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One Year After the Squeeze, London Has Its Silver Back
A year ago this week, London’s silver market came close to seizing up. On October 9, 2025, the cost of borrowing silver for one month hit a record 34.9% by Bloomberg’s measure, with intraday readings widely reported near 39%, as traders scrambled for metal they could deliver. That squeeze helped drive the run that carried silver above $121 an ounce in January.
This October looks very different. Silver is trading around $61-62, London’s vaults hold more metal than they did before the squeeze, and the market’s attention has moved from physical shortage to the Federal Reserve and the bond market. Even a weak September jobs report, which showed just 29,000 new payrolls and unemployment rising to 4.2%, couldn’t do much for prices while 10-year Treasury yields hovered near their highest levels in more than two decades.
The supply deficit behind last year’s squeeze hasn’t gone away. What changed is where the metal sits, and that shift explains a lot about how silver is trading now.
From $46 to $121 and Back to $61
Silver ended September 2025 at $46.18 an ounce on the LBMA benchmark. Four months later it hit an all-time high of $121.64, then lost roughly half its value. On Monday, October 5, December futures opened at $60.70 and traded up to $62.19 that morning.
That’s still about 27% higher than a year earlier, but the momentum has faded. Silver is down more than 5% from a month ago, and its year-over-year gain is now the smallest Yahoo Finance has recorded since starting its daily price series.
The Week London Couldn’t Lend
Lease rates are the cost of borrowing physical silver for a set period, and in normal conditions they barely register, sitting below 1%. In October 2025 they went vertical. A rate in the 30s means holders won’t part with metal even for a month, and anyone who needed to deliver silver in London had to pay steeply to borrow it.
Relief came from across the Atlantic. Metal flowed back into London from New York, and by October 27 the one-month rate had fallen to 5.6%. By the middle of the first quarter of 2026 it was down to roughly 2-3%, a fraction of the peak, though still above where it sat in calmer years.
London Refills the Vaults
The LBMA’s own vault data shows how thoroughly that gap has been filled. London held 24,581 tonnes of silver at the end of September 2025, just as the squeeze was building. By February 2026 that had climbed to 27,065 tonnes, and at the end of August it reached 28,431 tonnes. That’s a 15.7% increase in eleven months, or roughly 124 million additional ounces.
New York isn’t short either. COMEX warehouses held 337.6 million ounces on October 2, with 101.1 million registered and available for delivery against futures, up 1.8 million ounces over the previous 30 days.
Gold Gets the Money
With metal no longer scarce in London, silver is trading more on the forces that move gold, and right now those forces are mixed. The Fed raised rates on September 16, and 10-year Treasury yields briefly hit their highest level in more than two decades on October 1. High yields raise the cost of holding a metal that pays nothing, which is why softer data hasn’t sparked a bigger rally. August’s PCE price index rose 0.3%, with core up 0.2%, a better-than-expected read, and Friday’s payroll miss pushed the odds of an October hike down to roughly 22% on CME’s FedWatch tool.
Investment money, meanwhile, has leaned toward gold. Global gold ETFs took in $18 billion in August, the second-largest monthly inflow on record, lifting holdings to a record 4,189 tonnes. UBS strategist Dominic Schnider describes silver as a more volatile version of gold, one that tends to exaggerate gold’s moves in both directions.
Physical silver buying hasn’t disappeared, though. The Silver Institute’s World Silver Survey forecasts coin and bar demand rising 18% this year to its highest level since 2022, even as solar demand falls 19% because manufacturers are thrifting silver out of panels or switching to other materials.
The Deficit Didn’t Go Anywhere. The Metal Moved.
The Silver Institute and Metals Focus still forecast a 46.3 million ounce deficit for 2026, the sixth straight year that demand has exceeded supply. Yet London’s vaults added roughly 124 million ounces between September 2025 and August 2026, more than two and a half times this year’s projected shortfall.
Those two facts aren’t in conflict. A deficit is a global, annual balance between production and consumption, while vault holdings show where existing metal happens to be stored. The Silver Institute has said the market relies on bullion released from above-ground inventories to cover the gap. Last October’s squeeze happened in part because London’s pool had shrunk while New York’s swelled. Once metal moved back, the pressure eased, even with the deficit still on the books.
One caveat: London’s totals count everything held in custody, not just metal free to lend, so they’re a rough gauge of availability rather than a precise one.
