Silver prices finally caught up to gold with a jump above the $50.00 level as traders talk of physical shortages.
XAGUSD – Daily Chart
XAGUSD has soared from below $40.00 in July to hit prices around the $53.00 level. The 2011 highs came in at $50.00 and that is the key support levels to provide further gains.
The global silver market was facing its biggest crisis in decades, with an unprecedented surge in demand from India during the festive season. India celebrated Dhanteras on Saturday and Diwali on Monday, with millions rushing to buy silver due to soaring gold prices.
Vipin Raina, at MMTC-Pamp India, told Bloomberg that the scale of silver had exceeded expectations. India’s largest precious metals refinery ran out of the metal for the first time in history.
“This kind of crazy market — where people are buying at these levels — I have not seen in my 27-year career,” he said.
The shortages also reached London with traders saying the market was “all but broken,” with major banks refusing to quote prices. Although the City of London holds over $36 billion in silver, the majority is owned by investors in exchange-traded funds (ETFs).
From the beginning of 2025, ETF investors have acquired more than 100 million ounces of silver, according to Bloomberg. That has reduced the stockpile available to meet the sudden demand in countries like India.
JPMorgan Chase & Co, the largest precious metals trader, informed its clients that it had no more silver available to deliver to India for the month of October. The situation became so bad that fund managers in India were forced to halt new subscriptions to their funds.
The silver market could continue to be strained as the recent events cause some hoarding. Banks may look to stock up and avoid future problems.
Meanwhile, Phil Baker, the former CEO of Hecla Mining, says the current silver market is unlike the failed breakout of 2011. He cited an unprecedented, multi-year supply deficit and the profound shift in investor psychology.
The silver deficit is now in its fifth year, driven by what Baker called ‘insatiable’ physical demand versus a critically constrained supply chain. “You have roughly demand of about 1.2 billion ounces, and you have supply from the mines of about 800 million ounces,” he explained. “Recycling puts in maybe 150 million ounces… it doesn’t fill the gap”.
The $50 level is now key for silver and finding support there could see the precious metal continuing to push on higher.
