The silver market has witnessed an epic rally since the beginning of 2026.
Within less than a month, the year-to-date cumulative gains for both London spot silver and COMEX silver futures have exceeded 50%. Extending the timeline to start from 2025, the cumulative gains for that year have surpassed 110% for both, significantly outperforming international gold prices over the same period.
Simultaneously, volatility in silver prices has intensified. On January 27, spot silver experienced an extreme roller-coaster ride, surging as much as 14% intraday to hit a record high before rapidly reversing to trade lower. After the Asian market opened, spot silver once again rose over 5%, drawing significant market attention due to its sharp fluctuations.
As of 14:14 on the 27th, spot silver was up 5.65%, quoted at $109.739 per ounce.
Notably, as the rally continues to heat up, related financial products are frequently implementing risk control measures. On January 27, the only fund in the mainland market primarily investing in silver - the SDIC Essence Silver Futures (LOF) - announced that its Class A and Class C funds would suspend subscriptions and systematic investment plans starting January 28, citing the need to protect the interests of fund unit holders. This is another action taken by the fund following multiple purchase limits or trading halts since late December 2025 due to market volatility.
It has been observed that the current precious metals rally, led by silver, is profoundly unsettling global markets: the gold-silver ratio has fallen below 50, hitting a near 14-year low; downstream silver distributors are facing dual pressures of "difficulty sourcing raw materials and difficulty selling finished products."
With the resonance of silver's "financial attributes" and "industrial attributes," the precious metals market has entered a hot phase characterized by high volatility and high attention. Facing the fervent market conditions, professional institutions advise investors to remain calm and be wary of short-term correction risks.
The record-breaking price surge saw intraday swings exceeding $15.
The upward momentum in silver prices has been relentless since 2025. Data shows that from 2025 onwards, cumulative gains for both London spot silver and COMEX silver futures have exceeded 110%, entering a rapid upward trajectory. Entering 2026, the pace of gains accelerated further, with both key benchmarks rising over 50% year-to-date, leading the global precious metals market.
The trading activity on January 27 pushed market volatility to a peak. Influenced by a combination of factors including a persistently weak US dollar, rising safe-haven demand, support from industrial demand, and strong buying interest, spot silver broke through the $113 per ounce level in the early hours and continued its relentless advance, consecutively surpassing the $114, $115, $116, and $117 major psychological barriers. It hit an intraday high of $117.70 per ounce, setting a new record, with an intraday gain reaching 14%.
However, after 2:30 AM, concentrated profit-taking emerged, causing silver prices to retreat rapidly from their highs. Not only did it erase all the day's gains, but it also briefly turned negative, falling to $101.89 per ounce. The intraday price swing exceeded $15, presenting a classic roller-coaster pattern.
In fact, this round of silver's rally has a significant long-term backdrop. Extending the timeline to 10 years, Wind data shows that London silver prices started from a low of around $16 per ounce in 2015, entered an accelerated uptrend by the end of 2024, and recently surpassed $109 per ounce, representing a near seven-fold increase over the decade.
As silver prices climbed substantially, the gold-silver ratio, reflecting the relative price of gold to silver, continued to decline. As of January 27, the gold-silver ratio further narrowed to approximately 46.5.
Analysts Qu Rui and Bai Xue from Dongfang Jincheng's Research and Development Department pointed out that in the short term, the current gold-silver ratio below 50 indicates obvious overbought signals. After such extreme ratios, mean reversion is possible, potentially leading to a silver price adjustment. However, considering that COMEX registered warrants and London deliverable inventories are at historical lows, the approaching March delivery month might trigger a "squeeze" risk due to potential delivery shortages, pushing prices higher. Simultaneously, with the peak season for photovoltaic installations approaching, the first quarter is typically a stocking-up period for the solar industry, leading to rigid growth in silver paste demand, which will also support silver prices.
"The future trajectory of silver prices will likely show short-term strong volatility and a medium-to-long-term return to fundamentals. It still possesses room for further increases, but investors need to be cautious of periodic correction risks," the two analysts summarized.
Multiple factors are driving the price surge, propelling the rally into an accelerated phase.
Market institutions widely attribute the sustained surge in silver prices, which has even surpassed gold's gains, to the combined effect of multiple factors.
China International Capital Corporation (CICC) pointed out that the 2025 international trade situation disrupted the steady state of the global macroeconomic environment. Benefiting from a certainty premium in an uncertain environment, both international gold and silver prices rose. Differing from the past three years, this year's strong breakout in precious metal prices has been led by cyclical buying demand, represented by ETFs in Europe and the US, with the market performance showing silver's gains outpacing gold's.
Analysts Qu Rui and Bai Xue from Dongfang Jincheng's Research and Development Department analyzed that the recent explosive rise in silver prices mainly stems from three factors: structural supply-demand imbalance, an explosion in industrial demand, and the strengthening of its financial attributes.
From a fundamental supply and demand perspective, driven by demand from photovoltaics, AI data centers, and new energy vehicles, silver supply has fallen short of demand for five consecutive years. Meanwhile, growth in mined silver production is limited, and global silver inventories are at historical lows. The persistently widening supply-demand gap provides strong support for prices.
From a financial perspective, the Federal Reserve's continuation of its interest rate-cutting cycle, coupled with concerns about political interference affecting its policy independence, has driven a sustained weakening of the US dollar index. This has significantly enhanced the appeal of silver, which possesses precious metal attributes, while lower real interest rates reduce the cost of holding it.
Furthermore, silver's inclusion on the US critical minerals list, along with China's export controls implemented from January 2026, has strengthened its strategic resource attribute, further pushing up prices. