Afternoon everyone ….
Over the past few days, we’ve seen a major disruption across the silver market. Several large U.S. dealers and refineries have halted silver purchases, lease rates have spiked past 100%, and even some sovereign mints are scaling back new production.
I watched a video which was done by SD Bullion yesterday which goes into great deal on this subject.
You can watch the video on their website.
Here are some shorts from their take:
The silver bullion market is entering uncharted territory. Over the past few days, several U.S. dealers and refineries have halted purchases of silver, and the effects are rippling across every layer of the precious metals industry — from local coin shops to sovereign mints.
The Role of Lease Rates
Silver lease rates — the interest rate paid to borrow silver — are the backbone of global metal liquidity. As these rates surge, refiners, mints, and traders all face dramatically higher financing costs. Many institutions rely on these leases to hedge or temporarily hold metal; when the rate rises 30x overnight, operations grind to a halt.
This means:
Refineries can’t afford to take in more material.
Sovereign mints face higher input costs to produce new silver coins and silver bars.
Dealers and wholesalers are caught in the middle — unable to replenish inventory at normal prices.
Some large wholesalers and refineries announced Friday that they were no longer accepting 90% silver or sterling scrap, effectively pausing a major segment of the market. While some buyers — like SD Bullion — continue to make markets for physical silver, the strain is growing.
Over the weekend, the disconnect between spot and futures prices widened to nearly $3/oz, an extreme case of backwardation (where spot trades above futures). The physical market is commanding higher prices as available metal dries up.
There is a ton more to the story, I highly suggest anyone stacking watches it. It is very informative.
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And the Shanghai Physical metal exchange posted bids to about $128/oz. on silver! Arbitrage to the third power.
"and counting...7, 6, 5, ignition, 3, 3...."
!PIMP
It is fascinating, and silver will get more and more expensive. With price fluctuations like that refiners really can't afford to produce more silver. Things will be interesting in the coming weeks, that much is certain!
Incredible! Let's see what happens next week!