Silver Breaks $90 – Is the World Running Out of Physical Silver?
Hello! This is Michael from WStorybook.
In January 2026, one topic dominates global financial markets: silver.
Silver prices have surged past $90 per ounce, marking a historic high. But the real issue goes far beyond price. Across the market, a disturbing message is spreading rapidly:
Today, we’ll take a deep dive into the causes and implications of this shocking physical silver shortage and discuss how investors should respond.
1. Emergency in London and New York: “Physical Silver Has Vanished”
Physical silver inventories are drying up in New York and London, the core hubs of global precious metals trading.
The crisis began in India in October 2025, when domestic silver supplies tightened sharply and premiums surged beyond 10%. Soon after, an unprecedented move followed:
467 tons of silver stored at COMEX (New York) were urgently flown to London.
Silver is normally shipped by sea due to its weight and relatively low unit value. Transporting it by air – at enormous cost – signals just how critical the situation has become. The London spot market simply could not meet immediate delivery demands.
This panic is reflected in the silver lease rate, which spiked to 30% annually, nearly six times its normal level.
2. Why Silver – And Why Now? Three Structural Drivers
This is not a short-term supply disruption. The silver market has entered the early phase of a structural supercycle.
① Growing Distrust in “Paper Silver”
For decades, silver markets have relied heavily on ETFs and futures – paper claims far exceeding physical supply.
As inventories approach critical lows, investors are increasingly asking:
“Is my silver ETF actually backed by real metal?”
Suspicion intensified on November 28, during the U.S. Thanksgiving holiday, when CME silver trading was halted for 12 hours due to a system failure.
Many market participants questioned whether the halt was a technical issue or a desperate attempt to buy time to secure physical supply.
The message from investors is clear:
They want real silver, not paper promises.
② Five Consecutive Years of Supply Deficits
According to The Silver Institute (2025), the silver market has recorded five straight years of deficits.
- Cumulative shortfall (2021–2025): ~820 million ounces
- Equivalent to one full year of global mine production
Mine output has stagnated, while above-ground inventories have been steadily depleted.
* Note: The Silver Institute Official Report
③ Exploding Industrial Demand (AI, Solar, EVs)
Silver is no longer just a precious metal. it’s a strategic industrial resource.
- Solar energy: Rapid expansion of solar panels has driven soaring demand for silver paste
- Electric vehicles: EVs consume 70–80% more silver than internal combustion vehicles
- AI data centers: Massive power infrastructure expansion has fueled demand for silver, the most electrically conductive metal
For global tech giants, production cannot stop simply because silver prices rise. Supply must be secured at almost any cost – a textbook case of a liquidity-driven vertical price squeeze.
3. Investor Strategy: How Should You Respond?
Major institutions, including Bank of America, have openly discussed scenarios where silver exceeds $65 and even $100. Korean investors may consider three primary approaches:
1) Physical Silver (Bars & Coins)
Pros
- Eliminates all paper-counterparty risk
- Most reliable hedge in systemic crises
Cons
- Taxes may be imposed.
- Best suited for long-term holding
- Buy only from trusted dealers
2) Silver Banking Accounts
Features
- Allows fractional investment
- Offered by major commercial banks
Cautions
- Capital gains taxed (Tax rates vary by country)
- Potential inclusion in comprehensive financial income tax
- Physical withdrawal incurs additional fees
3) Silver ETFs
Pros
- High liquidity, real-time trading
- Suitable for short-term strategies
Cons
- Rollover costs
- Credibility risk during physical shortages
💡 Final Thoughts
This is not a slow, traditional bull market. In an era of aggressive monetary expansion, commodities act as powerful monetary hedges.
Strategic takeaway:
Maintain exposure to both gold and silver, but adopt a dual-track strategy -combining physical holdings with financial instruments.
Silver does carry cyclical risk due to its industrial nature. However, the dominant force today is not demand – it is supply shock. Warnings from the physical market that “silver simply isn’t available” should not be ignored.
