Silver Shockwave: India’s Futures Market Teeters Amid Global Price Surge

Image Source: BW BusinessWorld

India’s silver futures market is facing a potential meltdown as global prices surge past $48 an ounce. A dangerous gap between physical silver scarcity and futures pricing has triggered fears of delivery defaults. Experts warn that the Multi Commodity Exchange (MCX) may be headed toward a crisis if the squeeze intensifies.

The Great Silver Squeeze: India’s Futures Market Faces a Meltdown Risk

India’s precious metals market is under pressure as silver prices skyrocket globally, exposing a dangerous disconnect between physical availability and futures trading. The phenomenon, dubbed the “Great Silver Squeeze,” has raised alarms across the financial ecosystem, with the Multi Commodity Exchange (MCX) at the center of the storm.

Key Highlights from the Crisis Unfolding:

Record-Breaking Silver Prices

Global silver prices have surged over 50% in 2025, reaching $48 per ounce, outpacing gold and other metals.

In India, 999-purity silver now trades at an unprecedented ₹1.62 lakh per kilogram, according to the Indian Bullion and Jewellers Association (IBJA).

Futures Market in Backwardation

A rare backwardation has emerged, where spot prices exceed futures prices, signaling immediate physical shortage.

This inversion suggests that traders are struggling to deliver physical silver against paper contracts.

MCX Under Strain

The MCX faces a delivery crisis, as futures contracts may not be backed by sufficient physical silver.

Analysts warn that this could lead to defaults, margin calls, and forced liquidations, destabilizing the broader commodities market.

Industrial and Investor Demand Soars

Demand from industrial users, mints, and bullion buyers has intensified, further tightening supply.

Retail investors are also flocking to silver as a hedge against inflation and currency volatility.

Regulatory and Strategic Implications

The crisis has prompted calls for greater transparency in futures trading and stricter delivery norms.

Some experts suggest that India should increase domestic silver reserves and diversify sourcing channels to mitigate future risks.

Market Outlook

If the squeeze continues, India could witness price volatility, trading halts, and policy interventions.

Traders are advised to monitor positions closely and consider shifting to physical silver holdings.

The silver squeeze is more than a pricing anomaly—it’s a wake-up call for India’s commodities infrastructure, demanding swift action to prevent systemic fallout.

Sources: BusinessWorld, Investing.com India

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