Silver price falls in frenetic trading as short squeeze starts to ease

A lack of liquidity in London has sparked a worldwide hunt for silver, with benchmark prices soaring to near-unprecedented levels over New York. That’s prompting some traders to book cargo slots on transatlantic flights for silver bars — an expensive mode of transport typically reserved for gold — to profit off higher prices in London.

Those silver bars will start arriving in the coming days and weeks, multiple traders said, and the arbitrage trading has already substantially eroded the premium. The price gap between the two markets narrowed, and the cost of borrowing silver in London also started to fall, although both remained at extreme levels.

On Tuesday, silver touched levels about $1 higher than a peak set in January 1980 on a now-defunct contract overseen by the Chicago Board of Trade, when the billionaire Hunt brothers attempted to corner the market.