London’s silver inventories continue to dwindle, with available “free float” falling from 850 million ounces in 2019 to just 200 million last week. These structural deficits—five consecutive years of global supply shortfalls—have triggered a persistent short squeeze and even transatlantic air shipments of silver to meet demand. Physical tightness remains acute, especially as industrial recycling volumes lag and Indian import activity remains robust.
Silver continues to benefit from the broader environment of dovish Federal Reserve expectations and elevated geopolitical risk. Markets are pricing in rate cuts in both October and December, reducing the opportunity cost of holding non-yielding assets. Fed rhetoric has turned increasingly accommodative, while U.S. regional banks report fresh credit stress, boosting investor demand for monetary metals.
Meanwhile, trade war fears have returned to the fore. Trump’s tariff threats and China’s potential retaliatory measures have rekindled demand for safe-haven assets. Silver, straddling the line between industrial and monetary metal, remains uniquely positioned—but it is also exposed. Rising trade tensions may reduce industrial demand, especially if global manufacturing slows.
