by Craig Hemke, Sprott Money:
As September 2025 came to a close, gold closed up 11% for the month, pushing well into all-time high territory. In this month-end wrap-up hosted by Craig Hemke, market analyst and mining executive David Jensen offered a stark and data-rich breakdown of the underlying dynamics fueling this rally.
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While many market watchers cheer rising prices, Jensen’s analysis paints a deeper, more structural concern. “We’ve got price backwardation where the spot price is higher than the futures price all the way out to 12 months,” Jensen explained, signaling an intense demand for physical metal in the here and now—demand that outpaces supply by a wide margin.
Beyond the headlines and price charts, Jensen emphasized that the physical precious metals markets, especially gold and silver, are in deep distress, mainly due to the fractional-reserve-style paper trading systems in places like London. “This market is dominated with price setting in the UK and in London… you don’t have to have the metal to sell immediate ownership of metal,” he said, revealing the core of the issue: promissory notes are outstripping physical inventory. With lease rates now exceeding 5% and backlogs building, the system is under growing pressure. Learn more about the gold spot price here.
Buy Silver: Systemic Shortages Driving Silver’s 16% Monthly Surge
Silver had an even stronger month than gold, soaring 16% in September and inching toward historic highs. According to Jensen, this isn’t just speculative frenzy—it’s the inevitable result of years of global deficits and a shrinking pool of accessible physical supply. “We’ve got three years of 800 million to a billion ounce deficits,” Jensen pointed out, “and before that it extended for a couple more years.” Despite these deficits, the vault stock in London hasn’t budged, staying flat at around 140 million ounces since May. “The conclusion I’ve come to is that’s not available to market… that’s held by private owners,” he asserted.
Even ETFs like SLV are failing to reflect the real pressure in the system. Jensen suggests that the physical silver supposedly backing these ETFs is likely unavailable or being illegally rehypothecated. “The ETF holdings in London have barely gone up at all,” he noted, despite the explosive price action. As for the free float? Jensen claims it’s virtually nonexistent: “The amount of silver bars in the 1000 ounce format… that are truly available to market right now are measured in the tens of millions of ounces.”
With such tight availability, the physical silver market is entering crisis territory, evidenced by backwardation, surging lease rates, and static vault numbers. Check the current silver spot price here.
Gold Spot Price: Breaking the Digital Derivative Pricing Scheme
Craig Hemke, the show’s host, referred to London’s unallocated market as a “fractional reserve and digital derivative pricing scheme”, a system which relies heavily on paper trading with minimal physical backing. David Jensen supported this assertion, referencing a 2011 London market survey that revealed actual trading volumes were ten times higher than reported. This means the market could be facing as many as 4 billion ounces in claims on silver—in a market that only produces 825 million ounces annually.
Jensen also revisited the 2021 silver squeeze, during which Goldman Sachs’ Jeff Curry claimed that retail investors couldn’t move the silver price because ETFs would simply short any purchased metal. “That’s rehypothecation and it’s illegal,” Jensen stated flatly. He connected the dots to a sharp increase—and subsequent decline—in SLV’s silver holdings during that same time period, suggesting this public statement was a tactical move to stop a run on silver. “Curry was trying to stop a run on silver,” Jensen surmised, “and what he said had a very real effect on the markets.”
