Shanghai Premium Reaches 9.5% as Silver Breaks Above $75
The silver market delivered another solid session yesterday, with spot prices climbing 1.46% to $75.59 per ounce. But the real story is happening across the Pacific, where Shanghai silver futures are trading at $82.81—a notable 9.5% premium to spot that signals continued strong physical demand in Asia.
Key Market Movements
Yesterday's price action pushed silver decisively above the $75 psychological level, with COMEX futures showing healthy volume throughout the session. The move comes as the dollar index held relatively steady at 99.066, suggesting silver's strength is driven by metal-specific factors rather than broad currency weakness.
The Shanghai premium deserves particular attention. At 9.5%, it sits well above the typical 0-5% range we see during normal market conditions. This elevated premium indicates robust physical demand from Chinese buyers, who are willing to pay significantly more for immediate delivery than Western paper prices suggest.
| Metric | Current | Previous | Change |
|---|---|---|---|
| Silver Spot | $75.59 | $74.50 | +1.46% |
| Shanghai Premium | 9.5% | 8.2% | +1.3pp |
| Gold/Silver Ratio | 63.09 | 64.01 | -0.92 |
The gold-silver ratio improvement to 63.09 is encouraging for silver investors, as it suggests silver is outperforming its monetary counterpart. With gold at $4,768.60, silver continues to play catch-up to what many consider more appropriate relative valuations.
What This Means for Stackers
The elevated Shanghai premium and silver's breakout above $75 reflect a market where physical demand is outpacing readily available supply. However, premiums on U.S. physical silver remain relatively contained, with generic rounds at 8.6% and junk silver at just 5.5%—creating an interesting arbitrage opportunity for domestic buyers.
CFTC data shows commercial traders holding a net short position of 38,857 contracts as of March 31st. This positioning sits within the typical range of 30K-50K contracts, suggesting large traders aren't positioned for dramatic price moves in either direction.
What to Consider
With junk silver premiums at just 5.5%—well below both generic rounds and Eagles—90% silver coins offer exceptional value for stackers today. The premium gap between junk silver and other forms has widened significantly, making pre-1965 dimes and quarters an attractive accumulation opportunity while this discount persists.
Bottom Line
Silver's break above $75 backed by a 9.5% Shanghai premium demonstrates genuine physical demand driving prices higher. The relatively modest premiums on U.S. physical silver, particularly junk silver at 5.5%, suggest domestic stackers still have access to reasonably priced metal even as international demand intensifies. This divergence may not last long if the Shanghai premium continues expanding.
References - LBMA Silver Price: https://www.lbma.org.uk/prices-and-data/precious-metal-prices - COMEX Silver: https://www.cmegroup.com/markets/metals/precious/silver.html - CFTC COT Report: https://www.cftc.gov/dea/futures/deacmxsf.htm
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