Silver Price Surges Above $60 on Falling Inventory, Says Sprott
Silver has surged past the $60-an-ounce threshold this week, marking a significant milestone as momentum continues to build for one of the top-performing commodities in 2025. According to a recent precious metals report from investment firm Sprott, the primary driver behind silver’s record-setting rally is a tightening free-trading inventory that has reached critically low levels.
In the December report, analysts led by Paul Wong emphasized that global silver inventories have dwindled to the point where any additional demand triggers accelerated price increases, a phenomenon known as “price convexity.” This rapid price movement reflects a physical market under increasing strain, as available silver stocks for trading become scarce.
Inventory Drawdown Pressures Prices
Sprott’s analysis notes that silver inventories held in London, a key hub for precious metals trading, have plunged steadily from their 2021 peak to levels not seen since before the pandemic. This rapid drawdown indicates tightening liquidity and a physical market under stress. In parallel, regulatory uncertainties and tariff concerns have shifted arbitrage flows to New York markets, raising the risk of localized squeezes similar to those that previously occurred in London.
Supply deficits compound the issue. Silver mine production and recycling have remained largely flat over the past decade while industrial demand—especially for solar panels and electronics—has steadily climbed. This imbalance is forecast to result in a fifth consecutive annual silver deficit in 2025, with an estimated shortfall of around 125 million ounces. Since 2021, the cumulative supply deficit is approaching 800 million ounces.
ETF Holdings and Macroeconomic Factors
Exchange-Traded Fund (ETF) holdings of silver currently stand at 830 million ounces globally, well below the peak of roughly 1 billion ounces recorded in 2021. A rebound in ETF demand to previous highs could absorb a large portion of the already-tight London inventories, driving prices even higher.
Sprott’s report also highlights several macroeconomic trends supporting silver’s rise, including increased geopolitical risks and a steepening global yield curve. These dynamics stoke investor appetite for precious metals as safe-haven assets amid concerns of currency debasement and inflation.
Additionally, China has announced stringent new export controls on silver starting in 2026, prompting a rush to secure supplies ahead of the restrictions. This development further tightens global physical availability and adds upward pressure on prices.
Outlook
Despite a sharp sell-off in mid-October, silver prices have held strong, maintaining levels above the 50-day moving average and reinforcing a robust technical outlook. Sprott’s commentary suggests that the ongoing inventory drawdown, persistent supply deficits, and supportive macroeconomic conditions could drive further silver price gains in the coming months.
As the physical silver market remains under pressure and investor interest continues to rise, market participants will be closely watching inventory levels and demand trends that could shape price action into 2026. —
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