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    Falling inventory behind silver price surge: supply deficit lens for mine planners

    December 11, 2025|

    Reviewed by Joe Ashwell

    Falling inventory behind silver price surge: supply deficit lens for mine planners

    First reported on MINING.com

    30 Second Briefing

    Silver prices have broken above $60/oz for the first time, with Sprott’s Paul Wong attributing the surge to a shrinking free-trading inventory and a forecast 125 million oz supply deficit in 2025, extending a cumulative shortfall to nearly 800 million oz since 2021. London vault stocks have fallen sharply from their 2021 peak, while global ETF holdings sit around 830 million oz versus 1 billion oz in 2021, leaving limited buffer if investment demand rebounds. Additional pressure comes from China’s strict silver export controls starting in 2026 and silver’s recent addition to the USGS critical minerals list.

    Technical Brief

    • Sprott attributes current price behaviour to “price convexity”, where marginal demand spikes prices as float shrinks.
    • Silver mine output plus recycling has been effectively flat for over a decade, per Sprott estimates.
    • Industrial offtake from solar PV and electronics is identified as the primary incremental demand driver stressing supply.
    • London vault inventories have fallen from a 2021 peak to a 2025 low, signalling impaired spot liquidity.
    • Arbitrage flows into New York, driven by tariff uncertainty, raise the risk of a localised COMEX-style squeeze.
    • USGS designation of silver as a critical mineral raises concern that US-held stocks may be ring‑fenced domestically.
    • Global silver ETFs currently hold ~830 Moz versus ~1,000 Moz in 2021, leaving latent “reloading” capacity if investors return.

    Our Take

    With silver above US$60/oz and a forecast 125Moz deficit in 2025, marginal primary silver and silver‑rich polymetallic projects in Peru and the USA move further into the money, which typically accelerates feasibility work and reserve conversion in our project-level coverage.

    The cumulative 800Moz deficit since 2021 versus 830Moz currently held in ETFs implies that, if investors maintain or grow positions, industrial users in Europe, China and the USA will be pushed towards longer-term offtake contracts and substitution studies, especially where silver is used in high-spec electronics and solar applications.

    China’s tighter export controls from 2026, combined with Peru’s role as the third‑largest copper producer, suggest more attention on silver by-product reporting and recovery optimisation at copper operations in our database, as operators seek to monetise silver credits in a structurally tighter market.

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    Prepared by collating external sources, AI-assisted tools, and Geomechanics.io’s proprietary mining database, then reviewed for technical accuracy & edited by our geotechnical team.

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