Silver is going through another tightening phase, and there are concerns about a possible silversqueeze event. An influx of silver is expected to lead to the largest increase in London’s available silver stocks ever. Since a sudden squeeze changed the market, free-floating inventories at LBMA have increased by over 50 million ounces. As silver prices have not hit the $50 per ounce mark, ETF holders may be changing how they trade. If there is a failed breakout followed by price drops, it could lead to sell-offs, which would increase free-floating silver and create a cycle that may last for a while. Historically, silver has not done well as a safeguard against currency devaluation, and the threat of a silversqueeze seems distant for now. Currently, any fears about a new silver squeeze may be unfounded. The market is in better shape than during previous major disruptions. Recent reports from the London Bullion Market Association (LBMA) show that silver stocks in vaults have exceeded 1.2 billion ounces, a level not seen since late 2022. The failure to regain the $50/oz level marked a crucial change for the market. This barrier likely shifted how ETF holders act, as they are no longer buying into the squeeze narrative. In fact, data from major silver trusts like the iShares Silver Trust (SLV) indicates a net outflow of more than 15 million ounces in the last quarter, adding to the available supply. This situation creates a cycle that could keep prices down in the coming weeks. Lower prices may lead to more sell-offs from disappointed ETF holders. This selling will increase the free-floating supply and add further downward pressure on prices. When we look back at the attempted squeeze in early 2021, today’s market conditions are very different due to a significant rebuild of inventory. Additionally, the case for holding silver as a hedge against currency devaluation has weakened. While global central banks are facing ongoing inflation, silver has underperformed compared to gold throughout 2025. For derivative traders, a bearish approach seems appropriate for the next few weeks. Strategies such as buying put options or setting up put debit spreads might offer good risk-reward ratios, taking advantage of possible price drops toward the low $20s. We advise caution with long positions until the current surplus shows signs of easing.

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