Silver jumped for a second day near a record as a historic tightening of the London spot market added steam to a rally driven by demand for safe haven assets.
Spot prices rose as much as 3.7% above $51 an ounce, while the cost of borrowing the precious metal for one month in London soared to an annualized record of 35%. Gold and palladium also rose.
Silver is up more than 75% this year, by far outpacing gold’s advance, as investors seek security in the face of fiscal uncertainties in the US, concerns over an overheating equities market and threats to the Federal Reserve’s independence.
Earlier this year, fears that the US could levy tariffs on silver spurred a surge of metal to New York, drawing down inventories in London and reducing the amount of metal available to borrow. Much of the silver in London is held in vaults backing exchange-traded funds, and not available to buy or borrow on the market.
The tightness in London has led a typical premium of a few cents for futures in New York to collapse into a discount of more than $2.50 an ounce below spot prices. The scale of that dislocation may end up easing market tightness in London, as traders buy cheaper metal in the US and ship it to the UK to capture higher prices. But for now, the squeeze is driving prices closer to a $52.50-an-ounce record from 1980, set on a now-defunct contract on the Chicago Board of Trade.
The 1980 record was set when the Hunt brothers, Texan oil billionaires and notorious speculators, tried to corner the global market over fears of inflation. They stockpiled more than 200 million ounces, driving the price above $50 an ounce before it crashed below $11.
Spot silver rose 1.5% to $50.02 an ounce at 11:09 a.m. London time. Palladium jumped 3%, while gold and platinum also rose.
With assistance from Sybilla Gross.
This article was generated from an automated news agency feed without modifications to text.
