1980. This crisis is rooted in a fundamental physical shortage of tradable silver bars in London’s vaults.To meet urgent delivery obligations and capitalize on record-high price premiums, silver traders are engaging in extraordinary measures, including frenzied, high-cost air freight of physical silver bars from New York  to London.

This massive transatlantic movement of physical metal highlights the severe dysfunction and illiquidity in the world’s most critical precious metals trading hub.Traders described a market where liquidity has almost entirely dried up, leaving anyone short spot silver struggling to source metal and forced to pay crippling borrowing costs to roll their positions to a later date.

The short squeeze in the London silver market has intensified, driving prices above $50 an ounce, a level not consistently held since the 1980 Hunt brothers’ attempt to corner the market.

Key aspects of the current turmoil include:

• Price Dislocation: Benchmark London spot prices have soared to an unusual and massive premium—reportedly up to $3 per ounce—over the New York COMEX futures price, far exceeding the typical few-cent spread.
• Liquidity Crisis: Market liquidity has nearly evaporated. Banks are reluctant to quote prices, and the bid-ask spread has widened significantly, a clear sign of extreme market tightness.
• Borrowing Costs: The cost to borrow spot silver in London has skyrocketed, with annualized overnight borrowing costs reportedly surging over 100%, surpassing all-time highs from the 1980 squeeze.