Volatile Silver Still ‘Attractively Priced’
Despite wild trading gyrations so far in 2026, the fundamentals for silver remain intact
It’s been a volatile start to the year for the silver price, but the fundamentals continue to support higher prices.
Spot silver surged to a record high of more than US$115 an ounce in late January, before pulling right back to US$70/oz at the start of this month and remaining in the US$75-80/oz range.
“It’s been an incredibly wild ride for silver over the last six months or so,” Sprott Asset Management CEO John Ciampaglia told the Bloor Street Capital Virtual Silver Conference on Saturday.
“We’ve been waiting at Sprott for a long time for this silver catch-up trade to play out and it finally did play out, and we felt as though silver was a coiled spring.
“Because if you think back to its old market high in 2011 of around US$50 an ounce, it took all the way to November of 2025 for it to retest that high.
“It really lagged a lot of other commodities, and we didn’t really understand why, because there’s been a supply deficit for a number of years.”
Ciampaglia said there had been some warning signs of speculative fever in recent weeks.
“We saw a silver futures-based ETF in China, at one point, trading 60% over its net asset value, and the ETF sponsor basically warning investors about the danger of buying a fund 60% over its implied value, so there was clearly some signs of, I think, very speculative late-stage buying which has obviously dissipated in the last few weeks as the price has moderated,” he said.
While mentions of silver in groups like Wall Street Bets had surged, Ciampaglia refuted suggestions silver had become a meme asset.
“Silver investors are a super passionate group,” he said.
“I think they’re just getting excited because the market signals are very strong, and they’ve been waiting for these market signals for a long time.
“Given how long silver underperformed, I think where you’re seeing a lot of this speculative play come in is really the commodity trading advisors and hedge funds that have incredible amounts of capital and access to leverage.
“We see them really piling in on trades at times, mostly through derivative forms, whether it’s futures or options. To me, those are the ones that have really outsized impacts on metal markets in the very short term.
“Some of that, I think, is starting to wash out, and that’s obviously not healthy, because they can distort a market in a very short term, but I think retail investors are just excited because a metal that they have viewed as undervalued for a very long time is being re-rated.”
Geopolitical rumblings
Last year, the US added silver to its critical minerals list.
“I think for a long time, people took it for granted that these metals were readily available,” Ciampaglia said.
“Recently, China has put export restrictions on silver, which has, I think, really caught people’s attention that silver is not going to be flowing as easily as it did to other countries from China.”
Earlier this month, the US launched Project Vault, an initiative aimed at strengthening domestic critical minerals supply chains, backed by a US$10 billion loan from the Export-Import Bank of the United States and nearly US$2 billion in private sector investment.
The initiative will comprise a stockpile of any mineral deemed as critical by the US.
“There’s a lot of things going on, and they’re also trying to protect the industry from what they view as unfair trade practices by China, which heavily subsidises industries and has been known for suppressing prices or dumping a lot of production in other countries and really undermining local efforts to bring production to market,” Ciampaglia said.
China is a major player in critical minerals markets, including silver.
“There’s a lot of chatter in the media right now about a particular trading house in China that has taken a huge naked short position against silver in the last week or so, and it seems to be valid, because the reports are indicating the Chinese government has actually intervened to basically wrangle in this entity,” Ciampaglia said.
“We’ve seen this happen before in 2022 where a Chinese nickel producer had massive short positions in nickel that ultimately broke the London Metal Exchange and resulted in massive lawsuits, and so, these kinds of market dislocations are rare, but they can happen.
“It does feel like we’ve gone from this kind of speculative FOMO the last couple weeks to now people have flipped their bets and are trying to push the price down so and this is why I think the trading has been so volatile, because we had a real tug of war going between bulls and bears.”
Deficits to persist
Last week, the Silver Institute, in conjunction with Metals Focus, released its 2026 silver outlook.
Global silver demand in 2026 is expected to remain flat, with a 20% forecast rise in physical demand to a three-year high of 227 million ounces set to be offset by a 9% decline in jewellery demand and a 17% slump in silverware demand.
Industrial demand is expected to remain flat.
Total global silver supply is forecast to increase by 1.5% in 2026, reaching a decade high of 1.05 billion ounces, with silver mine production expected to rise by 1% to 820Moz.
Silver recycling is forecast to rise by 7%, with volumes surpassing 200Moz for the first time since 2012.
The silver market is expected to remain in deficit of 67Moz in 2026 for the sixth consecutive year.
“The longer-term fundamentals, I think, support higher pricing,” Ciampaglia said.
“If you think about where we are today, silver still seems very attractively priced to us. This catch-up trade took a long time, but it’s clearly, I think, in motion.
“And while it’s going to be volatile and bumpy along the way, we still are quite constructive on the price of silver.”