Silver Nears $100 Milestone After Record Surge as Analysts Warn of Overbought Rally

TradingKey - During Friday's Asian trading session, silver briefly broke above the $99 mark, hitting a record high for the second consecutive day and coming within a stone's throw of the $100 psychological level. Despite a 180-degree turnaround in Trump's stance on Greenland, where he pledged to rule out military force—temporarily removing the threat of geopolitical conflict—the rally for silver as a safe-haven asset remained unabated.

Just 23 days into 2026, silver prices have already surged by 38%, compared to a 146% gain for the full year of 2025. The "2026 Forecast Survey" released by the London Bullion Market Association (LBMA) indicates that professional analysts and traders expect the average daily price of gold in 2026 to rise by nearly two-fifths compared to 2025, while the average annual price of silver is expected to double.

However, Roukaya Ibrahim, chief strategist at BCA Research, stated in her latest precious metals report that while she remains bullish on silver in the long term, the probability of a significant pullback has increased given the recent sharp rally. Consequently, she does not recommend chasing the rally at current price levels.

Robust Demand: Long-Term Outlook Remains Bullish

Ibrahim noted that from a medium- to long-term perspective, the macro and geopolitical outlook provides favorable support for silver prices. "We have been bullish on silver within the commodities matrix for the past year." It is not just silver; demand across the entire precious metals sector has risen significantly since the second half of 2025.

On one hand, silver benefits from robust industrial demand, as high-growth industries like photovoltaics, electric vehicles, and AI infrastructure all require silver as a critical material. According to the latest report from the Silver Institute, global silver supply in 2025 was 32,100 tons, while demand reached 35,700 tons, with industrial silver accounting for 60% of total demand. Global industrial demand for silver is expected to continue growing over the next five years.

Additionally, the rise in silver prices is linked to "disruptions" in its supply chain. Starting from 2026, Chinese companies require government licenses to export silver, with only 44 companies currently authorized. To qualify for export, firms must have an annual refining capacity of at least 80 tons and a credit line exceeding $30 million. This has reduced the flow of silver into the global market.

Meanwhile, across the globe, the United States is "siphoning" physical silver. Current COMEX (New York Mercantile Exchange) silver inventories are approximately 125 million ounces higher than they were before the 2024 U.S. election, an increase equivalent to roughly 15% of annual global silver mine supply. However, the latest policy—an executive order signed by Trump invoking Section 232 of the Trade Expansion Act regarding critical mineral imports—did not mandate tariffs on silver, partially easing market concerns over a silver shortage.

The rise in silver also reflects the market's diminishing trust in fiat currencies, particularly the U.S. dollar. As the United States enters a state characterized by high interest rates, high debt, and low credit, the de-dollarization process is being further propelled worldwide. As an asset sharing the same monetary attributes as gold, silver's value is being reaffirmed in this process.

Why Buying Silver Now May Not Be "Cost-Effective"?

Ibrahim pointed out that while the bullish factors for silver will not change significantly in the short term, this information is already reflected in current prices—essentially, a "sell the news" scenario. Although U.S. inflationary pressures remain elevated, they have not intensified further; meanwhile, the dollar has stabilized following a period of depreciation, which will not stimulate a surge in silver prices.

Regarding potential price increases caused by silver controls, Ibrahim disagreed, noting that China's silver export policy has remained largely unchanged and that the requirement for export licenses is effectively a continuation of practices from previous years.

Conversely, there is a risk that silver prices could fall. She believes the greatest risk may stem from industrial consumption, as the market will naturally adjust to the impact of rising prices: manufacturers will seek cheaper alternatives, either by economizing silver usage or replacing it with other materials. She noted that there are already signs of demand-side adjustments; for example, solar cell manufacturer Longi has announced that it has begun using base metals to replace silver in solar cells to reduce costs.

Silver is Not Facing a Genuine Shortage

Stefan Gleason, CEO of Money Metals Exchange, a leading U.S. precious metals dealer and depository operator, stated that the U.S. is not currently facing a genuine shortage of raw silver.

He explained that the public perception of a shortage arises from bottlenecks in refining and minting, which can lead to order backlogs, product stockouts, and soaring premiums. The reality is that limited silver refining capacity in the U.S. has affected the production of silver products, but the situation should improve once capacity returns to normal. He noted that 1,000-ounce silver bars used for minting are still available in the U.S.

Robert Gottliebsen, founder of Business Review Weekly, stated that current silver premiums stem solely from retail-level scarcity rather than a comprehensive shortage. Real scarcity would only occur when industrial silver users begin to bypass exchanges and source directly from mines and refineries, thereby draining the market of available metal. Although there are signs of tight silver supply in some regions, a full-scale global short squeeze has not yet materialized.