MMTC-Pamp India Pvt. Vipin Raina, Head of Trading, knew that there was going to be a big surge in demand for silver during festive seasons like Diwali. He had made preparations for several months to meet the demand. But, when the frenzy of buying silver started, Raina himself was surprised.
Raina’s company is the country’s largest precious metal refinery. For the first time in its history, the stock of silver ran out. Raina said, ‘Most people who trade in silver and silver coins have no stock left. People are buying silver in large quantities. I have never seen such madness for silver in my 27 years of career.
Silver shortage all over the world
Within a few days, this shortage of silver started being felt not only in India but all over the world. Along with Indian festival buyers, international investors and hedge funds also started investing in precious metals. Many were considering it a bet on the weakness of the US dollar, while some were just following the market’s rise.
By the end of last week the frenzy spread to the London silver market, where global prices are set. Even big banks backed out from fixing the price due to repeated calls. There were many reasons for the strong increase in demand for silver. These included the solar power boom, the rush to ship to the US, a wave of investment in precious metals and sudden demand from India.
Prices rose further in the following week. It rose above $54 an ounce on Friday, then suddenly fell 6.7%. For traders, this fall was a new sign of tension in the silver market. It was the biggest crisis since the Hunt Brothers tried to control the market 45 years ago.
Is the silver crisis caused by India?
Traders and analysts attribute the silver crisis of 2025 to India. During Diwali, crores of people buy jewelery worth billions of rupees to worship Goddess Lakshmi. Refineries in Asia usually meet demand for gold, but many bought silver this year.
This change was not sudden. For months there was a promotion on social media that silver would be the next bull after gold. In April, investment banker and content creator Sarthak Ahuja told his 3 million followers that silver’s 100-to-1 ratio against gold makes it the perfect choice to buy this year. His video went viral on the day of Akshaya Tritiya.
Bigger trouble than holidays in China
As Indian demand increased, there was a week’s holiday in China. China is the largest supplier of silver. Therefore dealers started turning towards London. There too the stores had been sold to a large extent. As investment in global ETFs increased, stocks in London fell further. ETF investors have purchased more than 10 million ounces of silver since the beginning of 2025, reducing inventories to meet demand from India.
About two weeks ago, JPMorgan told one of its clients that silver was not available to India for the month of October, and the earliest deliveries would be in November. As buying intensified in India, Satish Dondapati, fund manager at Kotak Asset Management, observed that the Indian market was running out of silver, while local premiums continued to rise.
Mutual funds stopped silver ETFs
Kotak stopped new subscriptions. UTI and State Bank of India funds also did the same. Analysts and bullion dealers were giving such high targets for silver in the Indian media, which was not seen in the last 14 years. This created FOMO i.e. many investors started buying silver lest they miss out on profits.
In Mumbai’s busy gold markets, dealers were quoting prices above international standards. Wealthy buyers were placing bids for availability regardless of price. Premiums rose above $5 an ounce. JPMorgan’s reluctance to send silver to India indicates that pressure on supply is increasing globally.
Silver crisis increases before Dhanteras
On October 9, i.e. just a week before Dhanteras, the London silver market reached its biggest crisis ever. According to traders, they had never seen this situation in their entire career.
In London, suddenly there was no liquidity in the market, that is, there was a shortage of sellers. This caused panic and the cost of borrowing silver increased by 200% overnight. To avoid this risk, big banks started withdrawing from the market. As a result, there was a huge difference between the bid and ask prices, which almost brought trading to a halt.
A senior banker said that customers were continuously calling, but banks were afraid to decide the price themselves. Some people started shouting angrily on the phone. A trader said that at that time different banks were giving such different rates that he could buy from one bank and sell to another and make immediate profit, which is almost impossible in the normal market.
In the words of Robin Kolvenbach, CEO of Swiss refiner Argor-Heraeus, ‘There was almost no liquidity left from a lease perspective in London.’ That means no one was ready to lend or take silver in the market and this became the biggest reason for the crisis.
Such crises have occurred in the silver market before
In 1980, famous American businessmen Nelson and William Hunt tried to capture the silver market. The Hunt Brothers artificially inflated the price of physical silver by purchasing large quantities of physical silver and futures contracts. By the end of 1979, he had accumulated so much silver that the price of silver in the global market increased from $ 6 per ounce to almost $ 50 per ounce in a few months. This surge caused panic all over the world and was called the ‘Silver Bull Run’.
But in January 1980, American exchanges—particularly COMEX and the Chicago Board of Trade—took drastic measures to handle the situation. He increased the margin limit on silver futures trading and banned buying new contracts. These actions caused silver prices to fall rapidly and Hunt Brothers lost billions of dollars.
This event, known in history as ‘Silver Thursday’, demonstrated how intervention by exchanges could prevent attempts to artificially capture any commodity.
Warren Buffet also bought heavy silver
In 1998, famous investor Warren Buffett’s Berkshire Hathaway purchased approximately 25% of the annual silver produced in the world. That means, that year only one company bought one-fourth of the silver that came out of the mines all over the world. Such large purchases created a stir in the market and pushed prices upward. This made the market unusual and challenging for traders and investors, as sudden purchases of such large amounts of metal do not normally occur.
After this incident, the LBMA (London Bullion Market Association) changed the rules. Earlier, it was not necessary to make immediate delivery after large purchases and sales. Under the new rule, it has now been made mandatory to deliver the purchased silver to the vault within 15 days. This means that the purchased silver will be kept in safe stock and there will be liquidity in the market. This will keep the market more stable and controlled despite larger transactions.
Buffett’s Berkshire Hathaway suffered a huge loss on this investment, as silver prices suddenly dropped. This is why Buffett has had a very indifferent attitude towards precious metals for a long time. They consider gold as ‘useless’, which does not provide any cash flow.
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