For weeks, Vipin Raina, head of trading at MMTC-Pamp India Pvt., had been preparing for a silver-buying wave. But when it hit, it overwhelmed even him. As millions of Indians rushed to honor the goddess Lakshmi during Diwali, the country’s largest precious metals refinery ran out of silver for the first time in its history. Dealers across India found themselves empty-handed, their vaults stripped bare. “This kind of crazy market — where people are buying at these levels — I have not seen in my 27-year career,” Raina said.
The shock quickly spread beyond India’s borders. What began as a cultural buying spree transformed into a global liquidity crisis, as hedge funds and investors piled into silver amid fears of U.S. dollar weakness. According to Bloomberg, by the end of the week the strain had reached London, the heart of the global silver trade. The city’s vaults, which set international prices, were suddenly drained. Banks that normally quoted silver prices every few minutes stopped altogether, paralyzed by frantic calls from clients desperate to buy.
Prices skyrocketed to an unprecedented $54 an ounce before plunging nearly 7%, signaling deep instability across the market. Traders compared the turmoil to the 1980 Hunt brothers’ attempt to corner silver. Bloomberg’s reporting, based on interviews with more than two dozen insiders, revealed how a perfect storm of factors — from solar industry demand and looming U.S. tariffs to India’s cultural buying surge — converged to break the world’s silver market.
At the center of the storm was India, where social media influencers had hyped silver’s “100-to-1” ratio to gold as a once-in-a-generation opportunity. As followers rushed to buy, local premiums soared from a few cents to more than $5 per ounce. China’s week-long holiday only worsened the shortage, cutting off a major supply source. Traders turned to London for relief, only to discover that most of the city’s $36 billion in silver holdings was locked up in exchange-traded funds. Bloomberg data showed that since early 2025, ETFs had absorbed over 100 million ounces — leaving little available for physical buyers.
JPMorgan Chase & Co., the world’s largest precious metals trader, told clients it could no longer deliver silver to India in October. That triggered a cascade of panic among fund managers like Satish Dondapati at Kotak Asset Management, who halted new subscriptions to silver ETFs. Other major funds, including UTI and State Bank of India, soon followed, as India’s bullion dealers exhausted their inventories.
As the Dhanteras festival approached, the chaos deepened. In Mumbai’s Zaveri Bazaar, dealers charged record premiums as wealthy buyers competed to secure any available metal. By October 9, the London silver market was paralyzed. Bloomberg reported that borrowing costs for silver soared to annualized rates as high as 200%, while bid-ask spreads ballooned to levels never before seen. Some traders even profited from the confusion, buying from one bank and selling to another simultaneously for instant gain — a rare sign of dysfunction in such a massive market.
Despite the turmoil, the London Bullion Market Association has so far declined to intervene. Unlike past crises, this one stems from genuine shortages, not market manipulation. Years of rising industrial use — particularly in solar panel manufacturing — have pushed global demand far beyond mine output. According to the Silver Institute, the world has run a cumulative supply deficit of nearly 700 million ounces since 2021.
The situation worsened after traders rushed to move over 200 million ounces of silver to the U.S. early this year, anticipating tariffs under President Donald Trump’s trade policies. With another 100 million ounces absorbed by ETFs, London’s free-floating silver fell dangerously low — to under 150 million ounces by early October. As prices spiked, traders scrambled to fly silver from New York to London, but even those transfers faced customs delays and logistical bottlenecks.
For now, the panic seems to have eased slightly as inventories from Comex began shipping out. But Bloomberg reports that over 20 million ounces have already been drained from U.S. warehouses — the sharpest drop in 25 years. The global silver market, once a symbol of stability and tradition, has been transformed into a pressure cooker of speculation, fear, and scarcity. And in the middle of it all stands India — both the spark that ignited the frenzy and the face of the world’s silver obsession.
