Silver's $50 Surge Recalls 1980 Hunt Brothers' Frenzy, Liquidity Plummets

Silver prices surged above $50 an ounce for the first time in over four decades, igniting a market turmoil reminiscent of the 1980 Hunt brothers' speculative frenzy. The London silver market, typically the global benchmark for the metal, saw liquidity nearly vanish as traders scrambled to secure physical silver amid soaring borrowing costs. Prices hit $50.15 per ounce in London, breaching a level last seen in January 1980, when the Hunt brothers' cornering of the market triggered a collapse that ended with Comex imposing trading restrictions.

The current squeeze stems from a confluence of factors: a 61% annual gain in silver prices, surging industrial demand from solar and electronics sectors, and a sudden spike in Indian demand. Daniel Ghalil of TD Securities noted that India's silver imports doubled in September, exacerbating already depleted inventories. Meanwhile, Chinese participants, typically a stabilizing force, were sidelined during Golden Week holidays, while fears of U.S. tariffs on critical minerals, including silver, accelerated shipments to New York vaults.

The London Bullion Market Association (LBMA) reported that free float-silver available for trading-has dwindled to 200 million ounces, down 75% from 2019 levels. This scarcity has driven overnight borrowing costs for London silver above 100% annually, with bid-ask spreads widening from 3 cents to over 20 cents per ounce. Traders have resorted to booking cargo space on transatlantic flights to transport silver bars-a costly method usually reserved for gold-to capitalize on London's record premiums.

Market participants warn the squeeze could persist until new supply flows into London. Some anticipate silver from China, where prices trade at a discount to London, to ease the strain. However, logistical hurdles, including U.S. government shutdown delays, complicate efforts to mobilize metal. Morgan Stanley's Amy Gower suggested that high prices may resolve the crisis in the short term, while TD Securities' Ghalil predicted normalization when Chinese participants return to the market.

The silver squeeze has also reignited debates about its dual role as both a safe-haven asset and an industrial commodity. Mohammed El Erian, former Pimco CEO, highlighted silver's appeal amid concerns over fiat currency debasement, while analysts noted its critical use in green technologies. The gold-silver ratio, currently at 88:1, underscores silver's undervaluation relative to gold, fueling speculation of a rebalancing.

[1] Why the silver squeeze is finally about to end, analyst says (https://www.morningstar.com/news/marketwatch/20251003143/why-the-silver-squeeze-is-finally-about-to-end-analyst-says)

[2] The Silversqueeze end-game rally is approaching as ... (https://www.kitco.com/news/article/2025-09-08/silversqueeze-end-game-rally-approaching-lbma-stockpiles-could-be-depleted)

[3] The Silver Surge of 2025: A Global Demand Squeeze Reshapes ... (https://markets.financialcontent.com/stocks/article/marketminute-2025-10-3-the-silver-surge-of-2025-a-global-demand-squeeze-reshapes-markets)

[4] Silver Hits $50 for First Time Since Hunt Brothers' 1980 Squeeze (https://www.bloomberg.com/news/articles/2025-10-09/spot-silver-hits-highest-in-decades-on-haven-rally-tight-market)

[5] Silver Traders Rush Bars to London as Historic Squeeze Rocks ... (https://finance.yahoo.com/news/silver-traders-rush-bars-london-104741282.html)

[6] Silver Squeeze Evokes Hunt Brothers as Banks Rush Bars to ... (https://www.bloomberg.com/news/articles/2025-10-11/silver-squeeze-evokes-hunt-brothers-as-banks-rush-bars-to-london)

[7] Current Precious Metals Prices - Manhattan Gold & Silver (https://www.mgsrefining.com/resources/current-precious-metal-prices/)

[8] Silver traders hurry to send bars to London as unprecedented ... (https://totalnews.com/silver-traders-hurry-to-send-bars-to-london-as-unprecedented-squeeze-impacts-market/)

[9] Why Is JP Morgan the Only One Hoarding Silver? (https://wholeinone.substack.com/p/why-is-jp-morgan-the-only-one-hoarding)

[10] London Silver Market Faces Turmoil as Prices Surge Past $50 (https://www.indexbox.io/blog/london-silver-market-turmoil-prices-surge-past-50/)