In one of the tensest moments in precious metals markets in decades, the global silver market is experiencing widespread disruption reminiscent of the 1980 crisis when the Hunt brothers attempted to corner the white metal.

The London market—the global heart of silver trading—is undergoing an unprecedented short squeeze crisis, with prices rising above $50 per ounce for only the second time in history, amid severe supply shortages and a significant liquidity decline. This has prompted some banks and traders to airlift their silver bars from New York to London in a frantic race to cover short positions and capitalize on the massive price gap between the two markets.

This unexpected surge comes at a delicate moment for the global economy, with growing concerns over U.S. debt, a federal government shutdown, and increasing geopolitical risks driving investors toward gold and silver as safe havens.

According to Bloomberg, the current silver market situation goes beyond mere investment hedging, combining physical supply shortages, high-risk speculative moves, and disruptions in global transport networks, creating a financial storm unseen in four decades.

Reuters reported that price differentials between the U.S. COMEX market and London have become so large that shipping silver from America to London is now profitable to close the price gap, prompting some traders to use transcontinental flights to move bars.

Anant Gatia, manager of Greenland Investment Management, said, “What we are witnessing in the silver market is completely unprecedented; there is currently no liquidity available at all,” noting that spot prices in London have reached record levels compared to New York contracts, while interbank lending appetite has dropped to its lowest.

Bloomberg data shows overnight borrowing costs for silver in London have risen over 100% year-on-year, while the premium between London and New York exceeded $3 per ounce, a level not seen since the 1980 crisis.

Supply-demand spreads widened from 3 cents to over 20 cents, reflecting the market chaos, according to veteran trader Robert Gottlieb from JPMorgan, who described the situation as “an almost complete freeze of liquidity, with banks stopping quoting prices to each other.”

Bloomberg traces the crisis roots to intertwined developments: alongside increased demand for precious metals as a hedge against inflation and a weak dollar, recent weeks saw a sharp rise in demand from India, which shifted its import destination from Hong Kong to London during the “Golden Week” holiday.

Simultaneously, global stock shortages worsened the crisis, with free tradable quantities in London dropping to about 200 million ounces, down 75% from mid-2019 levels.

Analysts note these developments coincided with a partial paralysis of U.S. government institutions due to the shutdown, slowing shipping and customs clearance processes, making even logistical movements of silver more costly and complex.

In a scene unseen in markets for decades, Bloomberg confirmed that air freight companies received urgent requests from financial institutions to transport massive amounts of silver from COMEX warehouses in New York to London storage.

An executive at a logistics company said traders are currently trying to move between 15 and 30 million ounces of the white metal across the Atlantic, noting that the New York Mercantile Exchange (COMEX) recorded its largest daily silver withdrawal in four years.

Joseph Stevens, head of trading at MKS Pamp, predicted that “the return of supplies to London will gradually help restore balance,” but warned that any transport delays “could be extremely costly given the huge interest costs on short positions.”

The situation is further clouded by the possibility that President Donald Trump may impose new tariffs on silver imports under the so-called “Section 232” investigation on critical metals.

Amy Gower, analyst at Morgan Stanley, said, “Raising tariffs will increase metal retention in the U.S. market, worsening supply shortages in London,” adding that “high prices may temporarily restore balance but are not a sustainable solution to the crisis.”

The current silver crisis goes beyond precious metals markets to signal the fragility of the global financial system amid recurring disruptions.

As happened 45 years ago with the Hunt brothers, today’s scene shows that greed, speculation, and supply scarcity can shake even the most stable markets.

If banks, mining companies, and investment funds fail to restore market confidence, the 2025 silver crisis could become a new chapter in financial crisis history, reflecting how a metal symbolizing wealth can ignite a new global economic upheaval.