Structural shortage in silver prices worsens, XAG approaches the $100 mark, physical silver supply under pressure

January 14 News, silver (XAG) prices continue to strengthen, with spot prices breaking a historic $90 per ounce, driving the transaction price of American Eagle silver coins in dealer channels above $100 each. Overall, this round of increase is not driven by short-term sentiment but by a combination of structural shortages and strategic demand.

As prices fluctuate rapidly, the U.S. Mint announced a suspension of all silver coin sales. The official explanation states that the sharp volatility in silver prices makes it impossible to price reasonably, which the market interprets as physical silver demand significantly exceeding supply. Market commentator Echo X pointed out that when official channels halt sales, it often means that paper prices can no longer accurately reflect the scarcity of physical silver; premium spreads are only a matter of time.

In summary, the rise in silver prices is mainly influenced by multiple factors, including safe-haven capital inflows, rising expectations of Fed rate cuts, tightening physical silver markets, and continued demand for industrial silver in new energy and high-tech sectors. First Majestic Silver CEO Keith Neumeyer believes that under the current supply and demand structure, it is not an extreme scenario for silver prices to break through $100 per ounce in the coming months.

From a market mechanism perspective, Sunil Reddy pointed out that the silver market has long faced a problem where paper contract volumes far exceed physical inventories. When margin and delivery pressures rise simultaneously, short sellers are forced to accelerate covering, which shortens delivery cycles and pushes up spot premiums. He emphasized that the true trigger for chain reactions is not sentiment but the rapid squeezing of profit margins.

On the investor level, Peter Spina stated that funds holding physical silver long-term have not been selling off en masse due to the rise, and the historically accumulated structural imbalance is becoming more apparent. This rigid supply makes silver more like a strategic resource rather than an ordinary trading asset.

The macro environment also provides supporting context. JPMorgan’s latest earnings report mentioned slowing bond issuance, weakening labor markets, and rising corporate financing pressures. Analyst Jeffrey Snider believes these signals indicate that silver price increases are more a reflection of systemic external pressures rather than mere speculation.

Additionally, Jim Ferguson cited Andy Schectman’s view that central banks, sovereign wealth funds, and commercial institutions are continuously absorbing physical silver. Currently, paper commitments far exceed actual inventories, and China’s restrictions on silver exports have also strengthened its strategic security attribute, with widespread applications in artificial intelligence, energy systems, and high-end manufacturing.

Against the backdrop of ongoing tight physical supply, the market generally believes that the move toward $100 per ounce is no longer just a technical target but a phased result of supply and demand reshaping.