Sold Out in India, Panic in London: Silver Market Suffers Global Supply Shock

The global silver market recently faced unprecedented disruption as silver supplies vanished from major hubs including India and London. A blend of escalating investment demand, industrial consumption, and geopolitical tensions triggered this crisis, causing silver prices to breach historic highs before a sharp reversal.

India’s Festive Rush Triggers Supply Drain

Amid the 2025 Diwali season, Indian consumers shifted their attention from gold to silver, sparked by viral social media campaigns highlighting silver’s 100-to-1 price ratio to gold. Dealers reported complete sell-outs and surging premiums exceeding $5/oz. 

Trading houses, including MMTC-Pamp, witnessed silver depletions for the first time in over 25 years. China’s week-long shutdown worsened availability, forcing dealers to turn to London’s vaults.

London Vaults Nearly Empty Amid ETF Holdings

London’s bullion stockpiles, although vast, were largely locked in exchange-traded funds, making actual deliverable metal scarce. By early October, the “free float” dropped below 150 million ounces. JPMorgan and other major banks began rationing supply, unable to fulfil client commitments to India until November. Premiums and borrowing costs skyrocketed, reaching 200% annualised overnight rates.

Read More: Silver Supply Tightens in India as Global Demand Remains Robust!

New York Inventories Tapped to Alleviate Crisis

In an effort to ease London’s squeeze, over 20 million ounces were moved from New York’s Comex in just 2 weeks. However, delays due to customs and logistical complexities raised concerns. Traders feared being unable to meet London delivery obligations in time, risking steep rollover costs amid the volatile market.

Debasement Trade, Solar Boom Strains Global Supply

Since 2021, silver demand has outpaced mining and recycling by 678 million ounces, led by the solar power boom. The US-China tariff threat prompted preemptive shipments of 200 million ounces to New York, depleting global reserves. Investment inflow into silver ETFs drained further inventory, amplifying the global dislocation.

Conclusion

A confluence of Indian retail demand, solar industry consumption, geopolitical fears, and ETF accumulation pushed the global silver market into disarray. With supply stretched thin and sentiment volatile, this episode underscores the fragility of precious metals supply chains in periods of synchronised global demand.

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in securities are subject to market risks. Read all related documents carefully before investing.