The global silver market is facing challenges due to trade-war fears affecting investors. Key indicators are showing concerning signs, with millions of ounces of silver being transferred between trading hubs. The potential for months of disruption looms ahead.

The increase in borrowing rates for silver is causing worry, as fears grow about the impact of potential tariffs imposed by US President Donald Trump. This has led to a rush to transport silver to the US in order to take advantage of higher prices in New York, possibly causing a shortage in London.

This year has seen significant upheaval in precious metals like gold and silver due to Trump's trade policies. The demand for safe-haven assets has surged, creating pricing discrepancies between major markets. Although spot silver has seen a 17% increase in value this year, futures in New York have performed even better.

The concerns about tariffs, particularly those targeting Canada and Mexico, and the looming reciprocal trade restrictions have resulted in large amounts of gold and silver being moved from London to US vaults. Gold is usually air-freighted due to its higher value and density, while silver often takes longer sea voyages.

Lease rates for borrowing silver have risen sharply, with rates exceeding 6% this month. This increase reflects worries about diminishing stockpiles in London, reaching a historic low last month. Additionally, not all remaining stock is available as it is tied to exchange-traded products.

Analysts anticipate high lease rates in London for the next two to three months owing to the ongoing transfer of silver to the US. Given silver's bulkiness compared to gold, the transfer process for silver is expected to take longer.

Data from US exchanges indicates a tumultuous situation, as Comex-reported silver inventories have reached record levels, increasing by 40% this quarter alone. While New York is currently accumulating silver, there are concerns that the trend may reverse if a shortage of silver occurs in London vaults, leading to an extended period of instability.