🌐 London Short-Squeeze: US Sends Silver to Cover Shortfall

🔹 The London silver market is reportedly under stress from a short squeeze, essentially, many traders who bet on silver prices falling are being forced to cover those positions, pushing physical silver demand sharply higher. Inventory levels in London vaults are plunging, indicating physical shortages of deliverable silver. In response, U.S. silver bars are being shipped to London to help cover the shortfall, i.e. to provide the actual, physical silver needed to meet delivery obligations. Prices per ounce have surged, reportedly exceeding USD $50/oz, as the squeeze intensifies.

🔹 Traders who sold silver short (i.e. promised to deliver silver they didn’t own) are being squeezed because there isn’t enough physical silver on hand to fulfill all delivery claims. To settle those obligations, actual silver must be delivered, hence the movement of U.S. bars to London. The situation underscores the tension between paper/derivative claims on silver and actual physical metal. When many paper holders demand physical delivery simultaneously, shortages in real metal become apparent.

🔹 Because deliverable silver is so scarce, premiums (extra cost above “spot” or futures prices) are widening. The “basis” (difference between spot, futures, and physical & delivery prices) is becoming distorted. The scramble for physical metal and the need to transport bars across continents highlights stress in the global silver supply chain. It may challenge confidence in how well derivative markets reflect true physical scarcity.

➡️ https://www.scottsdalemint.com/articles/2025/london-silver-squeezed-us-bars-sent-to-cover-physical-shortfall/