Silver rallies on paper — but China’s spot buyers are sitting out the highs

On the screens, silver is recovering. Spot silver closed its last session up 2.78% at $60.81 an ounce, according to Shanghai Metals Market (SMM), and extended its technical rebound on Monday on the US–Russia diesel news and money flowing into precious-metals stocks. In China’s physical market, SMM describes a different mood: buyers stepping back.

Quiet trade in Shanghai

SMM’s daily review of the Chinese spot market makes three points:

• Downstream buyers are cautious at these prices. Manufacturers and fabricators who use silver are holding off after the recent rise.
• They stocked up before the holiday. Buyers built inventory ahead of China’s National Day holiday at the start of October, so many do not need metal right now.
• Spot silver is being offered at a discount. Shanghai traders’ morning offers were around 45 yuan per kilogram below the Shanghai Futures Exchange’s December 2026 contract (SHFE 2612), and the Shanghai Gold Exchange’s Ag(T+D) contract traded 45–55 yuan below it. Trading thinned, even as sellers held their offers firm.

Why the discount matters

When physical metal is in short supply, buyers pay a premium over the futures price to get it now. When it is plentiful, or demand is weak, sellers have to offer a discount. A spot discount to futures is the physical market saying that, at today’s prices, there is more metal available than buyers want.

That contrasts with the picture painted earlier in the month. Deutsche Bank, in a report covered by The Northern Miner, pointed to a persistent premium for silver in China as an upside risk to its view — see Is the silver deficit story over?. The two measures are not the same (one compares Chinese prices with international ones, the other compares spot with futures inside China), but a local discount at the very moment the price rebounds is worth noticing.

What a paper-vs-physical gap can mean

A rally driven by futures and investment money, with physical buyers on the sidelines, can go either way. Sometimes physical demand returns once users run down the stock they built before a holiday, and the gap closes. Sometimes the rally fades for lack of real-world buying. The usual reading is simply that the move is being led by financial flows rather than by industrial demand — which makes it more sensitive to the dollar, yields and this week’s US inflation data than to anything happening in a factory.

For the levels silver traders are watching, see Silver at $60: key levels to watch this week and Have gold and silver bottomed?. The gold-to-silver ratio tracks silver against gold.

Every figure here is as reported by the publications listed under Sources, at the time they reported it. Prices move; the live gold price has the current one. Nothing on this page is investment advice.