Warehoused supply is thinning, delivery timelines are stretching, and for the first time in years, we’re seeing real signs that physical demand is overwhelming paper supply.

Across the world’s major exchanges from New York to London to Shanghai, silver has slipped into backwardation. That’s not just a technical anomaly, it’s a sign the structural supply deficits we’ve seen for years are finally beginning to have an impact.

Silver pricing can be confusing, so here’s some background info…

When buying physical silver the price is based off of the spot price + the cost that it takes to purify and manufacture what you receive.

When buying silver futures the price is based off of the futures price (essentially a contract to buy silver at a set date in the future). Most of the time, futures are priced above spot. That premium accounts for storage, insurance, and the time value of money.

This setup is called contango, and it’s how the market usually operates. But every so often that structure breaks and the spot price rises above the futures price. That’s backwardation.

It means buyers are desperate to get their hands on silver now, not weeks or months from now. That kind of urgency only shows up when the market is under real physical stress.

In other words, backwardation is the canary in the coal mine and right now, the canary is singing.

In the last three months, silver has gone into backwardation across all major markets… New York’s COMEX, London’s LBMA, and the Shanghai Exchange. That’s extremely rare. Each of these markets operates independently, but they’ve all sent the same signal.

On COMEX in April, the spot price surged above the May futures contract, a clear inversion that persisted for days. Traders described it as a shortage of deliverable metal.

Arbitrage flows from London couldn’t move fast enough to plug the gap. In London, the same thing happened. Short-term forward prices flipped into backwardation and lease rates spiked over 6.5%. That’s the kind of rate you’d expect in a full-on supply squeeze.

Even in Shanghai, typically more insulated, local spot prices briefly surged above futures in March as refiners and industrial users scrambled for inventory. According to some reports, industrial buyers in China couldn’t even secure silver promptly. Orders were either delayed or unfilled altogether.

This isn’t some quirk of financial engineering, it’s the market saying we need metal now, and we don’t trust that there will be enough later.

So why is this happening? Why is the system suddenly under pressure?

These aren’t just short-term spikes. They’re the result of long-term structural problems that have been building for years. It’s a consequence of years of underinvestment, ignored warnings, and rising industrial demand that’s finally overwhelming the system.

The silver market has been running a structural deficit since 2019. That means global demand has outpaced new supply and we’ve been filling the gap by drawing down stockpiles. But those buffers are depleted.

Combined COMEX and LBMA inventories have dropped by roughly 50% since 2021, reaching their lowest levels in over a decade. At the heart of this imbalance is industrial demand.

Silver isn’t just a precious metal. It’s a critical industrial input. Especially in fast-growing sectors like solar energy, electronics, and electric vehicles. Solar alone now accounts for more than 20% of global mining supply, and that share keeps climbing.

The supply side, meanwhile, is constrained by something most investors overlook. Silver is rarely mined on its own. It’s primarily a byproduct of lead, zinc, and copper mining. That means even when silver prices rise, miners can’t just flip a switch and produce more.

If the primary metals aren’t in demand, silver output doesn’t scale. That’s why the market has been so slow to respond. Even with spot prices moving up, new supply just isn’t coming online fast enough.

Add in rising geopolitical risk, logistical bottlenecks, and a physical market that’s no longer willing to wait, and you’ve got the ingredients for what we are seeing now… backwardation, inventory drain, and buyers scrambling to secure metal.

For years, silver advocates have argued that the paper market, the world of futures, derivatives, and leveraged short positions, was artificially suppressing prices and distorting the metal’s true value. They believed that sooner or later, real-world demand would expose the limits of that system. 

What we are seeing now may or may not be proof of that thesis, but it’s the closest we’ve come in a long time. 

Backwardation across all three major silver markets, New York, London, and Shanghai, is a sign that physical silver is in high enough demand that the market is willing to pay a premium to get it now rather than wait. That kind of behavior cuts against everything the futures market is supposed to represent. It doesn’t confirm that the paper market has lost control, but it does suggest that the balance is shifting. 

For those who have held physical metal through years of sideways prices and skepticism, that shift feels like a long-awaited validation. Still, caution is warranted. This could be a lasting transition, or it could just be a cyclical moment of tightness. Something that normalizes as inventories are replenished or industrial demand plateaus.

Regardless, what’s clear is that for the first time in years, the physical market is asserting real influence over price. 

– Information provided by American Precious Metals Exchange

Are you prepared? Have you been adding real, physical silver to your collection every month?

If you have been, you are ahead of the curve.

If you have not been, it is not too late.

Think you can’t afford it?

Think again.

Quick Silver specializes in helping out those who don’t have a lot of $, but want to take steps to securing their financial future. No membership fees just to access our member pricing. All you need is to set up a monthly auto-wealth delivery that you can modify or cancel at any time.

Don’t wait until it is too late. Take action now.

Seize Your Silver

Mikael Gustavsson