has been on a near parabolic run higher in the last few weeks and this has posed a number of questions. Have the well-documented naked shorts finally given up? When will we see all-time highs, and chiefly, is there enough physical Silver should there be a run on the bullion banks?
Before answering these questions, first, we need to go back to a short history lesson that is extremely relevant to where we are today.
2008 Metals Bull Run
It is October 2008, the GFC is biting hard, sentiment is rock bottom, markets have crashed, and Silver drops to $8.4/oz. Over the course of the next few years, it ascends to a near 500% increase to just under $50/oz.
went from $683 – $1,914 oz, yielding north of a 180% increase over a similar period. There is a fundamental difference between the two metals at the present day in comparison to their 2011 highs, as the monthly charts below demonstrate.
Gold is sitting double the previous all-time high it posted in 2011, which looks like a distant memory, having recently surpassed the $3800/oz handle. Silver, however, hasn’t reached the highs of 2011 yet, as the below monthly chart shows.
This is systematic behaviour of both the yellow and white metals, and history has demonstrated that Gold always leads the way, before Silver comes charging from behind the pack and eventually catches up by posting percentage gains in excess of Gold’s.
For the astute, that means that should this follow the same patterns as history, Silver would need to be at $100/oz right now just to match Gold’s performance. Yet every bull run, Silver has outperformed Gold, suggesting there is serious upside yet to come.
Let’s also not forget that this current rally in both metals has happened relatively quietly. No one is talking about it or interested in metals because they are asleep at the wheel in the stock market dip-buying mania phase. The obsession with the magnificent seven and lumping money into the tech and AI bubble can’t go on forever. Overvalued is an understatement.
Because of this, estimates are that portfolio allocation to precious metals is around ½ %. Money has yet to rotate from the markets into Gold and Silver. It is also worth pointing out that traditionally, when markets correct or collapse, as well as Gold, money heads to the dollar and bonds as a once traditional safe haven. Who in their right mind is going to put their money in either of those two right now, given the state they are in?
Let’s hypothesize and say Gold gets to $5000/oz, which wouldn’t be inconceivable within the next two years. When the Gold/Silver ratio peaked in 2011 at 1:38, that would land Silver at $131/oz. Both these price targets for the metals are conservative, with many an experienced voice calling for much higher prices than these, and a vast closing up in the GSR.
The reason Silver is so comparatively cheap against its inflation-adjusted price is that it is by far the most shorted commodity out there. Due to Silver’s dual use as money and in industry, it has been held down in price for years by manipulation via paper contracts. Many naysayers have expressed this to be sour grapes for those who placed large bets on ascending prices; however, the CFTC handing out penalties of just under $1bn to JP Morgan for manipulating the price of commodities would prove otherwise. One of many big names and fines handed out over the years. The Comex and LBMA were invented for these very reasons.
However, when the price is held down so institutions and multinationals can buy physical at lower prices, there comes a point where the shorts have to throw in the towel, leading to the very heavily coiled spring starting to tension, or as we may soon experience, projecting off the medium from whence it is based.
The LBMA and the Physical Market
Approximately 830 million oz of Silver were mined worldwide in 2024. The Silver Institute is forecasting another deficit year in 2025 with record industrial demand outstripping the below-ground supply. The USA has recently categorised Silver as a critical mineral and called for a stockpile. Saudi Arabia has taken out huge positions in metals through ETFs with its insatiable thirst for solar power and clean energy. We know China is stockpiling for the same reasons.
More than a year’s worth of mining is traded every day in Silver through the almost exclusive paper-based London markets. The latest figures available in August 2025 show the LBMA has 155 million oz in the eligible category (4,821 metric tonnes) with the balance secured against ETF allocation. To understand just how little this is, India alone has consumed over 900 million oz of Silver in the last 5 years. That is over 100m oz more than the LBMA holds in its entirety right now.
Of course, this is if we believe what we are being told by the LBMA, who have a history of “accounting issues” as they put it when data on inventories was previously amended. Let’s not forget the LBMA is not set up for a delivery market and their association with unallocated metals accounts is well documented. In May 2021, for example, they managed to report they had 3,300 tonnes more Silver than they actually held.
The bottom line is all it would take is a China or Saudi Arabia to call for delivery at futures contract expiry at even a small percentage of their holdings and we could see headline news lead to a run on physical silver the likes of which have never been seen, or we will likely see again.
The consequence? Banks that have been caught on the short side of this trade for years, suppressing the price being rinsed out of their positions, have to cover and take on enormous losses. Estimates of 300:1 and above of paper oz vs physical trading Silver aren’t uncommon for several well-known experts in this field. Given the leverage in the system, the derivative markets, and the current vastly overloaded stock valuations, this could bring down the house as it will inevitably lead to margin calls.
Conclusion
The price of Silver and Gold has gone up very quickly, and when you get this type of move, it does suggest there is a correction coming which is healthy in any environment. For the long-term investors who have seen this time and again, it just means sitting on your hands, holding your nerve and waiting for the final buying gift below $50/oz of Silver. If you are investing in mining shares, breaking $50/oz in Silver will see your portfolio go ballistic – much more so than it would have done in the last few weeks.
The charts and price targets at the start of this article show the potential for Silver gains in an unencumbered environment. If you remove the mass of shorts, add a run on the LBMA, and throw in new money from a rotation out the stock market, you have a trifecta of reasons where we could be looking back in several months’ time, remembering when Silver was available under $100/oz. This could come sooner and go a lot higher than many people would believe.
If you haven’t invested in Silver, this could be your last chance ever to get in under $50/oz.
