AI Overview
Yes, there is a significant shortage of physical silver in October 2025, characterized by global supply deficits, high premiums, and difficulties in obtaining immediate delivery. Demand is outstripping supply due to strong industrial use and investment, while mine production remains constrained because most silver is a by-product of other metals. This has led to a "seizure" in the physical market, with traders resorting to measures like flying metal bars between continents to meet delivery obligations.
Key factors contributing to the shortage
Consistent supply deficit:
Global silver consumption has outpaced mine production for several consecutive years, including 2025, creating persistent supply shortfalls.
High industrial and investment demand:
Surging demand from industries like solar panel manufacturing, electronics, and electric vehicles, combined with investor interest, is putting further pressure on available supply.
Constrained mine supply:
Since silver is often a by-product of other metal mining, its supply is not easily increased to meet rising demand.
High lease rates:
Extreme stress in the market is evident as the rates to borrow physical silver have soared to historically high levels, signaling extreme difficulty in securing the metal.
Global impact:
The shortage is not limited to one region, with significant issues reported in major markets like India, China, and Australia, and a visible "squeeze" in physical availability.
Market and financial consequences:
This physical shortage has caused the spot price of silver to trade above futures prices (backwardation) and prompted some mutual funds to stop accepting new investments in their silver funds.
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