Silver market crisis 2025: The global silver market is facing its most severe crisis in decades, and for once, the epicenter of the turmoil isn’t just Wall Street or London— Is India to blame?As the country celebrated Diwali, millions of people flocked to buy silver, turning a seasonal ritual into a market-breaking frenzy. For Vipin Raina, head of trading at MMTC-Pamp India Pvt, the scale of demand was unprecedented.Raina had been preparing for months for a surge in silver purchases by Indian customers ahead of Diwali, the festival honouring the goddess of wealth. But when it came, it blew everything away. His company, India’s largest precious metals refinery, ran out of silver stock for the first time in its history.“Most people who are dealing silver and silver coins, they’re literally out of stock because silver is not there,” Raina, who is head of trading at MMTC-Pamp India Pvt, told Bloomberg.“This kind of crazy market — where people are buying at these levels — I have not seen in my 27-year career,” Raina added.
Is India leading the buying frenzy?
While India’s Diwali demand is usually gold-heavy, this year saw silver take the spotlight. Social media and market hype fueled the shift. According to the Bloomberg report, investment banker and content creator Sarthak Ahuja, with nearly 3 million followers, promoted silver as the “next big buy” after gold’s historic rally.“It’s never been like this before. The demand this time for silver has been humongous,” Amit Mittal, GM at M.D. Overseas Bullion told Bloomberg.Premiums for silver in India surged above $5 an ounce, far exceeding the usual few cents above international prices. Dealers in Mumbai reported bidding wars, with buyers prioritizing availability over cost.But the frenzy for silver wasn’t confined to India. Global investors and hedge funds joined the surge, betting on a weaker US dollar or simply following the unstoppable rally. By early October, JPMorgan Chase, a key supplier to the Indian market, warned clients that it had no silver to deliver for October, with the next availability only in November.The buying spree hit London, the global hub for silver trading. Traders described a market “all but broken” as banks struggled to quote prices amid repeated client calls and thin liquidity. Robin Kolvenbach, co-CEO of Argor-Heraeus, said, “There is more or less little to no liquidity actually available in terms of leases in London. We have basically stopped all silver intake that is not committed contractually.”The spike in silver prices reached $54 an ounce, before tumbling 6.7%, reflecting extreme stress across the market. Analysts compared it to historical crises, including the Hunt brothers’ attempt to corner the market in 1980, underscoring the severity of the situation.The 2025 silver crisis was not triggered by a single factor but by a convergence of events that drained global inventories and pushed the market to the brink. India’s Diwali demand played a key role, as millions of buyers turned to silver instead of gold, creating unprecedented pressure on domestic and international supplies.Over the past five years, silver demand has consistently exceeded supply from mines and recycled sources, driven largely by a solar industry boom using silver in photovoltaic cells.Since 2021, demand has outstripped supply by 678 million ounces, while London’s total inventories stood at around 1.1 billion ounces at the start of 2021, according to the Silver Institute.Market stress intensified this year as traders rushed to front-run potential U.S. tariffs announced by President Donald Trump, moving over 200 million ounces of silver into New York warehouses.Adding to the pressure, more than 100 million ounces flowed into global silver ETFs through September, as heightened investor demand for precious metals fueled a rally that also propelled gold past $4,000 an ounce for the first time in history. This coincided with a surge in investment demand through exchange-traded funds (ETFs), part of the so-called “debasement trade,” as investors sought a hedge against a weakening US dollar.The combined effect of these forces left London’s free-floating silver reserves, metal not tied up in ETFs—dropping to less than 150 million ounces, far below the daily trading volume of roughly 250 million ounces.Even in ideal circumstances, moving silver from Comex to London can take four days, but delays at customs and complex supply chains left traders exposed to high costs when contracts couldn’t be fulfilled on time. Comex inventories fell by more than 20 million ounces in two weeks, the largest drop in 25 years, benefiting logistics firms but stressing the market further.According to the Bloomberg report, some traders hesitated due to the risk of new tariffs on critical minerals, while TD Securities analyst Daniel Ghali noted that the London market had been primed for a squeeze for over a year.After the frenzy peaked, silver prices plunged more than 5% following signs of improving US-China relations, with Ghali suggesting further pressure may ease as silver flows in from New York and China.“The logistics were a little more complex than we initially assumed,” Ghali said. “We certainly did not expect the scale of the retail-buying bonanza across the globe that ensued while the London market was getting squeezed.”At the same time, China, a key supplier of silver, was on a week-long holiday, reducing the flow of metal into global markets.In essence, a perfect storm had formed: festive demand, industrial growth, investment mania, and trade-related hoarding converged, creating a market under extreme stress and unprecedented volatility, reported Bloomberg.While India’s Diwali buying played a major role, the crisis also reflects structural supply-demand imbalances built over years. Since 2021, silver demand has outpaced supply by 678 million ounces, largely due to industrial demand and ETF accumulation.Yet, the timing and scale of India’s purchases acted as the catalyst, turning an already tight market into a full-blown global squeeze, the Bloomberg report said. Analysts like Satish Dondapati, fund manager at Kotak Asset Management, point to the FOMO factor. “Analysts, bullion dealers were all giving bullish calls on silver in Indian media in a way that has not happened in the last 14 years. The FOMO factor has worked,” Dondapati stated.The silver market remains under stress as the world waits for sufficient deliveries to ease the crunch. While regulators like the London Bullion Market Association have not intervened, citing genuine supply shortages rather than logistics issues, the current situation underscores the fragility of global metals markets in a hyper-connected world.