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Since 2026 began, market rumors have been rampant that silver prices might decline due to the rebalancing of the Bloomberg Commodity Index (BCOM). However, driven by shifts in the supply-demand landscape and market sentiment, silver prices hit new highs during the adjustment period. As of January 16, the spot silver price in London closed at $90.134 per ounce, marking a weekly gain of 12.8%, with the price briefly breaking above the $93 per ounce level. Concurrently, COMEX silver futures rose 13.37% for the week, while Shanghai silver futures surged 22.83%.
Cheng Xiaoyong, General Manager Assistant and Director of the Research Institute at Huawen Futures, stated that silver prices remained unaffected by the BCOM weight rebalancing last week primarily due to several factors: first, investment demand for silver has not weakened. Allocation demand from financial institutions and investment interest from retail traders emerged as new buying forces after some passive funds unwound their positions. Data released by the CFTC shows that for the week ending January 13, the net non-commercial long positions in COMEX silver actually increased, rising from 30,000 contracts in the final week of December last year to 32,000 contracts. Second, tight physical silver supply has prompted companies to purchase large amounts of silver for hedging purposes. Suppliers, including silver producers, have reduced their sell-side hedging positions, opting to hoard inventory in anticipation of further price increases. In the fourth quarter of last year, the net commercial short position in COMEX silver continued to decline, dropping from 80,000 contracts at the end of September 2025 to 55,000 contracts for the week ending January 13.
Wang Jun, Vice President and Chief Expert at Green Dahua Futures, added that the strictly defined trading window for the BCOM annual rebalancing inherently means its impact is temporary and predictable, likely to be quickly offset by other, stronger supporting factors in the market, thus making it difficult to cause significant, sustained trend disruption. The 2026 BCOM annual rebalancing was confined to a specific five-trading-day window from January 8 to January 14, 2026, meaning selling pressure was concentrated and not prolonged. Active funds and long-term investors in the market were aware of this rule in advance and potentially used any price dip as a buying opportunity. "In fact, a similar sell-off in 2025 caused a short-term correction of about 4% in gold and silver prices, but the losses were recovered, and new highs were reached within two months," Wang Jun said, noting that the selling pressure from the BCOM rebalancing is unrelated to the fundamentals of commodities like silver and constitutes a rule-based technical adjustment; subsequently, silver price trends will revert to core fundamental and macroeconomic logic.
In Wang Jun's view, the fundamental reason for silver prices continuously reaching new highs is the combined effect of a supply-demand imbalance in silver, a shift in the Federal Reserve's monetary policy, and massive global capital inflows. "Among these, the persistently widening physical silver supply-demand gap is the core factor supporting this major 'bull market' in silver."
It is understood that global mined silver production fell to 820 million ounces (approximately 25,800 tonnes) in 2025, down 12% from the peak in 2020. Meanwhile, although the supply of recycled silver feedstock (from old jewelry, industrial catalysts, electronic products, etc.) reached a 13-year high in 2025, the increase was marginal and far below industrial demand. Rigid constraints on the supply side made silver a highly sought-after commodity in 2025.
At the same time, the rapid development of four major sectors globally over the past two years—photovoltaics, new energy vehicles, AI computing infrastructure, and 5G communication equipment—has propelled silver consumption into a new phase of growth.
Considering that silver inventories have recently been in a phase of rapid decline, the experts interviewed unanimously believe that silver prices are highly likely to remain elevated in the first quarter of 2026, with the potential for further new highs not ruled out. However, Wang Jun cautioned that, supported by multiple factors including global risk-off premiums, oil price transmission, a weaker US dollar, and the supply-demand gap, the volatility range of silver prices is expected to widen further.
The recent announcement by the US government that it will temporarily not impose comprehensive tariffs on key minerals like silver has led market participants to believe there is some risk of a short-term correction in silver prices.
Michael Widmer, a commodity strategist at Bank of America, wrote in a recent report, "We have been bullish on silver for 2026, but the recent exponential rise has been even stronger than we expected." He noted that the price surge has been accompanied by a sharp increase in actual volatility, which "is usually followed by a correction."
A J.P. Morgan report stated that as silver prices have continued to climb recently, related industrial cost pressures have become more pronounced. In response, the industry has begun implementing measures, with several leading photovoltaic companies announcing plans to accelerate the adoption of technical substitution solutions like "copper-for-silver," with related capacity conversions expected to be gradually implemented starting in the second quarter.
However, given that silver reduction in photovoltaics has not yet been widely adopted, and copper-coated silver struggles to match the performance of silver paste, Cheng Xiaoyong believes the silver supply shortage may persist for a considerable time, providing a significant advantage for bullish forces.
Regarding future silver trading, Cheng Xiaoyong suggested focusing on three aspects: first, whether previous positive factors have been fully priced in by the market, such as whether silver inventories continue to fall and whether the Federal Reserve will cut interest rates; second, monitoring whether risk control measures by exchanges might lead to a decline in trading activity—once activity wanes, the silver price rally is likely to pause, reverting to a "slow bull" market; third, paying attention to whether global geopolitical tensions escalate further, as further escalation could accelerate the rise in silver prices.
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