Silver Skyrockets 5.4%, Gold Climbs 2.75% in Precious Metals Break Out (photo credit: SHUTTERSTOCK)
Silver lease rates surge above 6%, echoing platinum’s pre-breakout spike. Traders eye signs of a squeeze as silver tests supply limits. Spot silver near $29.50/oz.
Silver markets are showing fresh signs of stress as implied 1-month lease rates have spiked sharply to over 6%, reaching levels not seen in years, according to Bloomberg data. The surge mirrors a pattern seen in platinum markets earlier this year, where lease rates soared ahead of a significant price rally.
The lease rate, the cost of borrowing silver, has climbed rapidly since January 2025, pointing to tighter availability of physical metal in the market. Elevated lease rates often indicate increased demand from short sellers who need to borrow metal or a tighter physical supply.
“Lease rates moving up like this can indicate that holders of physical silver are reluctant to lend, possibly due to strong industrial demand or tightness in supply chains,” said Tai Wong, an independent metals trader based in New York, in a phone interview.
Spot silver prices were last trading at $38.50 per ounce on Tuesday, having gained around 25% so far this year. Gold prices, meanwhile, hovered near $3,350 per ounce, up about 18% year-to-date. Both metals have benefited from robust investor interest amid concerns over sticky inflation and global geopolitical tensions.
Otavio (Tavi) Costa, a portfolio manager at Crescat Capital, highlighted the spike in lease rates on social media, drawing a parallel with silver’s breakout earlier this year.
Historically, spikes in lease rates can precede sharp moves in the underlying metal price. For example, during the 2011 silver bull market, when silver briefly traded near $50 per ounce, lease rates saw similar dislocations as market participants scrambled for physical metal.
According to the Silver Institute, silver demand remains robust, with significant industrial use in solar panels, electronics, and battery technologies. At the same time, mine production growth has struggled to keep pace with demand, leading some analysts to forecast potential deficits this year.
“Rising lease rates are a clear warning sign that the physical market is tightening,” said Nicky Shiels, head of metals strategy at MKS PAMP SA, in a recent client note. “It’s a supportive backdrop for higher prices if this trend continues.”
The sharp moves have drawn the attention of both hedge funds and retail investors, who are looking for signs of another squeeze in precious metals. As of now, market participants will be closely watching to see if the current supply-demand stress in the lease market translates into further upward momentum for silver prices.
