Silver Short Squeeze Ahead? 2025 Signals from LBMA, COMEX, SLV & PSLV

1. Introduction: Why Silver’s Strength Is Turning Heads Again

Silver has been quietly outperforming in 2025, and some analysts believe a silver short squeeze may be the reason—or the next big move on the horizon.

While the S&P 500 has stumbled, silver has climbed higher, trading above its 50-day and 200-day moving averages.

📊 The chart below shows how silver has outpaced the stock market so far this year.

This price strength has some investors and analysts asking:

Is silver setting up for a massive short squeeze?

While most short squeeze talk in the past has focused on COMEX futures, new data from London’s LBMA points to a different story unfolding in 2025—one that may be even more explosive.

Estimated reading time: 8 minutes

2. What Is a Short Squeeze—and How Could It Unfold in the Silver Market?

A short squeeze happens when traders who bet on lower prices—short sellers—are forced to buy back their positions as prices rise. This fuels more buying, creating a feedback loop that sends prices even higher.

In the silver market, this can happen in either the COMEX futures market or the London Bullion Market (LBMA).

A squeeze usually requires:

• A high level of short positions
  
• Rising prices against expectations
  
• Tight physical supply that limits cover options
  

We’ve seen attempts before—most notably in 2021, when retail investors rallied around silver.

Flashback: The 2021 Silver Squeeze Attempt

In early 2021, Reddit’s r/WallStreetSilver community tried to trigger a silver short squeeze. Prices briefly surged past $30/oz, the highest in nearly a decade. (You can read the full story on that here.)

But it didn’t last.

Why?

• The paper silver market on COMEX was too deep to overwhelm
  
• Big players covered early, cutting losses fast
  
• Exchanges raised margin requirements, cooling speculation
  

👉 Still, the 2021 attempt showed how quickly sentiment can shift—and just how eager many are to expose what they see as price suppression in silver.

➤ If you’re considering buying physical silver, here’s how to buy silver in New Zealand step-by-step.

3. Shifting Focus: From COMEX to the LBMA

In 2025, the most significant stress isn’t on COMEX—it’s in London.

The London Bullion Market Association (LBMA) is the world’s largest physical silver trading hub. It handles over-the-counter (OTC) deals between banks, refiners, and institutional investors. And right now, liquidity in London is drying up.

🔎 According to recent data:

• LBMA vault holdings have dropped by 128 million ounces since November
• The silver-to-ETF holdings ratio is now 1:1, meaning almost no free-floating supply remains
• Silver borrowing rates in London spiked to 7% in January
• ANZ Bank warns that LBMA is facing a real short-squeeze risk as inventory levels drop and swap dealers remain heavily net short

“This isn’t just tight—it’s the tightest we’ve seen since 2020.”
— ANZ Bank Analyst, via Scottsdale Mint Report

According to ANZ, these facts make London—not COMEX—the more likely flashpoint for a true silver squeeze in the months ahead.

➤ Similar liquidity risks in the gold market have been tied to banking reforms like Basel III. Read how Basel III could impact gold prices.

4. What the COT and COMEX Data Still Tell Us

While London is the pressure point, COMEX still gives us market signals.

According to the March 2025 Commitment of Traders (COT) report:

• Commercial traders are net short by 81,655 contracts—a historically high level
  
• Speculators (non-commercials) are heavily net long
  

📉 The chart below shows just how deeply net short commercial traders have become—levels not seen since 2020.

What it means:

• Commercials are hedging, yes—but this much short exposure could still fuel a squeeze
  
• If London’s stress spreads, COMEX shorts might scramble to cover too

5. The Case for a Silver Short Squeeze

A perfect storm is forming in the silver market:

✅ Tight physical supply in London
✅ Borrowing costs spiking across bullion markets
✅ Heavy ETF inflows straining metal availability
✅ Record short positions across LBMA and COMEX

This combination points to a fragile system—one unexpected shock could trigger a cascade of short covering.

And the pressure isn’t just showing up in futures or vaults. It’s also building in silver-backed ETFs, where physical vs paper tension is coming to a head.

This time, the squeeze may start in London’s physical market—but it could ripple through ETFs and futures markets alike.

