Silver prices reached a record high earlier this year. Data from Dow Jones Market Data shows the metal hit an intraday peak of $121.79 per ounce in January, with a settlement high of $115.50, before rapidly retreating. Prices are now trading around $60, nearly half their peak value.
Following the top, silver experienced a single-day drop exceeding 30%, marking one of its largest one-day declines in nearly five decades. While silver is known for its volatility, this year's price action has been described by some analysts as resembling the trading patterns of a "meme stock."
Jan Skoyles, Research Director at GoldCore, told MarketWatch that the extreme price swings have not altered its fundamental demand story, which remains intact. She noted that futures markets are currently treating silver more as a trading vehicle sensitive to interest rate changes, while governments and industrial sectors increasingly view it as a critical resource.
This divergence in perception has created a notable gap between financial market pricing and physical demand. Skoyles believes that while "paper silver" financial products like futures have faced selling pressure, the importance of physical silver has actually increased.
She also mentioned that the market was generally surprised by the magnitude and speed of the decline from over $120 to below $60, as demand fundamentals did not deteriorate to a corresponding degree. While shifts in interest rate expectations, a stronger US dollar, and position adjustments can impact prices, they do not fully explain such extreme volatility.
Silver possesses a dual nature as both a precious and industrial metal, with applications spanning electronics, solar energy, electric vehicles, AI data centers, and defense. Demand in these areas has not shown significant weakening recently.
Nick Cawley, an analyst at Solomon Global, told MarketWatch that the "parabolic rally" seen at the end of January was likely driven more by momentum than fundamentals, making a sharp correction at the end of such a move typical. He suggests that a near-50% retracement could start attracting the attention of long-term value investors.
However, Cawley also cautions that investors should not rush to add silver exposure against a backdrop where global interest rates may continue rising to combat inflation.
On a year-to-date basis, silver is down approximately 15%, a steeper decline than gold's roughly 4% drop. Both metals are being pressured by a strong US dollar and expectations that the Federal Reserve may implement further interest rate hikes.
Robert Minter, Director of ETF Investment Strategy at Aberdeen Investments, analyzed that factors driving silver higher at the start of the year included India's move in early December to allow pension funds to invest in gold and silver for the first time, market concerns over Chinese export restrictions (China accounts for about 60% of global supply), and a multi-year supply deficit.
He pointed out that these factors attracted significant short-term capital, much of which exited quickly when prices weakened. However, this exodus of speculative money may leave the market structure on a firmer footing.
Looking at longer-term supply and demand fundamentals, silver's outlook remains positive from multiple perspectives. Mike Parkin, Vice President of Strategy and Investor Relations at Hecla Mining, stated the company agrees that silver demand remains robust. Citing a Silver Institute forecast, he noted that 2026 is projected to be the sixth consecutive year of supply deficit, with mine production struggling to keep pace with demand growth.
Some market participants also view the price adjustment as a necessary process. Paul Mladjenovic, author of "Investing in Gold and Silver for Dummies," told MarketWatch that the market "euphoria" early in the year pushed prices too quickly into triple-digit territory. Therefore, a pullback to the $58 to $62 per ounce range could help "build a base."
He believes subsequent gains may be more evident in mining stocks, which are poised to report strong earnings. Data shows that as of Monday, shares of Wheaton Precious Metals are down about 2% year-to-date, while Hecla Mining shares have fallen nearly 14%. However, over an 18-month period, the former has gained approximately 100% and the latter about 214%.
Mladjenovic also noted that the most recent price for September Comex silver futures, around $62.50 per ounce, is an attractive level. He expects silver could recover to around $80 by year-end and potentially test the $110 to $130 range next year.
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