The global silver market is facing its most severe crisis in decades, fueled by an unprecedented surge in demand from India during the festive season. As the country celebrated Dhanteras on Saturday and prepares for Diwali today, millions rushed to buy silver amid soaring gold prices.
Vipin Raina, head of trading at MMTC-Pamp India Pvt, had anticipated a surge in silver purchases, expecting Indian customers to stock up on the metal to honour the Hindu goddess of wealth. But the scale of the demand exceeded all his expectations. His company, India’s largest precious metals refinery, ran out of silver stock for the first time in its history.
“This kind of crazy market — where people are buying at these levels — I have not seen in my 27-year career,” he told Bloomberg.
Global ripple effect
The silver shortage was confined to India. International investors and hedge funds joined the buying frenzy, viewing precious metals as a hedge against the fragility of the US dollar.
By the end of last week, the panic reached the London silver market, where global prices are set and where the world’s biggest banks trade the metal in large quantities, Bloomberg reported.
The market ran out of available metal. Traders described the market as “all but broken,” with major banks refusing to quote prices as they handled repeated client calls.
The following week, prices surged to never-before-seen highs, climbing above $54 an ounce on Friday before suddenly falling as much as 6.7%. This volatility indicated extreme stress across the silver market.
Who’s behind this silver crisis?
According to analysts and researchers, the immediate cause of the silver crisis of 2025 began in India. While the Diwali season typically sees hundreds of millions of devotees buying gold for Goddess Lakshmi, this year, many shifted to silver.
The shift was driven by social media, where influencers promoted the idea that after gold’s record rally, silver was poised to soar next. The hype began in April, when investment banker and content creator Sarthak Ahuja told his 3 million followers that silver’s 100-to-1 price ratio with gold made it a must-buy asset of the year. His video went viral during Akshaya Tritiya, an auspicious day for buying gold, second only to the Dhanteras festival on 18 October.
Premiums for silver in India, usually just a few cents an ounce above global prices, started to rise above $0.50 and then above $1 as supplies were exhausted. With Indian demand soaring and China, a key source of supply, closed for a week-long holiday, bullion dealers turned to London.
London vaults run dry
Bullion traders soon discovered that London’s precious metals vaults were nearly sold out. Although the city holds over $36 billion in silver, the majority is owned by investors in exchange-traded funds (ETFs).
Since the beginning of 2025, ETF investors have acquired more than 100 million ounces of silver, according to data compiled by Bloomberg. This depleted the stockpile available to meet the sudden demand in India.
Around two weeks ago, JPMorgan Chase & Co, the largest precious metals trader and an important bullion supplier to the Indian market, informed at least one of its clients that it had no more silver available to deliver to India for the month of October, Bloomberg reported.
The supply strain became so severe that fund managers in India also reacted to the situation. Satish Dondapati, a fund manager at Kotak Asset Management, closely monitored the silver market as bullion dealers across India ran out of stock and local premiums surged above international silver prices.
Eventually, the situation became so severe that Kotak was forced to halt new subscriptions to its silver fund, followed by similar moves by UTI Asset Management Co and the State Bank of India.
Elsewhere in the country, dealers in Mumbai’s busiest gold bazaars began charging prices well above international benchmarks, while bidding wars broke out between wealthy buyers who cared more about availability than price.
Premiums in Mumbai’s jewellery bazaars began charging prices well above international benchmarks, soaring as much as $5 an ounce.
“I have been here in this company for the last 28 years and I have never seen these kind of premiums,” Amit Mittal, general manager at MD Overseas Bullion, a dealer in gold and silver in New Delhi, told Bloomberg.
