Insights 
VT 
Silver is experiencing another tightening phase, with the market apprehensive about a potential silversqueeze event. An inflow of silver is anticipated to be the largest increase in London’s free-floating silver inventories on record.
Since a dramatic squeeze altered the market structure, free-floating inventories at LBMA have surged by over 50 million ounces. With silver prices not reaching the $50 per ounce level, ETF holders’ trading behaviours may be changing.
A failed breakout and subsequent price decreases could trigger liquidations, leading to increased free-floating silver in a cycle that is expected to remain for a while. Silver has historically underperformed as a protection against debasement. The threat of a silversqueeze does not appear imminent now.
We see that any fear of another silver squeeze event appears misplaced for now. The market structure is much healthier than it was during major dislocations of the past. Recent reports from the London Bullion Market Association (LBMA) confirm that vaulted silver stocks have now surpassed 1.2 billion ounces, a level not seen since late 2022.
The failure to recapture the $50/oz mark was a critical turning point for the market. This psychological barrier has likely shifted the behavior of ETF holders, who are no longer buying into the squeeze narrative. In fact, data from major silver trusts like the iShares Silver Trust (SLV) shows a net outflow of over 15 million ounces this past quarter, adding to the available supply.
This creates a self-reinforcing cycle that should keep prices under pressure in the coming weeks. Lower prices will likely trigger further liquidations from disappointed ETF holders. This selling, in turn, increases the free-floating supply and puts more downward pressure on the price.
Looking back at the attempted squeeze of early 2021, the market conditions today are vastly different due to this massive inventory rebuild. Furthermore, the argument for holding silver as a hedge against currency debasement has proven weak. While global central banks grapple with persistent inflation, silver has significantly underperformed gold throughout 2025.
For derivative traders, this suggests a bearish stance is warranted over the next few weeks. Strategies like buying put options or establishing put debit spreads could offer favorable risk-reward profiles, capitalizing on potential price declines toward the low $20s. We would be cautious with outright long positions until this supply overhang shows signs of clearing.
