Silver On The Highest Price Since 1980. Is History About to Repeat Itself?

[Redator]

• Silver Breaks $50 Barrier: Spot silver surged to $50.02 per ounce, its highest level since 1980, marking a 70% year-to-date gain — outperforming gold’s 51% rise.
• Severe Physical Shortage in London: Borrowing costs for silver hit a record 35% annualized rate, signaling tight supply as much of the metal remains locked in ETFs, limiting market liquidity.
• Macro Drivers & Fed Watch: Investor demand for safe-haven assets grows amid U.S. budget gridlock, stock market risks, and Fed independence concerns.

Silver prices are soaring, breaking above the key $50 per ounce level and reaching their highest point since 1980. On Friday, spot silver touched $50.02, briefly spiking above $51 during intraday trading — a 3.7% daily gain. Although a moderate correction followed, the overall trend remains strongly bullish.

Since the start of the year, silver has surged over 70%, making it one of the top-performing commodities. By comparison, gold has gained 51% over the same period.

Flight to Safe Havens Fuels the Rally

The rally in silver prices reflects a broader move toward safe-haven assets. Prolonged budget gridlock in the U.S., concerns about an overheated stock market, and growing doubts about the Federal Reserve’s independence are prompting investors to shift capital into tangible, inflation-resistant assets.

Silver, Daily Timeframe, source: TradingView

Alongside gold, silver is viewed as a classic hedge during times of political and economic uncertainty. However, its lower liquidity and smaller market size make its price movements more volatile than gold’s.

Supply Crunch in London Sparks Market Tensions

One of the key catalysts behind the current rally is the deepening shortage of physical silver in London, one of the world’s main storage and trading hubs. The cost of borrowing silver in the London market has skyrocketed to an annualized rate of 35%, signaling severe tightness in physical supply.

While demand for physical silver continues to rise, much of the available stock remains locked up as collateral for ETFs, unavailable for active trading. This limits market liquidity and intensifies upward price pressure.

Price Gap Between London and New York Widens

Another troubling signal for traders is the growing spread between spot silver prices in London and futures contracts in New York. The gap has now exceeded $2.50, with futures trading at a discount.

Spread between spot and futures price of Silver, source: TradingView

This disparity could encourage physical shipments of silver from the U.S. to the U.K. — an arbitrage move that raises logistics costs and further tightens supply.

Echoes of 1980 — Will the Past Return?

The current situation evokes memories of the 1980 silver saga, when the Hunt brothers attempted to corner the global silver market. At that time, prices reached an all-time high of $52.50 per ounce, followed by a dramatic crash that ended a speculative bubble. While today’s fundamentals are markedly different — driven by investment demand, geopolitical tensions, and supply constraints — the historical parallel serves as a cautionary reminder against investor euphoria.

Silver, Monthly Timeframe, source: TradingView

Inflation in Focus — CPI Data Could Steer the Market

Next week, investors will closely watch the U.S. CPI inflation report. Despite the ongoing government shutdown, the Bureau of Labor Statistics (BLS) confirmed that the release will proceed as scheduled.

These data could play a crucial role in shaping expectations for Federal Reserve policy, potentially influencing the U.S. dollar’s direction — and, in turn, the precious metals market, particularly silver and gold.

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