Analysts Highlight the Growing Disconnect in Silver’s Price
Following a more than 20% increase in December, silver ended the year as the top-performing asset. However, market participants caution that the move does not mirror past speculative spikes such as the quantitative-easing rally of 2011 or the Hunt brothers-driven surge in the 80s. While prices retreated once leverage was unwound because sufficient supply was available in the past, that isn’t the case today.
Now, the silver market is marked by increasing geopolitical constraints on the movement of physical metal, rapidly growing industrial demand, and a sustained supply shortfall.
In 2011, the surge was fuelled largely by investment inflows, particularly into ETFs, as investors sought protection from aggressive quantitative easing. Industrial demand was far lower then, and sizeable above-ground stockpiles in Western vaults were ultimately sufficient to absorb demand once market anxiety eased.
In the 80s, the Hunt brothers attempted to dominate a relatively small futures market using heavy leverage at a time when substantial inventories were still available. Once COMEX raised margin requirements and restricted trading to liquidation-only, leveraged positions were unwound and prices collapsed.
After reviewing these past rallies, today’s market shows a starkly different picture. Physical inventories are being steadily depleted after years in which total demand exceeded both mine output and recycled supply. Rapid growth in industrial consumption, notably from electronics, electric cars and solar power, has tightened the availability of metal, reshaping market behavior and investor priorities.
Francis Hunt, a veteran trader, recently observed that declining confidence in Western financial systems has increased the desire among investors to directly own and control physical silver rather than relying on paper claims. This comes as China continues to dominate the metal’s mining and refining.
While the country has not imposed an outright ban on silver exports, it has reclassified the metal as a strategic resource, regulating outflows through more than 40 licensed firms. Each ton leaving China is now determined more by political considerations than market pricing. Given the country’s central role as both a miner and refiner, this licensing system effectively converts a large portion of the world’s tradable silver into a policy tool.
The impact is visible in the growing gap between paper and physical silver prices. For example, the most active COMEX March 2026 contract closed at $72.27 an ounce. In Dubai, a key bullion hub, the cheapest one-ounce coin trades at nearly $100. Such a wide spread is far beyond typical fabrication and highlights a clear divergence between paper contracts and physical metal.
These changing market dynamics are likely to be closely analyzed by entities like Platinum Group Metals Ltd. (NYSE American: PLG) (TSX: PTM) that mine precious metals and supply them to global markets.
Please see full terms of use and disclaimers on the MiningNewsWire website applicable to all content provided by MNW, wherever published or re-published: https://www.MiningNewsWire.com/Disclaimer
Following a more than 20% increase in December, silver ended the year as the top-performing asset. However, market participants caution that the move does not mirror past speculative spikes such as the quantitative-easing rally of 2011 or the Hunt brothers-driven surge in the 80s. While prices retreated once leverage was unwound because sufficient supply was available in the past, that isn’t the case today.
Now, the silver market is marked by increasing geopolitical constraints on the movement of physical metal, rapidly growing industrial demand, and a sustained supply shortfall.
In 2011, the surge was fuelled largely by investment inflows, particularly into ETFs, as investors sought protection from aggressive quantitative easing. Industrial demand was far lower then, and sizeable above-ground stockpiles in Western vaults were ultimately sufficient to absorb demand once market anxiety eased.
In the 80s, the Hunt brothers attempted to dominate a relatively small futures market using heavy leverage at a time when substantial inventories were still available. Once COMEX raised margin requirements and restricted trading to liquidation-only, leveraged positions were unwound and prices collapsed.
After reviewing these past rallies, today’s market shows a starkly different picture. Physical inventories are being steadily depleted after years in which total demand exceeded both mine output and recycled supply. Rapid growth in industrial consumption, notably from electronics, electric cars and solar power, has tightened the availability of metal, reshaping market behavior and investor priorities.
Francis Hunt, a veteran trader, recently observed that declining confidence in Western financial systems has increased the desire among investors to directly own and control physical silver rather than relying on paper claims. This comes as China continues to dominate the metal’s mining and refining.
While the country has not imposed an outright ban on silver exports, it has reclassified the metal as a strategic resource, regulating outflows through more than 40 licensed firms. Each ton leaving China is now determined more by political considerations than market pricing. Given the country’s central role as both a miner and refiner, this licensing system effectively converts a large portion of the world’s tradable silver into a policy tool.
The impact is visible in the growing gap between paper and physical silver prices. For example, the most active COMEX March 2026 contract closed at $72.27 an ounce. In Dubai, a key bullion hub, the cheapest one-ounce coin trades at nearly $100. Such a wide spread is far beyond typical fabrication and highlights a clear divergence between paper contracts and physical metal.
These changing market dynamics are likely to be closely analyzed by entities like Platinum Group Metals Ltd. (NYSE American: PLG) (TSX: PTM) that mine precious metals and supply them to global markets.
Please see full terms of use and disclaimers on the MiningNewsWire website applicable to all content provided by MNW, wherever published or re-published: https://www.MiningNewsWire.com/Disclaimer
