Silver Squeeze 2.0: Will Silver Price See the Biggest Technical Breakout in Modern Market History?
Silver is back in the spotlight, recently gaining over 40% in value over the past year and now trading above $34 an ounce. This resurgence has caught the attention of investors and the media alike, with a coordinated grassroots movement emerging under the banner of “Silver Squeeze 2.0.” Set for March 31, this online campaign encourages a collective purchase of physical silver to confront what proponents perceive as a systematically manipulated paper market.
The foundational strategy echoes the 2021 silver squeeze, which was heavily driven by the Reddit community’s enthusiasm. However, supporters argue that the current environment is distinct due to tighter supply, soaring lease rates, and an overheated paper-to-physical silver ratio, currently at a staggering 378 to 1—a metric that far surpasses traditional futures markets for metals. Peter Krauth, author of The Great Silver Bull and editor at Silver Stock Investor, notes, “There’s about 223 million silver ounces that are net short right now. That’s about 25% of the annual mine supply.”
Retail Uprising or Temporary Hype?
The previous retail momentum in 2021 saw silver prices surge briefly from $25 to nearly $30, with average silver stocks climbing by 30% to 40% within days. However, this surge proved to be short-lived due to insufficient sustained buying and a lack of genuine demand from industrial users. Krauth emphasizes that a similar outcome could occur unless a significant demand pivot materializes, especially from industrial sectors.
It’s worth noting that silver’s industrial applications now account for roughly 60% of annual consumption, rising from 50% a decade ago, primarily driven by sectors such as solar energy, electronics, and electric vehicles. With the ongoing supply deficits—averaging 200 million ounces annually over the last four years—there’s a scenario where the market conditions may indeed catalyze a more robust price movement this time around.
Supply Pressures Mounting
According to Metals Focus, these persistent global supply deficits have not been counteracted by new mine developments. Instead, inventory drawdowns from exchanges such as the London Bullion Market Association (LBMA) and COMEX have filled the gap. Krauth highlights that LBMA inventories have diminished by 40% to 50% over recent years, and much of that silver is reportedly shifting into private vaults within New York.
Furthermore, recent geopolitical tensions and anticipated tariffs on imported metals have spurred this inventory movement ahead of a highly publicized tariff announcement expected around April 2. Notably, existing Trump-era tariffs pose an additional concern for importers, potentially imposing a harsh 25% tax on imported silver.
The Path to $50 and Beyond?
Despite trading significantly lower than its 1980 all-time high, there is growing sentiment that silver could finally break critical price thresholds. Krauth believes that prices could push toward $40 in the second half of this year and could even reach $50 next year. Drawing from the analysis of various industry experts, Krauth suggests that if silver decisively crosses $50, the price could skyrocket to $70, $80, or even $100 in rapid succession.
Indeed, some analysts have made bold proclamations regarding silver’s future, with Krauth himself predicting eventual price points ranging from $250 to $300, aligning with forecasts from investors like Eric Sprott. Notably, retail premiums remain elevated, and while demand from general consumers has eased, institutional interest appears to be increasing, indicating a complex demand dynamic.
Investment Recommendations
For investors considering entering the market, Krauth recommends that even those who haven’t yet committed to silver should consider making at least a modest initial purchase. “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,” he advises.
What’s Next? March 31 and Beyond
As we approach March 31, the question remains whether this date will act as a significant catalyst for silver prices. Regardless of the outcome of the Silver Squeeze 2.0 movement, the underlying supply-demand fundamentals appear oriented toward a bullish outlook. This situation isn’t just about a grassroots campaign; it’s indicative of significant market tightening.
Krauth succinctly encapsulates the sentiment: “This isn’t just about retail investors anymore. It’s about real tightness in the market.” Investors should remain vigilant and informed as the situation unfolds, recognizing that the time-tested dynamics of supply and demand are poised to dictate silver’s value trajectory in the coming months and years.
