The Silver Price Squeeze: Strategic Entry Points in Gold and Industrial Metal Miners

The global metals market is undergoing a profound transformation, driven by a confluence of speculative demand, industrial bottlenecks, and liquidity constraints. Silver, in particular, has become a focal point of this turbulence, with lease rates spiking to 34.9% in October 2025 before retreating to 5.6% as liquidity returned, according to a Royal Gold press release. This volatility, coupled with gold's parallel rally to record prices, has created a unique opportunity for investors to identify undervalued equities in the mining sector. By analyzing the interplay between physical premiums, lease rates, and corporate financials, we can pinpoint strategic entry points in companies like Newmont (NEM), Royal Gold (RGLD), and Hudbay Minerals (HBM).

The Silver Squeeze: A Perfect Storm of Supply and Demand

Silver's current predicament is the result of a structural imbalance. Industrial demand, particularly in the solar photovoltaic sector, consumed 232 million ounces in 2024 alone, according to a Newmont earnings report. Meanwhile, refined silver inventories at COMEX and LBMA vaults have dwindled to historic lows, exacerbating the squeeze. The London Bullion Market Association (LBMA) has even proposed publishing weekly silver inventory levels-a rare acknowledgment of the crisis, as noted in the Royal Gold press release.

This scarcity has driven lease rates to stratospheric levels, with traders resorting to transatlantic flights to arbitrage price discrepancies between London and New York, as described in the Royal Gold press release. The result is a market where physical silver is trading at a 30% premium to futures contracts, a stark indicator of backwardation, according to the Newmont earnings report. For mining companies, this environment presents a dual-edged sword: higher prices for their output, but also elevated costs for hedging and financing.

Gold's Rally and the Valuation Disconnect

Gold, meanwhile, has surged to an average of $3,456.54 per ounce in Q3 2025, driven by macroeconomic uncertainty and central bank purchases. Yet the gold-silver ratio has ballooned to 90:1, far above its historical average of 7:1, according to the Newmont earnings report. This suggests silver is not only undervalued relative to gold but also underpriced in absolute terms given its industrial indispensability.

For investors, this disconnect creates a compelling case for allocating capital to miners with exposure to both metals. Newmont (NEM), for instance, reported a 41% year-over-year increase in its average realized gold price to $3,539 per ounce, while Hudbay Minerals (HBM) capitalized on its gold by-product credits to improve cash costs. Royal Gold (RGLD), a royalty and streaming company, leveraged higher gold and silver prices to achieve record revenue of $252.1 million in Q3 2025, as noted in the Royal Gold press release.

Strategic Entry Points: Analyzing Key Equities

Hudbay Minerals (HBM): Despite Q3 results missing analyst expectations, Hudbay's operational resilience and strategic partnerships position it as a compelling buy. The company secured a $600 million investment from Mitsubishi Corporation for its Copper World project, reducing capital contributions to $200 million and improving the project's internal rate of return to 90%, as reported in the Newmont earnings report. With cash costs now guided to $0.15–$0.35 per pound, Hudbay's cost discipline and by-product gold credits make it well-suited to benefit from the current price environment.

Newmont (NEM): Newmont's Q3 2025 results highlight its ability to generate free cash flow despite a 15% drop in gold production. The company's all-in sustaining costs fell to $1,566 per ounce, and strategic divestments, including the Coffee project, generated $3.5 billion in proceeds, according to the Newmont earnings report. While production challenges persist, Newmont's near-zero net-debt position and cost efficiency make it a defensive play in a volatile market.

Royal Gold (RGLD): As a royalty and streaming company, Royal Gold is uniquely positioned to capitalize on rising metal prices without bearing the operational risks of mining. Its Q3 revenue of $252.1 million reflects the strength of its diversified portfolio, which includes gold and copper royalties, as noted in the Royal Gold press release. With a forward price-to-cash-flow ratio of 8.5, Royal Gold appears undervalued relative to its peers, offering a high-margin exposure to the energy transition.

Conclusion: Navigating the Squeeze with Discipline

The silver price squeeze and gold's rally are not isolated phenomena but symptoms of a broader shift in global demand. For investors, the key lies in identifying companies that can navigate this volatility while maintaining strong cost structures and strategic flexibility. Hudbay's joint ventures, Newmont's operational efficiency, and Royal Gold's royalty model each offer distinct advantages in this environment.

As the LBMA moves to publish silver inventory levels and industrial demand continues to outstrip supply, the window for strategic entry is narrowing. Those who act with discipline and foresight may find themselves well-positioned to capitalize on the next phase of the metals market's evolution.