Sorry Silver Bears, the Vaults Are Empty and the Receipts Are In
Why the world just ran out of silver at exactly the wrong moment
For the first time ever, silver has smashed through $60 an ounce this week, and the smartest minds in the physical precious-metals space are warning that the real fireworks are still ahead. In its just-released December report, Sprott Asset Management laid out a case so tight it almost feels unfair to the bears: the world has drained its readily deliverable silver stockpiles to the point where almost any fresh buying could trigger a vertical move.
The core problem is simple but brutal. Mine supply plus recycling has been dead flat for over a decade while industrial demand, solar panels, EVs, 5G, AI data centers, defense applications, keeps surging. Sprott projects another 125-million-ounce deficit in 2025, pushing the cumulative deficit since 2021 toward a staggering 800 million ounces. For context, the more aggressive Silver Institute forecast (released only weeks ago) sees the 2025 hole at a record 215 million ounces, meaning the five-year drawdown has already topped one billion ounces. Either way, the direction is identical: the world is eating its silver seed corn.
Visible inventories are now flashing the same red alerts that preceded every historic squeeze. London vault stocks have cratered from their 2021 highs to fresh multi-year lows in 2025, while the December 2025 COMEX contract is already in delivery with registered (immediately deliverable) stocks scraping along multi-decade lows relative to open interest. Small backwardations have appeared in nearby spreads—an anomaly in silver that almost always signals genuine physical stress.
Over in the world’s largest physical market, Indian importers are suddenly paying $4–$7 per ounce over London spot, levels normally seen only at the absolute peak of bull cycles. India routinely absorbs 15–20 % of annual mine production; when its buyers start bidding like this in December, the rest of the world usually feels the pain shortly afterward.
Then came the geopolitical detonator: China’s surprise announcement of strict silver export controls starting January 2026. The global scramble to front-run those restrictions is pulling even more metal eastward, leaving Western vaults emptier by the day. At the same time, silver’s new designation on the U.S. critical minerals list has traders gaming out future tariffs, driving arbitrage flows into New York and raising the very real prospects of a COMEX delivery squeeze.
Exchange-traded funds still sit 170 million ounces below their 2021 peak. A return to those levels would require roughly the entire remaining London vault stock—an outcome that can only be achieved with dramatically higher prices to shake loose industrial or private hoards.
Put it all together and you get what Sprott calls “price convexity”: the point where the free float is so small that even modest new demand produces outsized price spikes. History offers only two comparable episodes—1979–1980 (silver from $6 to $50 in under a year) and 2010–2011 ($18 to $49 in nine months)—and both parabolic legs ignited only after the metal had already posted fresh multi-year or all-time highs. Sound familiar?
Technically, silver has spent the last several years tracing out a massive cup-and-handle pattern across multiple time frames. Macro winds are at its back too: steepening yield curves, currency debasement trades, and escalating geopolitical risk rarely leave hard assets behind.
$60 isn’t the top. According to everyone from Sprott to the Silver Institute to the physical dealers in Mumbai, it increasingly looks like the ignition switch for the supply-shock stage of this bull market.
Sources
- Sprott Precious Metals Report, December 2025 (Paul Wong et al.), published December 10, 2025
- The Silver Institute, “World Silver Survey 2025 Update” (November 2025 preliminary deficit forecast)
- Public LBMA vault data, COMEX warehouse & delivery reports, and Reuters/Indian dealer premium surveys as of December 10, 2025