#XAG A “Gray rhino” emerging? Silver prices ride a roller coaster as bulls and bears reach a stalemate
Silver has become this year’s biggest “gray rhino.” Spot prices first soared 70% in a month, peaking at $121.647/oz, before entering a prolonged correction and falling as low as $54.744/oz. They are now hovering around $56 to $57/oz, down by half from the peak, with the year-to-date change also swinging from a 70% gain to a 20% loss.
Even after the sharp correction, the market remains pessimistic. Some believe that against a backdrop of high oil prices and slowing economic growth, silver still faces severe technical pressure, and that it may take years to digest the valuation and volatility issues left by this rally.
Silver’s dual nature weighs on prices, with a bottom still unconfirmed
Mike McGlone, senior commodity strategist at Bloomberg Intelligence, believes that after an epic rally, silver still faces heavy technical pressure. Prices are likely to trade in a range of $50 to $84 per ounce over the next few years, with $50 serving as the key first support level. He noted that the last time silver prices and volatility surged this extremely was during the 1979–1980 commodity bull market, when silver peaked near $50/oz and then traded around that level for more than 40 years.
Why has a bottom remained elusive after silver’s deep correction?
The prevailing market view is that silver has the dual attributes of a monetary precious metal and an industrial commodity, with multiple pricing dynamics intertwined, making its price a composite macroeconomic leading indicator. Yuan Zheng, a precious metals researcher at Galaxy Futures, noted that silver fell harder than gold, mainly because the two have different pricing anchors: around 90% of gold’s value is supported by its monetary role, safe-haven demand and central-bank reserves, while around half of silver’s value comes from industrial demand in areas such as photovoltaics, electronics and new energy. When macroeconomic expectations reverse, gold mainly faces a pullback in its financial attributes, while silver is hit by both weaker industrial demand and a pullback in its financial attributes.
Li Gang, research director at the China Forex Investment Research Institute, said silver’s rise to around $121/oz in January featured clear short-squeeze dynamics and a speculative premium. High interest rates and a strong dollar then persisted, alongside a concentrated unwinding of leveraged positions, naturally amplifying the decline.
The gold-silver ratio also supports this view. London spot gold fell from its January 28 peak of $5,413.805/oz to $4,112.7/oz on October 19, a decline of 24.03%, less than half of silver’s drop. The gold-silver ratio fell to 46.3 on January 27 and rose to 73.83 on October 14, a new high for the year. Its historical midpoint is around 60; above 80 may indicate that gold is overvalued, while below 40 may indicate that silver is overvalued.
A review of history shows that recovering from silver price peaks often takes a long time. The Hunt brothers’ cornering of the market pushed silver above $50 in January 1980, but it did not reach that level again until 31 years later, in 2011. The April 2011 peak of $49.82/oz was not surpassed until October 2025, a recovery period of about 14 and a half years. A rough estimate suggests investors who bought at historical silver peaks have needed an average of around 16 years to break even.
Bulls and bears diverge further as photovoltaics and AI enter a demand transition
Bullish and bearish views on silver are sharply divided. Bears believe high interest rates remain a headwind and weakness will persist; bulls point to six consecutive years of supply deficits and support from AI demand. The figures behind the divergence in supply and demand are clear.
The Silver Institute’s “World Silver Survey 2026” forecasts a global silver market deficit of 46.3 million ounces in 2026, 15% wider than the 40.3 million ounces in 2025, marking a sixth consecutive year of supply shortfalls. However, a Goldman Sachs commodities report on October 8 said that net sales of silver futures totaled around $1.6 billion in the week through September 29, the largest single-week sell-off since February this year.
Why are silver prices still under pressure despite the supply deficit? Yuan Zheng noted a clear timing mismatch between the retreat in photovoltaics and AI taking over. According to the Silver Institute’s survey, silver demand in the photovoltaic sector is expected to fall around 19% year over year in 2026, to about 151 million ounces, the largest single-year decline on record. Leading manufacturers have already reduced silver consumption per watt from 5mg/W to below 3mg/W, and “silver reduction” in photovoltaics is a technological trend. AI and data centers are expected to account for more than 42.3 million ounces of silver demand in 2026, exceeding 10% of electronic silver demand in 2027. But by 2030, AI-related silver consumption will still account for less than 4% of total global silver demand. Li Gang expects this transition period to last at least until 2027 or even longer.
Yuan Zheng believes silver is currently in a wide trading range, with “interest rates at the top constraining upside, and the supply deficit at the bottom limiting downside.” Directional opportunities will require a clear shift toward monetary easing in the Federal Reserve’s policy path, or AI silver demand making up for the decline in photovoltaics in absolute terms.
Unrealized losses and drawdowns converge as institutions diverge on the outlook
The sharp drop in silver prices has also dealt a heavy blow to Qifu Life Services, which had previously made a name for itself investing in “gold and silver.”
Qifu Life Services’ interim report showed that for the six months ended June 30, 2026, the company recorded a net loss attributable to its owners of ¥3.372 million, compared with a profit of ¥75.149 million in the same period last year, swinging from profit to loss, primarily due to losses on precious metals investments. From February to June 2026, the company continued buying allocated silver bars and gold bars. Its precious metals investments generated a combined fair-value loss of ¥83.4 million in the first half of the year, including an unrealized loss of ¥59.9 million on allocated silver bars, ¥10.6 million on unallocated gold bars and ¥12.9 million on allocated gold bars. The company had previously sold out at the beginning-of-year highs, realizing a substantial gain. On January 9 this year, it sold 400,000 ounces of silver bars for ¥226 million, and on January 12 it sold 280,000 ounces for ¥162 million. Its entire holding of around 21 tonnes of silver bars was liquidated, yielding a net gain of ¥247 million over the book value at the end of 2024. It then increased its holdings again from February to June, just as prices were falling. The company said in an announcement that the ¥83.4 million loss was entirely an unrealized fair-value loss and could be reversed if gold and silver prices recover.
Institutions are divided on the outlook.
Citi analysts believe silver prices could rise to $75/oz in the short term and around $90/oz in the next 6 to 12 months. If the Federal Reserve potentially turns dovish, precious metals could once again become a focus for investors.
The Zhu Shanying team at CITIC Futures said on October 20 that silver is expected to remain range-bound in the short term. Inflation remains sticky, the possibility of further Federal Reserve rate hikes this year is still relatively high, and any rebound remains constrained by interest rates.
Trevor Yates, senior investment analyst at Global X ETFs, said massive capital spending on smart grids and data centers is underpinning industrial demand for silver. He expects the spot silver market to post its sixth consecutive annual supply deficit in 2026, and sees precious metals as a “highly attractive strategic allocation opportunity” for positioning in 2027.
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