Silver Establishment Warns of Another Coming Silver Squeeze
- Gold and silver prices moved higher last week, driven largely by geopolitical headlines around a temporary ceasefire in the Middle East, which boosted overall market sentiment.
- Spot silver closed the week at $80.79 per ounce, while spot gold finished at $4,830 per ounce, with the gold-to-silver ratio tightening further to 59, signaling relative strength in silver.
- Markets reacted positively after Iran stated the Strait of Hormuz would remain open during the ceasefire, sending crude oil prices down more than 10%, though shipping data suggests actual traffic remains limited.
- Lower energy prices are reinforcing expectations that the Federal Reserve may pause or cut interest rates, a scenario that typically weakens the U.S. dollar and supports demand for non-yielding assets like gold and silver.
- Former Treasury Secretary Hank Paulson warned of a potential “vicious” U.S. bond market crisis, citing concerns over weakening demand for Treasuries amid the country’s growing debt burden.
- The U.S. debt situation remains a central risk, with nearly $10 trillion needing refinancing this year at significantly higher interest rates than in past crises, increasing pressure on the financial system.
- The Treasury has already stepped in with large-scale debt purchases—around $30 billion in April alone—highlighting growing strain in maintaining bond market stability.
- On the supply side, the Silver Institute’s latest report confirms ongoing global silver deficits, with demand continuing to outpace supply and contributing to tightening market conditions.
- Analysts and mainstream financial media are increasingly warning of a potential new silver squeeze, noting shrinking inventories, elevated premiums in Asia, and structurally thinner liquidity in the market.
- Structural differences between gold and silver markets remain key: unlike gold, silver lacks central bank support, making it more vulnerable to volatility but also more prone to sharp upside moves if supply shortages intensify.
Bullion prices climb on Middle East ceasefire optimism, mounting U.S. debt concerns spark bond market warnings, and tightening silver supply fuels growing expectations of another silver squeeze.
Last Week's Gold and Silver Market Update
The silver and gold markets where up on the week's peace-talk headlines.
The spot silver price ended the week at $80.79 oz bid.
The spot gold price closed the week at $4830 oz bid.
The spot gold silver ratio fell again to close this week at 59.
Silver and gold rallied on the week with silver returning to trading above $80 oz for the first time in about a month.
Financial markets rallied this week on Iran's announcing the Strait of Hormuz is "completely open" to commercial shipping vessels for the duration of a 10-day Lebanon ceasefire. Crude oil dropped more than 10% on the news.
Optimistic headlines aside, shipping vessel traffic data to end this week show little to no ships have actually passed through the Strait.
Lower energy costs suggest it being more likely the fiat Fed will hold interest rates steady or start cutting rates, which means the the fiat US dollar will weaken, and non-yielding assets like silver and gold bullion become more attractive to investors.
Former US Treasury Secretary during the 2008 Financial Crisis was out this week trial balloon conditioning investors for coming US debt market dysfunctions. Suggesting the fiat financial powers that be begin preparing for a "vicious' bond market crash.
The US Treasury again bout $15 billion of our debt today, tying the largest tranche of our own debt ever purchased in open market operations. They also bought another $15 billion in our own US debt to start this month April 2026.
About 1/4 of outstanding US debt has to be refinanced this year yet this time, interest rates are 3.75% as compared to 0% after the 2008 GFC and Covid 2020 era.
Close to $10 trillion of our now near $40 trillion hard US debt pile needs to be rolled over and obviously the US Treasury is already having to step in to make the bond market function.
You can expect in coming 'vicious' US bond bear market to continue seeing further calls to begin overhauling Social Security, Medicare, Medicaid, and other unfunded liability programs which add on another near $100 trillion in future obligations for the nation on top of the near $40 trillion debt pile.
One of the most important differentiators between this ongoing bullion bull market versus the 1980 version is the sheer amount of un-payable debt and promise pile loads coming due in the years and decades looking ahead. This is partly why being aggressively allocated in bullion makes perhaps more sense than ever prior in our lifetimes.
Silver market industry body the Silver Institute published their annual World Silver Survey this past week projecting further supply deficits for this year 2026.
Seemingly every mainstream financial media published articles explicitly citing silver supplies remain in short supply vs ongoing industrial and investment demand.
A few even went so far as explicitly stating in their article headlines, that yet another supply and silver price squeeze risk remains to the upside in the coming future.
We're going to take a closer look at that report after this brief message.
Silver premiums in Shanghai have stayed elevated near $90 oz to close this week's trading. Inventories on the SHFE and SGE continue climbing with a now combined 30.9 million oz. To put that amount in perspective, 31 million oz is enough to cover one and half years of internal industrial silver used for their country's ongoing automobile demand.
Lease rates in London for the three white precious metals (silver, platinum, and palladium) had been falling but with the recent strength in the silver spot price we saw an increase in one month London silver lease rates to close this week. Suggesting the recent downward trend might be turning.
Even mainstream financial media this week were again warning about a key differentiator when comparing the silver market versus gold, with silver there are no central bank backstops, only weak handed unsecured ETFs which in selloffs can temporarily increase silver industrial bar supplies for the short term.
Asian financial media citing this week that the next liquidity storm for silver will likely be born by empty vaults.
The two largest wildcards of further silver ETF demand inflows and coming Indian silver demand the second half this year.
The Silver Institute's annual report stated point blank, "The (Silver) market has clearly entered an era of reduced stocks. Tightness will not be constant, but liquidity will generally be thinner, lease rates more volatile & price moves likely to be larger than investors have grown used to. With deficits set to remain in place, however, it is unlikely that we will see a return to the previous status quo any time soon."
When you add in net Silver ETF demand since 2019 and ongoing silver demand outstripping annual supplies the deficit number balloons to near 1.4 billion oz.
And there is low to no sign of this trend stopping anytime soon, rather what we are now seeing is even the silver establishment admit another coming silver squeeze seems all but inevitable.
That will be all for this week's bullion market update.
Sources:
Former Treasury Secretary Henry Paulson comments on bond market on Bloomberg
https://www.youtube.com/watch?v=mQY_h48GbQM
