The banks are no longer in charge: Eric Sprott discusses the $300 silver surge and his extensive mining acquisitions

Silver Surges as Gold Finds New Ground

Gold prices have stabilized in the $5,000 to $5,500 range, a level now widely accepted by the market. However, the spotlight has shifted to silver, which has experienced a dramatic rally, briefly reaching the low $90s. This surge signals a significant transformation in how global capital is being allocated, making it increasingly difficult for investors to overlook the changes in the precious metals landscape.

Eric Sprott on Market Upheaval and Silver's Physical Squeeze

In an exclusive conversation with Kitco News Senior Anchor Jeremy Szafron, billionaire investor and Sprott Inc. founder Eric Sprott shared his insights ahead of the 2026 PDAC convention in Toronto. Sprott discussed the mechanics behind the current shortage of physical silver, the shifting flow of precious metals toward Eastern markets, and his own substantial investments in junior mining companies.

Technical Disruptions and the Physical Shortage

The recent volatility in silver prices has been accompanied by growing pressure on Western trading platforms. This week, the CME Group faced a technical issue on its Globex system, suspending trading of metals and natural gas for about an hour and a half. According to the CME, metals trading was paused at 12:15 p.m. and resumed at 1:45 p.m., while natural gas markets reopened at 12:50 p.m. All day orders and good-till-date orders from the previous day were canceled, but good-till-canceled orders remained active.

Although the CME attributed the disruption to technical problems, this incident follows a similar event last November, raising concerns about the liquidity of physical metals in Western markets.

Sprott commented, "It's clear we're witnessing a physical short squeeze. We monitor inventories on the LBMA, CME, and Shanghai Gold Exchange, and the drawdown is accelerating, especially in the East." He highlighted that Shanghai's inventories dropped by 10% in a single day, leaving only about 11 million ounces—an extremely low level for a country as large as China.

He also pointed out that many Western financial institutions remain heavily invested in paper silver, even as physical supplies dwindle. "There’s still a short position of around 500 million ounces of silver on Comex, and it’s mainly held by banks, not miners," Sprott explained.

Eastern Markets Take the Lead in Precious Metals Pricing

The balance of pricing power in precious metals is rapidly shifting from Western paper markets to Eastern buyers. Sprott’s observations about increased Indian investment are supported by recent regulatory changes. On February 26, the Securities and Exchange Board of India (SEBI) revised its mutual fund regulations, now permitting actively managed equity funds to allocate up to 35% of their assets to gold and silver instruments.

Sprott explained, "The Indian government has authorized mutual funds and ETFs to invest up to 35% of their portfolios in gold and silver, opening up a $385 billion pool of assets to precious metals."

This policy change paves the way for a surge in institutional demand for gold and silver in India. Additionally, starting April 1, 2026, Indian mutual funds must use domestic spot prices from local exchanges to value their physical gold and silver holdings, moving away from the London Bullion Market Association (LBMA) standard.

Sprott noted, "India is choosing to set its own prices, independent of the LBMA and Comex, reflecting a broader trend of Eastern markets establishing their own benchmarks."

Silver’s Potential: The Gold-to-Silver Ratio and $300 Silver

Sprott believes that as industrial demand for silver intensifies, the gold-to-silver price ratio will revert to historical norms. Traditionally, silver is mined at about one-eighth the rate of gold, but the current market ratio is much higher. "I expect the ratio to return to 15:1, and we may even see it overshoot to 10:1," Sprott said. With gold trading in the $5,000s, this would imply silver prices exceeding $300 per ounce.

He also pointed to direct deals between manufacturers and miners as evidence of growing scarcity. "Samsung recently agreed to purchase all of Silver Storm Energy’s output, advancing $5 million to secure supply," Sprott noted, highlighting the increasing role of industrial buyers in the silver market.

Investing in Mining: Hycroft and Junior Miners

Sprott remains optimistic about his investment in Hycroft Mining, recently increasing his stake by $6.3 million to hold over 40% of the company. He emphasized the significant leverage of Hycroft’s Nevada asset, which now boasts reserves of 2.6 billion silver-equivalent ounces, surpassing other major producers.

He described the deposit as a "coiled spring," poised for a major revaluation as market conditions evolve. "We’re not selling at low prices; we’ll wait for $150 or $200 an ounce," he said.

Beyond Hycroft, Sprott has invested $3 million in Rio Silver, $10 million in Silverco, and $40 million in Highlander Silver in Peru. He anticipates a wave of investment in junior mining companies, reminiscent of the tech boom of the late 1990s. "We’re approaching what I call the Nortel Effect—when everyone wants to own a particular asset, causing a dramatic price surge. Junior mining stocks have lagged behind gold and silver prices and have a lot of ground to make up," Sprott explained.

Major Producers Remain Cautious

Despite strong cash flows, Sprott criticized leading gold and silver producers for their lack of aggressive mergers and acquisitions. "The major players seem out of touch with the realities of the metals market. They may understand mining, but that’s not what matters most right now. Many of them haven’t increased production," he said.

Sprott believes the era of paper market dominance is ending. As trend-following funds reduce their exposure to U.S. equities and shift toward safe-haven assets, the tightening supply of physical silver could spark a dramatic revaluation.