Historic Silver Short Squeeze Rockets Price Past $50, Sparking Chaos in London Trading Hub

A powerful short squeeze in the silver market has driven prices to unprecedented highs, upending London trading desks that had positioned for a downturn. Silver recently surpassed $53 per ounce, marking an increase of over 35% since late August, and prompting fresh worries about liquidity and volatility across commodity markets.

As prices spiked, traders with short exposures were forced to buy back physical metal, tightening an already constrained supply chain. London’s vault holdings have reportedly fallen to around 22,000 tonnes, compared with more than 35,000 tonnes in 2022. Much of the recent drawdown reflects shipments of bullion to the United States amid concerns that British-sourced silver might be affected by possible U.S. tariffs on strategic minerals. Analysts note that the resulting “liquidity squeeze” has magnified price momentum throughout the market.

Borrowing costs for silver have climbed sharply as a result. The one-month lease rate, which was roughly 5% at the start of October, has surged close to 35%, according to market data attributed to Goldman Sachs. Traders rolling short positions now face extremely high financing costs, and reports suggest that shipments are being flown from New York to London to relieve the shortage.

The current surge has drawn parallels to the Hunt brothers’ 1980 attempt to corner the silver market, when prices briefly touched $50 before collapsing on “Silver Thursday.” Analysts warn that the present environment could similarly lead to sudden corrections, given the heightened volatility and thin liquidity.

Several macroeconomic factors appear to be fueling the rally. Investors are increasingly anxious about fiscal imbalances in major Western economies and the possibility of an equity bubble linked to AI-driven tech stocks. At the same time, renewed trade tensions—particularly U.S. tariff threats—are reinforcing demand for precious metals as safe-haven assets. Silver’s 75% gain in 2025 has outpaced gold’s 55% rise, underscoring its strong relative performance.

Producers are benefiting as well. Fresnillo, a leading London-listed miner, expects to maintain annual output near 50 million ounces. With an estimated all-in sustaining cost (AISC) of about $17 per ounce, current prices imply potential gross profits approaching $850 million from silver operations alone. Rising industrial demand—especially from solar manufacturing and U.S. industrial policy initiatives—continues to support long-term fundamentals, though any major slowdown in global growth could compress margins and reverse some of the recent gains.