Historic short squeeze, historic prices! Silver soars, returning to "Hunt Brothers squeeze" price levels.

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A historic short squeeze is sweeping the London silver market, with severe physical shortages pushing silver prices to unprecedented heights, surpassing the record set during the Hunt brothers’ attempted market manipulation in 1980.

According to Bloomberg data, London spot silver prices once rose 0.4%, reaching a record high of $52.5868 per ounce. This price surpassed the January 1980 high of $52.50 set on the (now-defunct) Chicago futures exchange, when Texas billionaires the Hunt brothers tried to monopolize the market by hoarding silver.

Driven by silver, spot gold also climbed to a new all-time high of $4150 per ounce.

Wallstreetcn previously mentioned that a combination of strong safe-haven demand, surging Indian buying, and worries over potential US tariffs has rapidly drained London silver inventories, and the liquidity crisis has triggered a global rush for silver.

London spot prices once traded as much as $3 higher than New York futures, an unprecedented premium that pushed traders to take extreme measures—chartering cargo space on transatlantic flights to airlift silver bars, an expensive move typically reserved for gold shipments. Though the premium retreated to about $1.55 as of early Tuesday, market tension remains unabated.

London Liquidity Crisis, Borrowing Costs Soar

Liquidity in the London silver market has almost completely dried up, and traders holding short positions face enormous pressure. Unable to find deliverable physical silver on the market, they are forced to pay exorbitant rollover fees. Data shows London’s one-month lease rate for silver—the cost to borrow it—has soared above 30%, and overnight borrowing rates have even hit an annualized rate of over 100%.

“I’ve never seen anything like this before,” said Anant Jatia, Chief Investment Officer at Greenland Investment Management. “What we are seeing in the silver market is absolutely unprecedented; there is virtually no liquidity right now.”

This extreme lack of liquidity stems from a dramatic drop in tradable silver inventories in London vaults. Bloomberg data shows that since mid-2019, freely available silver stocks in the London market have plummeted 75% from about 850 million ounces to just around 200 million ounces. Former JPMorgan managing director and precious metals trader Robert Gottlieb noted: “Banks are unwilling to quote each other, so bid-ask spreads have become extremely wide. This has created a huge lack of liquidity.”

This round of short squeeze is the result of multiple forces at work.

First, amid global economic uncertainty, investors are flocking into safe havens such as gold and silver to hedge against US debt risks, fiscal deadlock, and currency depreciation. Second, a recent unexpected surge in Indian demand has further drained London’s already tight inventories. In addition, concerns about the US government potentially imposing tariffs on key minerals including silver under Section 232 have led some metals to be shipped out early, aggravating supply tightness. The London Bullion Market Association (LBMA) has issued a statement saying it is “actively monitoring the situation.”

Goldman Sachs Warns of Turbulent Correction

Facing historic prices, market institutions are divided over silver’s future. Bank of America analysts raised their 2026 year-end target for silver from $44 to $65 per ounce, citing ongoing supply shortages, soaring fiscal deficits, and a low interest rate environment.

However, Goldman Sachs has issued a warning, saying the current rally is mainly driven by tight supply in the London physical market, and that this tension is expected to ease in the next 1-2 weeks as a large amount of physical silver flows in from China and the US—but the adjustment process will be “extremely volatile.”

Goldman analysts wrote in a report: “Liquidity in the silver market is worse, with the market being about one-ninth the size of gold, which amplifies price volatility. Without central bank buying as an anchor, even a temporary outflow of investment can trigger a disproportionate correction.”

Risk Disclosure and DisclaimerThe market is risky, and investments must be made with caution. This article does not constitute personal investment advice, and does not take into account the individual investment objectives, financial situation, or needs of any particular user. Users should consider whether any opinions, views, or conclusions in this article are appropriate for their individual circumstances. Investment is at your own risk. ```