Three Banks, a $7 Spread
Among major banks with recent published targets, late-2026 forecasts cluster between $63 and $70, just above where silver trades now. J.P. Morgan sits at the low end with a fourth-quarter target of $63, pointing to higher interest rates that make non-yielding metals costlier to hold and a sharp drop in solar demand. HSBC’s year-end target is $70, though its analysts expect shrinking deficits won’t be enough to push silver sharply higher for long. UBS also sees $70 by December, rising to $75 by March 2027 and $80 by September 2027.
Further out, the gap widens. J.P. Morgan’s 2027 average is $63.90 and HSBC’s year-end 2027 target is $65, while UBS expects gold’s strength, investment demand, and slow-growing mine supply to keep lifting prices. Even UBS flags a more hawkish Fed as the main near-term risk, so the real disagreement is less about the next few months than about what happens once rates stop rising.
Five Dials to Watch
FAQ
The acute phase ended within weeks of the October 2025 peak, once metal moved back into London and lease rates fell sharply. The underlying deficit is still there, though, so tightness could return if inventories start moving the wrong way again.
Because yields stayed high. Weaker data lowered the odds of another Fed hike, but with 10-year Treasury yields near multi-decade highs, holding a metal that pays no interest still carries a real cost.
A deficit measures global production against consumption over a year, while London’s vault numbers show where existing metal is stored. Metal can flow into London from other hubs even while the world as a whole uses more than it mines.
Lease rates show how hard it is to borrow physical metal right now, which makes them a direct read on deliverable supply. Last October, they were the clearest measure of how acute the shortage of available metal in London had become.
Not on their published targets. J.P. Morgan, HSBC, and UBS all have late-2026 targets above today’s price, though J.P. Morgan’s $63 call implies little upside, and both J.P. Morgan and UBS point to interest rates as the key near-term headwind.
Sources
- LBMA: London Vault Data (holdings as at end August 2026), September 2026
- LBMA: Precious Metals Market Report: Q3 2025
- Bloomberg: Silver Lease Rates Plunge as Historic Market Squeeze Eases, October 27, 2025
- FXEmpire: London’s Silver Is Running Out of Room, April 23, 2026
- MetalCharts.org: COMEX Silver Price & Inventory, October 2, 2026
- U.S. Bureau of Labor Statistics: Employment Situation Summary, September 2026, October 2, 2026
- U.S. Bureau of Economic Analysis: Personal Income and Outlays, August 2026, September 30, 2026
- Kitco News: Gold Holds Firm Despite Elevated Yields as Fed Bets Soften (Kitco PM Report), October 1, 2026
- Yahoo Finance: Silver Price Today, Thursday, October 1, 2026: Silver Prices Gain Some Ground Following the Latest PCE Report, October 1, 2026
- Fortune: Current Price of Silver as of Friday, Oct. 2, 2026, October 2, 2026
- FXStreet: The October Fed Hike Just Died. Here’s What the 29K Jobs Report Really Means for Rates, October 2, 2026
- Yahoo Finance: Silver Prices Today, Monday, October 5, 2026: Silver Prices Rising Steadily Off Morning Lows, October 5, 2026
- Trading Economics: Silver Price, Chart, Historical Data, News, accessed October 6, 2026
- World Gold Council: Gold ETF Holdings and Flows, August 2026, September 9, 2026
- Yahoo Finance UK: Silver Could Reach $80 by September 2027, According to UBS Forecast, September 27, 2026
- J.P. Morgan Global Research: Silver Price Forecast for 2026 and 2027, August 13, 2026
- Yahoo Finance: HSBC Raises Silver Forecasts for 2026 and 2027 but Warns Upside May Be Limited, May 17, 2026
- Kitco News: Silver Market Faces Another Deficit in 2026 as Volatility and Investment Demand Shape Outlook, April 15, 2026
- Silver Institute: Global Silver Investment to Remain Strong in 2026 Against the Backdrop of a Sixth Consecutive Annual Market Deficit, February 10, 2026
- Federal Reserve: Meeting Calendars and Information (2026 FOMC Schedule)
- U.S. Bureau of Labor Statistics: Schedule of Releases for the Consumer Price Index
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Sources: Silver Institute, Metals Focus, LBMA, CME Group, and financial press as cited. AktieGo doesn’t independently verify third-party data, so figures should be checked at the time you’re reading this.
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