On January 15th, Beijing time, both domestic and international silver futures prices reached new historical highs during the trading session. Specifically, the main Shanghai silver futures contract, 2604, hit a high of 23,688 yuan per kilogram, while the main March silver futures contract on the COMEX reached a peak of $93.7 per ounce.
Xu Ying, Chief Macro Strategy Analyst at Orient Futures Derivatives Research Institute, stated that the consecutive record highs for silver futures prices are primarily supported by expectations of loose liquidity in overseas markets and geopolitical risks. Against this backdrop, market concerns about future silver supply have intensified. Combined with overall structural adjustments on both the supply and demand sides, bullish sentiment in the market has strengthened, driving the continuous upward trend in silver prices.
Wu Zijie, a Precious Metals Researcher at Jinyuan Futures, explained that the strength in silver futures prices is related to a mismatch between supply and demand. From the perspective of downstream industries, silver is a key raw material for photovoltaic panels, electric vehicles, and AI computing hardware. Industrial demand has continued to grow in recent years, leading to global inventories being at historically low levels. This "hard shortage" situation has bolstered the bullish sentiment among speculative funds.
Data from the Shanghai Futures Exchange website on January 15th showed that the trading volume for the top twenty holders of the main silver futures contract, 2604, reached 1.887 million lots, an increase of 284,000 lots from the previous trading day. In terms of open interest, the long positions held by the top twenty holders reached 212,000 lots, with a daily increase of 3,558 lots, while short positions reached 184,000 lots, with a daily increase of 2,179 lots. Overall, long positions significantly outnumber short positions, indicating that bullish enthusiasm remains strong.
Furthermore, data from Shanghai Wenhuacai Information Technology Co., Ltd. showed that the amount of capital settled in Shanghai silver futures increased to 80.867 billion yuan on January 15th, with a net inflow of 230 million yuan for the day and a net inflow of nearly 21.5 billion yuan for the year. This makes it the commodity futures contract with the second-highest amount of settled capital currently.
Some analysts believe that investors should manage their positions cautiously and be mindful of risks. "After the rapid price increase, the volatility of silver futures has risen. The battle between bulls and bears in the future market may intensify, and investors need to appropriately reduce leverage levels or risk exposure," Xu Ying suggested. She added that investors holding physical silver should not blindly chase the rally. While silver futures prices are expected to maintain their strength in the medium to long term, investors could wait for buying opportunities during price pullbacks.
For long-term strategic investors, Wu Zijie recommended using derivative tools like options for risk hedging to protect against potential sharp corrections due to high price volatility. "The volatility of silver futures is typically higher than that of gold. Investors need to dynamically adjust the proportion of precious metals in their investment portfolios based on their own risk tolerance to avoid the volatility of a single asset impacting overall investment returns," he advised.
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