After the holiday, silver prices directly hit a new all-time high. At first glance, it seems driven by sentiment, but actually not — this time, it’s backed by a real "commodity shortage." Even more seriously, the global silver transfer hub, London, is being squeezed by the market.

A set of data makes this clear. The current 1-year silver swap rate difference with US interest rates is about –7%. It sounds technical, but the core logic is straightforward: if you want to get silver immediately, it will cost 7% more than waiting a year for delivery. This makes no sense under normal economic logic. It’s important to note that physical silver storage involves costs like warehousing fees, insurance, and capital occupation; "future delivery" should logically be cheaper. In normal years, this spread is positive, but now it’s negative — what does that indicate? The market has begun to doubt "paper silver."

How does the London silver market operate? Many traders don’t hold physical silver but "unallocated silver" — sounds fancy, but essentially it’s a paper promise of "I owe you silver," not linked to any specific silver bar. Usually, no one cares because no one takes delivery. But once someone starts to settle and moves silver bars out of vaults, the truth is revealed: most "silver" in London exists only on the books, not in warehouses. This can trigger a chain reaction, with more and more holders of paper promises panicking — I want real silver, not this paper.

In essence, London’s problem isn’t whether there is silver, but that the same silver bar is recorded in too many people’s ledgers.

Another detail worth noting is that Shanghai silver trades at a clear premium over London silver. This price difference itself is also sending a signal.