India’s massive silver buying spree this festive season has triggered an unprecedented global shortage, with London markets witnessing record stress, according to a report by Bloomberg News.
Driven by soaring domestic demand for silver jewellery, coins, and Exchange-Traded Funds (ETFs), India’s appetite for the metal has surged sharply during Diwali 2025. The frenzy intensified after several financial influencers, including Sarthak Ahuja, highlighted silver’s favorable 100-to-1 gold ratio, attracting investors nationwide.
MMTC-PAMP, India’s largest precious metals refinery, ran out of silver for the first time in its history, leading to bidding wars among dealers. Premiums on silver in India soared to over $5 per ounce, far above usual rates.
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Global Ripple Effects
According to Bloomberg, the shortage has spilled over globally, worsened by China’s week-long holiday that disrupted supplies. Increased ETF purchases and pre-tariff US shipments have further tightened global availability.
The London silver market is under extreme stress, with liquidity drying up and borrowing rates soaring to 200% annually, the report noted.
Market analysts attribute the rush to the “debasement trade”—a belief that the US dollar is weakening globally, prompting central banks and institutions to hedge with gold and silver.
Silver prices recently touched $54 per ounce, marking only the second time in history the metal has crossed $50, the first being in the 1970s. Prices later corrected by 6–7%.
Bloomberg’s data further showed that silver demand now exceeds supply by 678 million ounces, mainly due to surging demand from the solar industry.
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MFs Halt Silver Fund Subscriptions
In India, mutual funds such as Kotak MF, UTI, and SBI MF have temporarily suspended new subscriptions to silver funds amid extreme shortages.
Kotak Mutual Fund, in its statement, said, “Domestic silver is currently trading at a significant premium compared to international prices due to acute scarcity.”
The premium rose from 0.5% in early September 2025 to 5.7% by October 9, 2025.
Experts say this is the most severe silver squeeze since the 1980s, when the Hunt brothers famously attempted to corner the global silver market.
