How did LBMA lease rates behave during the October 2025 silver squeeze, and what data sources documented the spike?
Executive summary
The London one‑month silver lease rate exploded from its usual near‑zero levels to record annualised highs in early October 2025 — with multiple outlets reporting peaks in the high 30% range — before retreating later in the month as liquidity returned [1] [2] [3]. This behaviour was documented across LBMA commentary, market data from Bloomberg and CME/COMEX warehouse and open‑interest reports, and corroborated by industry outlets and analysts tracking vault flows and ETF/inventory movements [2] [4] [5] [6].
1. The spike: degree and timing of the lease‑rate shock
The one‑month silver lease rate in London rose from typical one‑month levels measured in fractions of a percent to an annualised peak that most reports place around the high‑30s: Bloomberg reported an all‑time peak of 34.9% in October before a rapid fall [2], multiple market commentators and trade sites described spikes “to nearly 40%” or “39%” on October 9th [4] [3] [5], and several industry summaries cited one‑month rates exceeding 30% during the squeeze [7] [8]. These figures contrast with the benign pre‑squeeze baseline often cited by the LBMA and industry writers — one‑month silver lease rates were typically quoted near 0.3%–0.5% in normal years [1] [4].
2. What the spike signalled and why it mattered
Such an extreme rise in lease rates is a market signal that immediate access to deliverable metal was severely constrained: high lease rates represent the annualised cost of borrowing physical silver in the London market and therefore reflect tightness in lendable inventories rather than necessarily an absolute geological shortage [1] [9]. Analysts linked the spike to constrained LBMA/COMEX inventories, heavy retail and regional physical demand (notably India), and shifts of metal between London and New York vaults that left London liquidity “threadbare,” producing backwardation and steep spot premiums [4] [3] [10] [5].
3. The data sources that documented the spike
Primary documentation came from market‑data and reporting services and from LBMA commentary: Bloomberg reported the lease‑rate peak and subsequent fall and cited LBMA market metrics [2], Investing.com and Bank of America analyses highlighted the 39% peak in London and the ensuing moderation [5], and industry sites tracked LBMA vault holdings and COMEX/warehouse movements as corroborating evidence that deliverable supplies had tightened [4] [8]. Trade association reporting and LBMA releases were invoked by outlets and used to quantify inventory declines and trading volumes [11] [12] [6].
4. The unwind: how quickly rates normalised and why
By late October liquidity eased and lease rates fell sharply from their peaks: Bloomberg recorded a retreat of the annualised London lease rate to about 5.6% on October 27 after the earlier surge [2], and multiple reports described a rapid normalization as flows — including shipments from COMEX to London and seasonal demand patterns easing — relieved the immediate scarcity [3] [5] [6]. Market participants and LBMA commentary noted that restoring arbitrage between spot and futures and replenishing London lendable stocks were central to the rate decline [6] [3].
5. Contrasting views and reporting caveats
There are competing framings in the coverage: some outlets portrayed the spike as evidence of a systemic failure of the bullion banking model and near‑terminal physical scarcity [3] [8], while LBMA and market‑structure analysts cautioned that elevated lease rates reflect temporary “tightness” and financing pressures rather than proof of permanent exhaustion of metal [9] [1]. Reporting frequently cites LBMA vault and COMEX warehouse figures and ETF flows to support claims, but publicly available series are summarized by intermediaries — the sources here document the spike through LBMA commentary, Bloomberg and Investing.com market data, CME/COMEX open‑interest and warehouse movement reports, and industry reporting on vault holdings and regional premiums [2] [4] [5] [6]. Where primary LBMA time‑series detail would be needed to reconstruct intraday lease‑rate paths, the reviewed sources provide authoritative contemporaneous snapshots rather than full raw datasets [2] [6].