Silver lease rates explained

Jewelry Discussion
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Hi,

i learned something new today…silver lease rates”…and thought i would share…i was searching for “why silver refiners have stopped taking in/ buying silver”…

this article is from october 2025, but it explains the process…

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another article on the topic

i am still trying to understand “why” refiners need to/ want to lease silver…i kinda understand, but not quite clearly enough…

i “think”…they buy silver, pay for it (from dealers, at a discount to cover costs) and it takes x days to process it, before they can then sell it and get their money back out of the transaction…so, they are carrying the cost for x days…

but i am not clear on how then leasing silver plays into this scenario…

because that seems like they are also buying silver, but at a premium, due to the lease rate, which used to be negligible until recently when rates pushed up…

and, why do they need to buy silver leases at a higher price, if they are buying from dealers at a discounted rate?

unless, the main source of their silver is thru silver leases, rather than dealers…?…where they are/were buying/ commiting to known silver lease prices at points in time, with the ability to plan their margins without surprises…?…when silver lease prices were stable and predictable…

so…?… their current concern would make sense if they think silver prices will fall by the time they finish processing? ie: lower than when they bought it?

but…”why” are they currently “underwater”…?…it would seem that if they paid higher prices they would just charge higher prices at the end…unless they commit to settlement prices on production before they purchase the silver for that production run…?

i do understand their general concern regarding paying higher prices before processing and possibly having the price dramatically lower at end of processing…when it is time to sell the finished product…

confused,..

julie

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Here’s an interesting article from JCK that more clearly explains why refineries take loans and why it has become a massive problem since silver prices have jumped.

Pam

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The following is a pretty good article on the issue with a lot more information and clear explanations.

Which doesn’t change the situation, but does explain why.

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Hi,

Thank you both! great article! i understand better now

julie

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Volatility Comparison (2025–2026)

Recent market data highlights this significant gap in price swings:

  • Annualized Volatility: As of early 2026, silver’s 1-month annualized volatility spiked to over 126%, compared to gold’s 54.8%.

  • Historical Average: Long-run average volatility for silver is approximately 23.5%, while gold averages around 16.3%.

  • Recent Price Swings:

    • In a single month in early 2026, silver surged 72% while gold gained 30%.

    • During subsequent corrections, silver fell 37% in a week, while gold’s sharpest single-day drop was roughly 9.8%.

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The instability in US economic and foreign policy has decoupled the US economy from the global economy and has destabilized the USD. The trade wars and actual military wars have led to geopolitical uncertainty. The war against Iran has sent oil from $72/bbl to $100/bbl. Oil prices at $100/bbl have not been seen since the Arab oil embargo of 1973, and the Russian invasion of Ukraine in 2022. All asset classes have been been affected- the stock market fell 5.5% over the last 3 months, US government bond interest rates are rising (bond prices lose value when rates increase).. the exception is gold and silver. Gold is rising towards 5.2K/oz, silver spot today is $85 after a secondary peak of $90, with all time high of $120/oz. US government economic and foreign policy volatility is the driver of all these changes. There are some signs that the silver market is stabilizing. Refineries will resume taking orders so long as the price of silver moves slowly up. Silver futures are slowly stabilizing. Copper is the new poorman’s silver and gold. Copper is steady at $5.50 to $6 per pound. (three rolls of copper pennies weigh a pound). Copper futures have increased nearly 3X over the last 10 years. The rise in copper has been slow but steady.,