Global silver market faces stress from trade-war tariffs

The global silver market is currently experiencing significant strain as concerns about ongoing trade wars unsettle investors. Key indicators suggest trouble ahead, with millions of ounces of silver moving between trading hubs and potential disruptions over the coming months. Investors are alarmed by rising costs to borrow silver. These concerns are fueled by the possibility of new tariffs from U.S. President Donald Trump. In response, many are rushing to send silver to the U.S. to take advantage of higher prices in New York. This situation may create a shortage of silver in London. This year, precious metals like gold and silver have seen considerable price changes due to the uncertainty in global trade. Spot silver prices are up about 17%, making it one of the year's top-performing commodities. However, futures contracts in New York have performed even better. As trade tensions rise, large amounts of silver and gold are being transferred from London to the U.S. However, shipping silver takes longer than gold because it is bulkier. This delay could extend the market disruption. Lease rates for borrowing silver have surged, with one-month rates exceeding 6%. This rise is partly due to dwindling stockpiles in London, which hit a record low last month. Not all remaining silver is accessible, as it is tied up in exchange-traded products. In the U.S., silver inventories have soared to their highest levels recorded since 1992, increasing by 40% this quarter alone. While New York continues to attract silver, analysts warn that market dynamics could shift if London faces a shortage. The U.S. imports about 70% of its silver from Canada and Mexico. Both countries face potential retaliatory tariffs from the Trump administration, which could further complicate the market. Analysts believe that upcoming tariffs may not have been fully factored into current pricing. Experts suggest that retaliatory tariffs could also include Canadian silver, which accounts for about 20% of U.S. imports. The uncertainty in trade relations means that even if current disruptions resolve quickly, the market may never return to its previous stability.