Is The Real Silver Squeeze Coming? (Uncut) 03-30-2025

Is The Real Silver Squeeze Coming?

Talk of a silver squeeze is making the rounds again. On podcasts, alternative news sites, and social media, eye-popping price targets, some as high as $500 an ounce, are being thrown around. But is there any truth to these claims, or is this just another round of hype? More importantly, even if the conditions for a squeeze are forming, are the markets designed in a way that would prevent it from ever happening? Today, we’re going to break down what’s driving silver’s recent stress, whether the price could go parabolic, and what forces exist to keep silver under control.

Because if history tells us anything, it’s that silver doesn’t just rise uncontrollably without a fight. If you appreciate fresh takes and deep insights into the world of precious metals, take a second to hit that subscribe button. Your support helps us keep bringing you new content each week.

We’ve been down this road before, and it’s becoming a well-worn path. After Redditor sent GameStop stock to the moon in a short squeeze targeting hedge funds, attention quickly turned to silver. In 2021, investors identified bottlenecks in physical supply and attempted to coordinate a silver squeeze.

Some articles even suggested prices could skyrocket anywhere from $100 to $1,000 per ounce. So far, those claims haven’t materialized, but despite history saying otherwise, silver squeeze advocates aren’t backing down. This time, they’re pointing to technical data showing clear signs of stress in the market.

If silver squeeze advocates are looking for signs of stress in the market, they don’t have to look far. Right now, the London Bullion Market Association is facing a growing liquidity problem. Silver is flowing out of London’s reserves at a historic rate, with much of it heading to the New York COMEX.

At the current pace, London could be completely drained of its silver reserves in just 22 months. That might not sound like a big deal at first, but London is the backbone of the global silver trading system. If liquidity dries up there, it could trigger a major disruption in the entire paper silver market.

The biggest factor right now is geopolitical risk. Tariff threats have put enormous pressure on the exchange-for-physical mechanism, the link between London’s LBMA and New York’s COMEX. This is creating a regional scarcity of silver, forcing traders and institutions to source their metal elsewhere.

If this continues, it could lead to serious instability in the paper market. And we’re already seeing the effects. In response to this liquidity crunch, institutions are leasing more silver than before, an indicator that supply chains are tightening.

To put it into perspective, since Trump’s tariff threats in November 2024, roughly 60 million ounces of silver have flowed into COMEX. That’s happening at an even faster pace than during the COVID crisis, when physical silver was in extremely short supply. If this keeps up, and silver remains regionally scarce, the market will eventually need to rebalance.

But with geopolitical uncertainty keeping the exchange-for-physical mechanism elevated, that rebalancing could take much longer than usual. At the same time, industrial demand for silver keeps rising, even as mining supply continues to fall. This isn’t just speculation, it’s a real-world supply and demand imbalance that could put significant pressure on prices.

And in the end, it’s not just paper markets that determine silver’s fate, it’s the real-world flow of physical silver. That’s where we find the real bottleneck in a true silver squeeze scenario. The refineries.

If the silver market were ever to experience a true squeeze, the battle wouldn’t be fought on the COMEX or in London’s financial district. It would happen at the refineries. Refineries sit at the choke point of the entire silver supply chain.

They determine whether raw silver is processed into investment-grade bars for ETFs and bullion dealers or into industrial-grade silver for manufacturers. And when silver gets scarce, refiners prioritize their best customers, the ones with long-term contracts and deep pockets. That means if industrial demand spikes, refiners could shift production away from the kind of silver investors buy, draining supply from bullion markets and exchanges.

This would create a two-tiered system, industrial buyers getting priority access while retail investors and institutions fight over what’s left. Refineries may not even have a choice. Industrial buyers can enter contracts that cannot be ignored by the refineries, forcing prioritization.

And here’s where it gets even more important. Industrial buyers are largely price inelastic. For most industries, silver costs are a rounding error, easily absorbed by the or passed on to the consumer.

EV manufacturers, medical equipment producers, and most electronics companies wouldn’t even blink at higher silver prices. The one sector that might feel the squeeze is solar panels, since they use significant amounts of silver. But even they have a buffer, government subsidies that protect them from price volatility.

We’re already seeing signs of stress, with London’s reserves draining and silver being leased at increasing rates, refiners are under pressure to keep up with demand. And there’s another problem. Mining supply is struggling to grow.

Silver is primarily mined as a byproduct of other metals like copper and zinc, and with fewer large-scale mining projects coming online, supply shortages could develop faster than most people expect. It wouldn’t be as simple as buying paper contracts and waiting for a price explosion. The real question is whether refiners can keep up with demand for investment-grade silver.

If institutions are forced to scramble for large bars and refineries can’t process metal fast enough, that’s when we could see a true breakdown between paper silver and physical silver pricing. A true silver squeeze would need to occur as a result of supply constraints. History is our guide.

In 2011, we saw the price of silver go parabolic, reaching nearly $50 an ounce in short order. What capped the momentum and led to silver’s collapse at that time was intervention by the exchanges. Margin requirements were raised five times in a week in an extreme response to silver’s meteoric rise.

The way margin hikes work is they force leveraged traders to either put up more cash or liquidate their positions. Since most retail traders and smaller funds don’t have the capital to meet the new requirements, this leads to forced selling, which drives prices down. This is exactly what happened in May 2011, which sent silver from $50 an ounce to below $35 in a matter of days.

Whether this was justifiable risk management or coordinated suppression is a real debate, but what it shows is that the exchanges do have tools at their disposal to runaway prices, making it even less likely that a run to $500 an ounce silver or more could happen. However, if physical supply was strained enough to begin a squeeze without a fast resolution, then physical reality could force a price adjustment. This could potentially end the paper market’s dominance in price setting and set off a chain reaction in markets across the globe.

In other words, a bet on a silver squeeze is akin to betting on a collapse of the existing paper pricing system dominated by Western exchanges. At the end of the day, a silver squeeze isn’t as simple as buying up metal and waiting for the price to explode. While silver is showing signs of stress, history tells us that runaway prices don’t happen easily.

The system has built-in controls that make a parabolic move unlikely, unless something fundamentally breaks. If silver’s liquidity issues worsen and industrial demand keeps rising, we could see a supply-driven event that challenges the paper market’s ability to set prices. And if that moment ever comes, it won’t be a slow rise.

It will be a structural break in the market as we know it. So if you’re investing in silver, it’s critical to separate hype from reality. A real squeeze wouldn’t be about retail buying.

It would come from an institutional scramble for physical supply. And if that moment ever arrives, it won’t just be silver investors who feel the impact. It will be a shift that ripples through financial markets worldwide.

And that’s all we have for you today. Please remember to like, subscribe, and share with a friend. Thanks for watching, and we’ll see you next time.