The global silver market is witnessing one of its sharpest crises in decades, triggered by unprecedented demand from India during the Dhanteras–Diwali festive season. As gold prices climbed to record highs, millions of Indian consumers turned to silver, driving an unexpected buying frenzy that has rippled across the world’s bullion markets.
According to a Bloomberg report, Vipin Raina, head of trading at MMTC-Pamp India Pvt, said his refinery — India’s largest precious metals processor — 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,” Raina said.
What began as a domestic rush soon turned into a global squeeze. International investors and hedge funds joined the buying spree, viewing precious metals as a hedge against the weakening US dollar. The surge in physical buying reached London’s silver market, where global prices are determined, and where major banks trade in large volumes.
By the end of last week, London’s market was reportedly “all but broken”, with major banks refusing to quote prices as they struggled to meet client orders. Silver prices surged to an all-time high of $54 an ounce on Friday, before plunging nearly 7% in a bout of volatility that exposed severe strain in the system.
Analysts say the immediate spark of the 2025 silver crisis came from India, where festive buying traditionally focuses on gold for Goddess Lakshmi. This year, however, many switched to silver, spurred by a mix of affordability, cultural sentiment and viral investment trends.
The shift gained momentum online, after investment banker and content creator Sarthak Ahuja told his 3 million followers that silver’s 100-to-1 price ratio with gold made it the “asset to buy” in 2025. The video went viral during Akshaya Tritiya in April, setting the tone for record-breaking silver sales by Dhanteras on October 18.
As supplies dwindled, premiums in India — usually just a few cents above international rates — soared above $1 per ounce, and later to $5 in Mumbai’s jewellery bazaars. The situation worsened as China, a major supplier, closed for a week-long national holiday, forcing Indian dealers to turn to London vaults, which were already stretched thin.
London’s vaults, holding over $36 billion worth of silver, are mostly owned by exchange-traded funds (ETFs), limiting available supply. Bloomberg data shows that ETF investors have bought more than 100 million ounces of silver so far this year, further tightening availability.
The crisis soon spilled into India’s financial sector. Kotak Asset Management, UTI Mutual Fund and the State Bank of India temporarily suspended new subscriptions to their silver funds as domestic dealers ran out of stock.
“The premiums are something I’ve never seen in 28 years,” said Amit Mittal, general manager at MD Overseas Bullion in New Delhi, describing the bidding wars among wealthy buyers who were willing to pay well above global benchmarks simply to secure supply.
While analysts expect the silver market to stabilise once festive demand subsides, the 2025 silver shortage underscores India’s growing influence in global bullion trade.
