Silver Prices Break Record: Concerns Over Physical Supply Rise

Historical Peak in Silver Prices

At the beginning of September, silver was trading at 42 dollars per ounce, and on October 9, it soared to 51.23 dollars, reaching an all-time high. This rapid increase created significant excitement among silver investors, while a crisis in physical supply also caused anxiety in the markets.

Striking Decline in Physical Supply

Bruce Ikemizu, Director of the Japan Precious Metals Association (JBMA), stated that the rates for one-month physical silver leasing on the London market have risen to 39.2%. This situation indicates that physical supply in the markets has seriously tightened. Most silver transactions conducted in the Western world are done through “paper silver” contracts, which do not require physical delivery. However, the rising demand for physical delivery in recent times is straining the market system.

Panic Atmosphere in the West

The anxiety in the markets is increasing as metal stocks rapidly deplete. Physical silver holders have become reluctant to lend out their holdings, leading to higher leasing rates and escalating the panic. Experts warn that if this trend continues, the cash settlement system in futures trading could collapse. Speculators with short positions are also facing pressure to deliver metals they do not possess. For these players, who have manipulated the market for many years, the current situation is becoming quite dangerous.

China Halting Exports and Its Consequences

During this process, China, the world's second-largest silver producer, has completely halted its exports. The Beijing government has chosen to prioritize protecting its own industry and increasing its reserves over short-term gains. Western countries, having avoided stockpiling during periods of low prices, are now facing disruptions in industrial production and delivery crises. Experts warn that the prevailing paper silver system in the West is unsustainable and that the difficulties in physical silver supply could seriously impact industrial production.