Silver Squeeze 2.0: Will Silver Price See the Biggest Technical Breakout in Modern Market History?
Silver is back in the spotlight, captivating the attention of investors and enthusiasts alike. After a remarkable gain of over 40% in the past 12 months, the price of silver has soared above $34 an ounce. This resurgence has catalyzed a grassroots movement dubbed “Silver Squeeze 2.0,” which calls for a coordinated buy of physical silver on March 31, aiming to challenge what proponents allege to be a “manipulated” paper market. As this online campaign gains traction across social media platforms like X, many are drawing parallels to the 2021 Reddit-driven silver squeeze, but with important differences in the current market conditions.
A Different Set of Circumstances
The enthusiasm surrounding Silver Squeeze 2.0 is not solely driven by sentiment; rather, it is underpinned by significant shifts in supply dynamics. Peter Krauth, author of The Great Silver Bull and editor of Silver Stock Investor, pointed out that approximately 223 million ounces of silver are currently net short, amounting to about 25% of the annual mine supply. “If you look at the ratio of paper silver to physical silver, we’re seeing something like 378 to 1—well beyond any other futures market for metals,” explained Krauth in an interview with Kitco News.
In 2021, the retail investor movement primarily driven through Reddit’s WallStreetBets community led to dramatic spikes in silver prices and volumes traded via the SLV ETF, increasing ninefold. At that time, silver jumped from $25 to $29.50, with average silver stocks climbing by 30 to 40% in just three days. While market momentum eventually fizzled due to a lack of sustained buying and fundamental demand, Krauth argues that the current market scenario has unique attributes that could lead to a sustained rally. “Unless you see a fundamental bump in demand, especially from industrial buyers, I think the rally might not last. But there’s less silver available for investment now than there was 10 years ago, which could really help drive a bigger and more sustained squeeze,” he noted.
The Rising Industrial Demand
One of the critical differences today is that industrial demand for silver now accounts for about 60% of annual usage, compared to just 50% a decade ago. Sectors such as solar energy, electronics, and electric vehicles have significantly driven this increase, making industrial demand a vital factor in the silver market’s future. The Silver Institute indicates that silver has experienced four consecutive years of global supply deficits, averaging around 200 million ounces annually. This shortage has not been offset by new mine supply but instead has been supplemented by drawing down inventories from major exchange platforms like the LBMA and COMEX.
Supply Pressures Continue to Mount
Krauth pointed out that LBMA inventories have dwindled by 40 to 50% over the past few years. “A lot of that metal is moving into private vaults in New York,” he said, especially as concerns mount over potential U.S. tariffs on imported metals. This impending shift prompted a rush of silver moving from London to the U.S. ahead of the anticipated April 2 announcement date regarding possible new trade measures. The uncertainty fueled by existing Trump tariffs on metal imports adds another layer of complexity to the silver market.
Can Silver Surpass Historical Highs?
Despite its recent successes, silver remains the only major metal still trading below its 1980 all-time high. Krauth believes a decisive break above $50 could ignite a rally unlike any seen before, with potential price targets soaring as high as $70, $80, or even $100 in rapid succession. He shares a bold prediction, stating, “I think we could probably see $40 in the second half of this year, and $50 next year,” replicating sentiments expressed by other industry voices.
Retail premiums persist at elevated levels, and while demand at bullion dealers appears to be moderating, institutional interest in silver is notably on the rise. “Some dealers are actually going to Costco to get their silver,” Krauth observed, highlighting the shifting dynamics in the distribution of silver. For new investors or those contemplating entry into the silver market, Krauth advises, “If someone doesn’t own silver, at least buy a little now. If you want a larger allocation, do it in tranches. Maybe buy some now, and if there’s a dip, add more.”
What Lies Ahead?
As March 31 approaches, it remains uncertain whether this grassroots movement will serve as a catalyst for silver prices. Nonetheless, it is apparent that silver is firmly embedded in broader discussions surrounding inflation, de-dollarization, and market manipulation. Krauth emphasizes that “this isn’t just about retail investors anymore. It’s about real tightness in the market,” which points to a potentially bullish outlook for silver in the coming months.
For ongoing updates on #SilverSqueeze 2.0 and insights regarding the movement, follow developments to see how this grassroots effort will impact the silver market.