The vault is empty.
London and New York are feeling the squeeze. On January 17, silver prices pierced through the psychological $48 resistance level. This was not a fluke of retail speculation. It was a structural collapse of the supply chain. For three years, the Silver Institute has warned of a widening deficit. Those warnings were ignored by a market obsessed with high-interest rates and a strong dollar. Now, the bill has come due.
The data is undeniable. Global silver demand reached a record 1.4 billion ounces in 2025. Supply remained stagnant at roughly 840 million ounces. The gap was filled by drawing down exchange-traded inventories. Those inventories are now at their lowest levels since the 2011 bull run. According to the Reuters commodity desk, the depletion of LBMA vaults has accelerated by 15 percent in the last quarter alone. This is no longer a precious metals story. It is an industrial crisis.
The solar throat of the market
Solar energy is the primary culprit. The transition to N-type TOPCon and HJT solar cells has doubled the silver loading per megawatt. China’s massive expansion of photovoltaic capacity has weaponized silver demand. While manufacturers claim to be ‘thrifting’ silver, the physical reality is different. Silver is the most conductive metal on earth. It cannot be replaced in high-efficiency cells without a massive loss in performance.
Industrial buyers are now bypassing the COMEX. They are going directly to miners. This ‘off-exchange’ activity is masking the true extent of the shortage. When the Bloomberg Commodities index updated its weighting yesterday, the silver component showed a volatility signature not seen since the Hunt Brothers era. The market is realizing that silver is a critical mineral, not just a jewelry component.
Historical Silver Price Trajectory leading to January 18 2026
The AI electronics multiplier
Artificial Intelligence is the second pillar of this rally. Every GPU produced by Nvidia and its competitors requires silver-heavy high-speed connectors. The data center build-out of 2025 consumed 20 percent more silver than initial projections suggested. Electronic components are now competing with solar panels for the same limited physical stock. This is a classic squeeze.
Institutional investors have noticed. ETF inflows into silver-backed products hit a five-year high last week. This investment demand is layering on top of the industrial shortage. It creates a feedback loop. Higher prices lead to more investment, which further reduces available physical supply for industry. The LBMA price discovery mechanism is under immense strain as physical delivery requests spike.
Global Silver Supply and Demand Deficit 2023 to 2025
| Year | Total Supply (Moz) | Total Demand (Moz) | Deficit (Moz) |
|---|---|---|---|
| 2023 | 830 | 1,120 | -290 |
| 2024 | 835 | 1,250 | -415 |
| 2025 | 840 | 1,400 | -560 |
The paper market disconnect
Paper silver is a fiction. For every ounce of physical silver in a vault, there are dozens of ounces traded in the futures market. This leverage worked when supply was abundant. It fails when industrial users demand physical delivery. We are seeing the ‘delivery-only’ premium rise. In the Shanghai Gold Exchange, silver is trading at a $3.00 premium over the New York spot price. This arbitrage window is forcing physical metal to flow from West to East.
Mining production cannot ramp up quickly. Most silver is a byproduct of lead, zinc, and copper mining. You cannot simply ‘turn on’ a silver mine. You have to build a copper mine first. This means the supply side is inelastic for at least the next five years. The market must balance through price destruction. Industrial users will have to pay whatever it takes to secure their production lines.
Watch the February 12 LBMA inventory report. If stocks dip below the 800 million ounce threshold, the current rally will look like a minor tremor. The $60 target is no longer a conspiracy theory. It is a mathematical certainty based on current consumption rates.
