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 has been fuelled by surging demand for 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. Gold also climbed to another record high, building on eight straight weeks of gains.
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 has prompted some traders to book cargo slots on transatlantic flights for silver bars – an expensive mode of transport typically reserved for gold – to profit from higher prices in London. The premium was at about US$1.55 an ounce in early trading on Tuesday – down from a spread of US$3 last week.
Silver lease rates – which represent the annualised cost of borrowing metal in the London market – have been persistently high this year, but surged to more than 30 per cent on a one-month basis on Friday. That is creating eye-watering costs for those looking to roll over short positions.
A jump in demand from India in recent weeks has drawn down the supply of available bars to trade in London, following a rush to ship metal to New York earlier this year after worries that the metal could be hit with US tariffs sparked large dislocations between the two trading hubs.
While precious metals were officially exempt from levies in April, 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. The investigation has revived fears the metals could be swept up in new tariffs, exacerbating market tightness.
