London silver price $53.55 per ounce…breaks record high

First-ever precious metals short squeeze leads many short sellers to switch to buying

A first-ever precious metals short squeeze in London pushed the price of silver above $53 per ounce, reaching a record high. The sharp rise in silver was driven by investors who had shorted silver expecting a decline but rushed to buy as losses mounted, which in turn intensified the price increase. Gold is also attempting to break its record again at $4,101 per ounce.

On the 14th (local time) in the London market, spot silver rose more than 4% from the previous day to $53.55 per ounce, surpassing the record high of $52.50 set in London in 1980 for the first time in 45 years. So far this year, silver has risen nearly 73%, outpacing gold's roughly 53% gain.

Spot gold in London also continued an eight-week winning streak, approaching its record high of $4,117 at $4,101 per ounce. Market unease from a surge in investor demand spread to other precious metals, with platinum and palladium rising more than 4%.

According to Bloomberg, as London’s silver benchmark price became more than $1.40 per ounce more expensive than New York’s, some traders even began transporting metal by air from the U.S. to London. This is a method typically used when gold prices differ between London and New York.

The silver lease rate, which represents the annual cost of borrowing silver, surged more than 30% on the 10th, placing a heavy burden on investors seeking to roll over short positions.

Lease rates for gold and palladium※ also fell. This suggests that London’s gold holdings have been further reduced after large shipments of gold to New York earlier this year.

In recent weeks, available silver bar supply in London has plunged due to a surge in demand from India. The large shipments of silver to New York earlier this year amid moves to impose U.S. tariffs also played a role.

In April, the U.S. government officially announced that precious metal tariff measures would be exempted. However, with the unpredictable Trump administration approaching the conclusion of its Section 232 investigation into key minerals such as silver, platinum and palladium, the market still harbors concerns over precious metal tariffs.

Analysts at Goldman Sachs Group analyzed that "the silver market has lower liquidity and is nine times smaller than the gold market, so price swings are larger." They warned that "if central banks do not step in to stabilize silver prices, an uneven adjustment could occur."

This year's rise in gold prices has been supported by central bank purchases, increases in exchange-traded fund (ETF) holdings, and the Fed's interest rate cuts. Added to this, U.S.-China trade tensions, threats to the Fed's independence, and a U.S. government shutdown have also contributed to alternative demand for U.S. Treasuries and the dollar. Silver has risen nearly 300% since 2020.

The resumption of trade disputes between the U.S. and China is also increasing demand for safe-haven assets such as gold and silver.

On New York's COMEX, silver futures jumped as much as 7% to $50.59 per ounce, also a record. According to a spokesperson for CME Group, which owns COMEX, the previous high was $50.35 in 1980.

Kim Jeong-a, guest reporter kja@hankyung.com