Guide
Silver lease rates explained.
A silver lease rate is the interest rate for borrowing physical silver, mostly in London. It's usually around 1% a year. When it jumps, it's the clearest sign that physical silver is scarce right now.
Updated October 28, 2026
What it is
Refiners, manufacturers, and banks borrow and lend silver the way businesses borrow money: a holder lends metal for a period and is paid interest in return. The lease rate is that interest rate. Borrowers include refiners who need metal while scrap is being processed, and industrial users who'd rather borrow than buy.
How it's worked out
There's no official published lease rate today. The LBMA's guide to the London market explains the relationship: a precious-metals swap is priced as the difference between the dollar interest rate and the metal's interest rate. So the lease rate is worked out from market prices as the dollar rate minus the forward rate, and the figures in the news are implied rates from data providers. The LBMA's old published forward rates for gold ended in 2015.
When the lease rate rises above the dollar interest rate, forward prices fall below spot, called backwardation. The LBMA notes that silver spends more time in backwardation than gold.
Normal levels and the spikes
- Normal: about 1% for one month, according to the Silver Institute, before October 2025.
- October 2025: the one-month rate rose from about 1% to over 30%, and overnight rates touched about 200%, as London ran short of silver free to trade.
- Early 2026: back to around 2% to 3% by mid-first quarter, per the Silver Institute; BullionVault reported 3.3% on January 9 and 6.3% on February 6.
What high lease rates mean
- Higher costs for those who borrow metal, such as refiners, recyclers, and manufacturers, some of whom have to buy instead.
- Slower settlement for scrap, as refiners hold off or settle later.
- Higher retail premiums on coins and bars.
- Backwardation, with futures below the spot price.
See silver vault inventories and shortages for what caused the 2025 squeeze.
Sources
- LBMA, The OTC Guide: lending and borrowing metal, and discontinuation of GOFO.
- The Silver Institute, World Silver Survey 2026 (data by Metals Focus).
- BullionVault market reports, January 9 and February 6, 2026.
Silver market: Vault inventories and shortages · The silver deficit · How much silver is mined · Why is silver going up? · All guides
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