Silver Surges to Record Highs: Supply Crunch and Structural Deficit Fuel the Rally

Silver futures skyrocketed nearly 11% on December 26, 2025, logging the biggest single-day gain in over three years and driving COMEX prices to $79.455 per ounce. Spot silver peaked at $75.14, capping a year of over 165% gains that outshone gold and evoked rallies unseen since 1979.

The surge hit amid sparse holiday trading as investors piled into precious metals: gold smashed new records above $4,550 per ounce, platinum rose 8% to $2,413.62, and copper climbed 5%. Macro uncertainties—like anticipated Fed rate cuts and a softening dollar—converge to power this broad rally.

London's silver market grapples with an extraordinary physical shortage, with the one-year silver swap spread plunging to -7.18%—a glaring anomaly signaling acute scarcity. Dutch trader Karel Mercx notes, "This distortion proves the silver rally isn't over."

Lease rates have spiked past 39% this year, compelling traders to air-ship silver from New York—a tactic usually for gold. Over 200 million ounces shifted to New York vaults earlier in 2025 as traders anticipated tariffs, slashing London's free float to under 150 million ounces.

The silver market braces for its fifth straight annual supply deficit, with a cumulative gap since 2021 nearing 820 million ounces—roughly a year's global mine output. Industrial demand from solar panels, electronics, and EVs is projected to top 700 million ounces in 2025.

Exchange-traded products saw 95 million ounces of inflows in the first half, flipping years of outflows. Analyst Peter Krauth eyes $300 per ounce long-term, while Jim Rickards forecasts $200 silver with $10,000 gold by 2026. A Kitco poll shows 57% of retail investors betting on over $100 in 2026.

These forces highlight silver's shift from speculative asset to strategic commodity amid geopolitical risks and the green energy boom. Investors should watch this trend closely.