Silver prices surged past the $100-per-ounce mark in international markets on Friday, extending an extraordinary rally from 2025 into the new year as strong retail participation, momentum-driven buying
and prolonged tightness in physical markets pushed the precious and industrial metal sharply higher.
Spot silver prices were last trading 5.1 per cent higher at around $101 per troy ounce. The metal has already gained about 40 per cent since the start of 2026, after posting a stunning 147 per cent rise in 2025, the biggest annual gain in data tracked by LSEG going back to 1983. Gold, meanwhile, hit a fresh record high of $4,988 per ounce on Friday, providing additional support to silver’s rally.
Analysts say silver has been riding on the coat-tails of gold, benefiting from heightened geopolitical risks and its relatively lower unit price, which has attracted a broader base of investors. However, some market watchers are beginning to flag warning signs as prices rise at an unusually rapid pace.
“Silver is in the midst of a self-propelled frenzy and with plenty of geopolitical risk to give gold added buoyancy, silver is benefiting, even now, from its lower unit price,” said Rhona O’Connell, analyst at StoneX, according to Reuters.
“Everyone, it seems, wants to be involved but it is also flashing amber wealth warnings,” she added. “As and when cracks start to appear they could easily become chasms. Buckle up.”
The sharp outperformance has also compressed the gold-to-silver ratio. For the first time in 14 years, it now takes just about 50 ounces of silver to buy one ounce of gold, down from 105 ounces in April. Traders and analysts often use this ratio to gauge relative valuations, and its rapid fall suggests silver’s outperformance over gold has become stretched.
Some strategists argue that prices have moved well beyond fundamentals. Michael Widmer, strategist at Bank of America, estimates that a fundamentally justified silver price is closer to $60 per ounce. He noted that demand from solar panel producers, one of silver’s key industrial uses, likely peaked in 2025, while overall industrial demand is coming under pressure from record-high prices.
Investment demand and supply tightness
Silver’s rally has been underpinned by a powerful surge in investment demand. Analysts point to several waves of retail buying through purchases of small bars and coins, alongside sustained inflows into physically backed silver exchange-traded funds since October. These flows were amplified by thin liquidity in the benchmark London silver market, as concerns over potential US tariffs prompted large movements of metal into US markets.
On the supply side, nearly 20 per cent of the world’s annual silver supply, about one billion ounces, comes from recycling, with activity increasing as prices hit record highs. However, inventories have not rebuilt quickly enough. A shortage of high-grade refining capacity has limited how fast scrap silver can be returned to the market, according to precious metals consultancy Metals Focus.
After five consecutive years of structural deficits, a trend expected to continue in 2026, the availability of readily mobilisable silver has become increasingly constrained. Metals Focus estimates that stocks in London commercial vaults fell to a record low of 136 million ounces by end-September, driven by deficits, outflows to the US and ETF inflows. Although stocks recovered to nearly 200 million ounces by end-2025, they remain far below the roughly 360 million ounces seen at the peak of the Reddit-driven rally in early 2021.
What happens next?
Analysts expect some easing in market tightness as US stock outflows accelerate following Washington’s decision not to impose tariffs after announcing the results of its critical metals review in mid-January. COMEX inventories, which peaked at 532 million ounces on October 3, have already fallen by 114 million ounces to about 418 million ounces, their lowest level since March, as silver worth roughly $11 billion exited warehouses.
To return to pre-US election levels, COMEX stocks would need to see further outflows of around 113 million ounces, equivalent to about 11 per cent of total annual global silver supply.
Still, some analysts believe a correction may be close as physical market conditions begin to ease and investors start booking profits. “Profit taking following the frenzied nature of the investor-driven rally since late November is likely sooner rather than later, particularly in view of ongoing physical market easing,” said David Wilson, senior commodities strategist at BNP Paribas.
For now, silver’s historic move above $100 reflects a potent mix of speculative enthusiasm, investment demand and supply constraints, but the speed of the rally has also heightened the risk of sharp swings ahead.
Silver Prices In India
Silver in India is currently selling at record Rs 3,40,000 per kg.
(With inputs from Reuters)