6. Silver Trusts Under Pressure: PSLV, SLV, and the Battle Over Physical

While futures and vault data dominate the headlines, another crucial silver battleground is unfolding in the ETF space—specifically between SLV and PSLV.

Together, these two funds hold hundreds of millions of ounces of silver, but how they operate—and how they’re being used in today’s market—is telling a story of its own.

6.1 SLV: Still the King of Paper Silver

SLV remains the largest silver ETF in the world, backed by JPMorgan and widely used by institutional investors. But its structure continues to draw criticism.

• As of February 2025, 49.15 million SLV shares were sold short, still over 10% of shares outstanding
• That’s down from 58.5 million—but still elevated by historical standards
• Some analysts question how much actual physical silver backs the fund’s massive holdings

SLV is often seen as a proxy for paper silver, with critics alleging that short selling in SLV suppresses silver’s spot price while creating the illusion of ample supply.

6.2 PSLV: Physical Silver… Also Under Attack?

Sprott’s PSLV is designed as the opposite of SLV—fully allocated, redeemable, and backed by physical metal stored in Canadian vaults.

Yet surprisingly, PSLV is now being heavily shorted too.

📈 As of March 2025, PSLV short interest has spiked to nearly 25 million shares—the highest in its history, even exceeding the 2021 silver squeeze attempt.

This data raises serious questions:

Is PSLV being shorted to suppress silver prices and prevent a physical squeeze?

Analysts like @SemperVigilant1 on X and recent coverage on Seeking Alpha argue that shorting PSLV achieves two things:

1. Caps upward price momentum in silver ETFs
2. Adds artificial supply to the market, without delivering metal

👉 This creates the illusion of ample silver availability, while true physical supply remains tight—especially in London.

6.3 A War Between Physical and Paper

• SLV: Backed by JPMorgan, heavily shorted, opaque backing
• PSLV: Fully allocated, growing rapidly—but now targeted by shorts

This contrast highlights a broader trend: the battle between physical silver and synthetic supply. If PSLV continues to grow—and those shorting it get caught out—it could act as an unexpected catalyst in a broader silver squeeze.

Related reading: Paper Gold vs Physical Gold – What Should You Buy

7. Barriers to a Silver Squeeze

But it’s not guaranteed.

🚫 The paper market is deep—traders can roll positions forward

🚫 Commercials often hedge, not speculate

🚫 Exchanges can raise margins or restrict positions

🚫 Institutional players may intervene if industrial supply is threatened

So while a squeeze is possible, it’s far from certain. It may take multiple triggers to push the market into real panic mode.

➤ Central banks have already been quietly hoarding gold in recent years. Here’s why they’re buying while retail investors sell.

8. What Investors Should Watch For

Here’s what to monitor if you want to stay ahead:

• 📉 LBMA vault data – are holdings still falling?
  
• 💸 Silver borrowing/leasing rates – any more spikes?
  
• 📈 ETF flows – strong inflows = physical stress
  
• 📊 COT reports – watch short positioning
  
• 💬 Reddit / X / news chatter – growing buzz could hint at retail interest returning
  

Also watch for wider economic signals: gold, the US dollar, bond yields—all of these shape silver’s direction. Subscribe to our weekly newsletter to stay informed about all of these factors.

➤ Looking to secure physical silver while it’s still available? Browse our live silver bullion listings here.

9. Conclusion: Could the Next Silver Shock Be Around the Corner?

Silver has always been a volatile and complex market. But in 2025, the pieces are falling into place for something bigger than usual.

From tight London inventories to heavily short positions on COMEX, the conditions for a squeeze are building.

Does this mean a short squeeze is guaranteed? No.

But the conditions are closer than they’ve been in years—and this time, the stress may be starting not on Reddit, but in the very core of the global silver market: London.

🧠 Final Thought:

The silver market is shifting. If a true supply crunch hits, price moves could be fast, sharp, and historic.

You’ll want to be holding physical silver if a squeeze happens.

👉 Explore our full range of investment-grade silver bullion at the Gold Survival Guide Shop.

Whether you’re holding physical metal, watching futures, or just trying to understand what’s next, now is the time to stay informed—and prepared. Get our daily prices alerts for free.