What if I told you that a single festive season in India could send shockwaves through the global silver market? As millions rushed to buy silver for Diwali, the world's largest precious metals refinery ran out of stock for the first time in history. Welcome to the 2025 silver market crisis, where India is at the center of a massive buying frenzy that has left London traders in a panic.

Typically, Diwali is a time when gold takes center stage, but this year, silver stole the spotlight. The fervor of Indian consumers turned an annual ritual into an unprecedented buying spree, igniting a surge in demand that traders struggled to meet. Vipin Raina, head of trading at MMTC-Pamp India Pvt, described the scene: “Most people who are dealing silver and silver coins, they’re literally out of stock because silver is not there.” His sentiment speaks volumes of the chaos that unfolded.

Social media played a pivotal role in this upheaval. Influencers and investment bankers like Sarthak Ahuja, boasting nearly 3 million followers, fueled the frenzy by promoting silver as the “next big buy.” This year's demand was not just heavy; it was “humongous,” according to Amit Mittal, GM at M.D. Overseas Bullion. Premiums on silver soared above $5 an ounce, significantly higher than the typical few cents above international prices, creating bidding wars as buyers scrambled for availability over cost.

But this buying mania didn’t stop at India’s borders. Global hedge funds and investors also piled into the silver market, betting on a weaker U.S. dollar and following the unstoppable rally. By early October, JPMorgan Chase had to inform clients that they had no silver to deliver for the month, with the next availability pushed to November. London, the hub for silver trading, described a market “all but broken.”

As traders grappled with an influx of client calls and dwindling liquidity, Robin Kolvenbach, co-CEO of Argor-Heraeus, noted a drastic drop in silver availability. The price of silver skyrocketed to $54 an ounce before experiencing a staggering tumble of over 6.7%. This kind of volatility takes us back to historical market crises, like the infamous Hunt brothers' attempt to corner the market in 1980.

The situation has been exacerbated by a mix of factors, including India’s extraordinary Diwali demand and a global supply shortage that has been building for years. Since 2021, silver demand has consistently surpassed supply by a staggering 678 million ounces, driven largely by a booming solar industry. Adding to this frenzy, over 100 million ounces flowed into global silver ETFs this year, reflecting an increasing appetite for precious metals.

Even when conditions seem ideal, moving silver from COMEX to London can take several days, and delays left traders exposed to spiraling costs as contracts couldn’t be fulfilled on time. The sharp drop in COMEX inventories marked the largest reduction in 25 years, highlighting the ongoing stress in the market.

Yet, signs of improvement emerged when silver prices receded following hints of better U.S.-China relations. Daniel Ghali, a TD Securities analyst, acknowledged that the market had been on the brink of a squeeze for over a year. The combination of festive demand, industrial growth, and a surge in investment mania turned a tight market into a global squeeze.

As the silver market remains under strain, the world watches closely, waiting for the necessary deliveries to alleviate the ongoing crunch. This crisis isn't merely a logistical hiccup; it reflects a delicate balance of supply and demand dynamics in an increasingly interconnected global marketplace.