The global silver market is facing significant strain as trade tensions and tariff policies continue to disrupt supply chains. Higher lease rates a measure of the cost to borrow the metal are indicative of tightening supplies, compounded by shifting trade dynamics between key markets such as the United States and the United Kingdom. In recent months, silver prices have climbed notably, supported by a growing demand for safe-haven investments amid market uncertainty. Spot silver has achieved impressive gains, outperforming in the commodities sector, while futures in New York have surged even higher.
The impact of trade tariffs has drawn large quantities of silver from London to U.S. storage facilities, causing inventory levels to dip in the U.K. and potentially leading to supply shortages. Unlike gold, which is often transported by air, silver’s relative bulk and weight mean it typically travels by sea, slowing the redistribution process and adding to market stress. Concerns about dwindling stockpiles in London have driven lease rates for silver to spike, with short-term borrowing costs surging to their highest levels in years. This reflects not only the physical challenges of transferring silver across markets but also the potential for a prolonged disruption if supplies in London fall critically low.
With a significant portion of U.S. silver imports sourced from Canada and Mexico, reciprocal tariffs imposed in response to trade measures have introduced additional uncertainties. The possibility of further tariff hikes has left market participants wary of long-term risks, including the potential for sustained pricing dislocations.