By Rebecca Feng and Joe Wallace
Last week, border police stopped a car crossing from Hong Kong into the neighboring mainland Chinese city of Shenzhen. The suspected crime: silver smuggling.
Two men in their 40s hid nearly 500 pounds of silver bars in 10 Danish-style cookie tins, six milk-powder tins and nine crispy egg-roll boxes. The estimated market value was roughly $782,000, according to Hong Kong customs authorities, who arrested the men and seized the bars and the cookies they were hidden under.
The duo were likely headed for one of the largest bullion markets in China, the Shenzhen Shuibei Gold and Jewelry Market, hoping to cash in on the biggest silver boom in a generation.
The market, where prices trade at a premium compared with other countries, has become an epicenter of a metals mania that has captivated traders around the world.
Silver prices have shot up more than 250% in the past year to as high as $114 a troy ounce in New York trading. At their peak, they were up 63% in January alone. In China, where the metal is needed for solar-panel production and coveted by speculators, silver futures have risen to even higher levels, above $140 on Thursday.
Silver's surge crumbled on Friday, when prices plunged more than 30% off the record highs, below $80 a troy ounce. The metal's meteoric rise, analysts say, had been supported less by rising industrial demand or lack of supply, and more by speculators betting on a shifting global order and growing distrust of the U.S. dollar.
Some market participants say silver is behaving like "gold squared" and "gold on steroids." Others have compared it to meme stock mania, or called silver the "devil's metal" and "widow maker," arguing that a future price drop will surely send many believers to hell.
The episode is also reminiscent of the 1980 attempt by the Hunt brothers to corner the market. The price then peaked near $50, plunged and failed to attain those levels for four decades until last October.
Silver on planes
At times in recent months, regional gaps in prices got so wide that it has been profitable for traders to move silver by air. It normally travels by ship because it is heavy and worth less than gold.
"You know where your luggage is sitting underneath? You got gold and silver sitting underneath there, too," said Ken Lewis, CEO of Bullion International Group, which owns Apmex, an online precious-metals market. He has sold millions of dollars of silver to dealers from Hong Kong, Singapore and Japan in recent days.
The company's mints, which source silver from local refineries in North America, are backlogged with orders.
"Our company's revenue before January was 70% gold, 30% silver. And January is probably going to be 70% silver, 30% gold," he said.
On the trading floor of precious-metals group Heraeus in Hanau, Germany, Dominik Sperzel is fielding calls from investors hunting for silver bars -- ranging from the smallest, one troy ounce, to the largest, 15 kilos.
In normal times, Heraeus ships out silver products the day customers order them. But its refineries, like those elsewhere in Europe, can't keep up with rampant demand and an influx of people cashing in the family silver -- things like jewelry, candlesticks and flatware.
"The run on this, it is amazing," said Sperzel, head of trading for Germany, adding that the buying spree is a surprise because silver, unlike gold, incurs a sales tax in Germany. "Investors are still going crazy," he said.
Silver victims
Manufacturers that rely on silver are stung by the metal's explosive rally.
Silver is a critical component in solar cells, of which 80% globally are made in China.
The solar sector is estimated to have contributed about 17% of total silver demand in 2025, more than double its share from a decade ago and on par with what is used to make jewelry, according to the Silver Institute, an industry group.
As silver prices surged, the world's largest solar-panel makers saw profitability plunge. Some are raising prices and speeding up plans to substitute silver with cheaper materials such as copper.
An average 400-watt residential solar panel contains about 4 to 6 grams of silver, according to Sagar Chopra, a senior research analyst at energy consulting firm Wood Mackenzie. The precious metal is applied as silver paste to form busbars -- solid metal strips that conduct electricity.
For years, silver accounted for 5% to 7% of the cost of manufacturing a solar panel, Chopra said. Now it has become the largest cost component of solar-cell production, accounting for 15% to 20%.
Some of the world's largest solar-panel companies have issued silver-related profit warnings. Tongwei Solar, which boasts 14% of the global solar-cell market, said it would report a loss of up to $1.4 billion in its 2025 results because of surging silver prices.
Many have been quietly passing higher costs to customers. Since January, prices for a typical solar cell in China have risen 10% from 4.96 cents per watt to 5.47 cents per watt, according to OPIS, an energy-data and analytics provider owned by the same parent company as The Wall Street Journal.
The endgame
Eventually, refiners might process enough scrap to bring silver prices down. Industrial users are looking to minimize their silver consumption, another factor that could put the rally further into reverse.
Estimated industrial demand for silver fell 2% last year thanks to a sharp drop in the amount of silver used in each module, according to the Silver Institute. Meanwhile, demand for silver jewelry and silverware is also expected to decline, by 4% and 11%, respectively.
The constraints fueling wild moves in silver prices are financial as well as physical.
The cost to borrow silver -- especially in London, a global metals hub -- soared last year after tons of silver moved across the Atlantic on fears that President Trump was going to impose tariffs on the metal. He didn't impose the tariffs, but the borrowing costs have remained high.
The high borrowing costs, combined with the soaring price of the metal itself, has stretched the balance sheets of the banks, refiners and recycling firms that grease precious-metal markets.
That has curtailed the ability of financial institutions to step in and temper big price moves. It also limits how much metal physical players can process.
Changes in the direction of silver prices, as evidenced by the price plunge on Friday, "could be very sharp indeed," said Matthew Piggott, director of gold and silver at consulting firm Metals Focus in London. "And that would be very painful for anyone involved."
Write to Rebecca Feng at rebecca.feng@wsj.com and Joe Wallace at joe.wallace@wsj.com
(END) Dow Jones Newswires
February 01, 2026 05:30 ET (10:30 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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