On July 31, 2026, the latest data released by the London Bullion Market Association (LBMA) showed that global silver inventories had fallen to a five-year low, while gold lease rates spiked to unusually high levels. These signals indicate that the precious metals spot market is facing supply tightness, with international gold and silver prices moving higher in tandem during the day's trading and market sentiment reignited.
Silver inventories hit five-year low, spot shortage intensifies
The data shows that as of July 30, silver inventories held by LBMA members stood at approximately 820 million ounces, down 18% from 1 billion ounces at the start of the year, the lowest level since 2021. Meanwhile, silver inventories at the Shanghai Gold Exchange also fell to historical lows, down more than 30% from their peak.
Analysts point out that the rapid decline in silver inventories is mainly driven by two factors: first, strong demand for silver from the photovoltaic industry and new energy vehicles—in 2025, global photovoltaic silver paste consumption grew 22% year-on-year, pushing silver's industrial demand share above 60%; second, physical silver investment continues to heat up, with global silver coin and bar sales maintaining double-digit growth for three consecutive quarters. In addition, unexpected mine shutdowns and declining ore grades at some silver mines have further limited supply-side flexibility.
Gold lease rates surge, signs of physical gold scarcity emerge
Even more striking than silver inventories is the sharp rise in gold lease rates. According to LBMA data, the one-month gold lease rate surged from 0.6% in early July to 1.25%, the highest in nearly two and a half years. The gold lease rate represents the opportunity cost of holding physical gold, and its climb usually signals a surge in demand for physical gold or reduced availability of lendable gold supply.
"The rise in rates reflects a lower willingness of central banks and financial institutions to lend gold, coupled with increased hedging demand, making physical gold 'hard to borrow' in the market," said an executive at a multinational precious metals dealer. "This situation is rare in history—the last similar scenario was on the eve of the liquidity crisis in March 2020."
Spot premiums stay elevated, strong upward momentum
Tightness in the spot market is directly reflected in premiums. Currently, the premium of spot silver over futures in the London market has widened to $0.85 per ounce, the highest since 2015; the spot gold premium at the Shanghai Gold Exchange remains around $8 per ounce, far above normal levels. This indicates that physical buyers are willing to pay higher prices to secure spot supplies, further pushing prices up.
Driven by supply concerns, as of the Asian trading session on July 31, COMEX gold futures were trading above $2,550 per ounce, up 1.2% intraday; silver futures jumped 2.5%, breaking through the $49 per ounce level and outperforming gold. The gold-silver ratio has narrowed from around 75 at the start of the year to around 52 currently. Although still above the historical average, silver's elasticity is becoming evident.
Industry interpretation: supply logic dominates, precious metals bull market foundation solid
Several investment banks upgraded their precious metals price forecasts in reports this week. Goldman Sachs believes that the global central bank gold-buying trend continues, and with the shift toward looser central bank policy cycles, gold's medium-to-long-term upward channel remains intact. Silver, due to its smaller market size and higher industrial sensitivity, tends to show greater price elasticity during supply shortages.
"The rapid depletion of silver inventories is an important signal—it means the market may need higher prices to curb demand or stimulate new supply," said Chen Qing, an independent precious metals analyst. "Historically, whenever silver inventories fell to low levels, silver prices tended to see a significant rally within the next 6-12 months. The current fundamentals are building momentum for a new round of gains."
From a technical perspective, gold has been consolidating in the $2,400-2,500 range for nearly six weeks. Today's upward breakout touched $2,558; if it closes firmly above $2,550, it could open new upside room. Silver has preliminarily broken through the key resistance at $49, with the next target at the previous high of $51.
Investment strategy: beware of short-term volatility, accumulating on dips remains the best approach
Although tight spot supply is a long-term positive, investors should also be alert to short-term risks. Uncertainty over the Fed's policy path, a rebound in the US dollar index, and easing geopolitical tensions could all trigger sharp fluctuations in precious metals prices. In addition, if silver inventory data shows unexpected replenishment or demand falls short of expectations, prices could also correct.
- Build positions in batches and avoid chasing highs;
- Silver offers higher elasticity but also higher volatility, suitable for aggressive investors;
- Gold as a core position, with an allocation ratio of 55%-60% recommended;
- Pay attention to ETF and futures tools, and control leverage risk.
Conclusion
Silver inventories at five-year lows and the surge in gold lease rates are like a thunderclap breaking the calm in the precious metals market. Under the dual resonance of global monetary easing expectations and tightening physical supply, the long-term investment value of precious metals is being reshaped. In the coming weeks, the upcoming US non-farm payroll data and central bank policy developments will determine short-term direction, but regardless of volatility, supply-demand fundamentals have provided a solid bottom for gold and silver prices.
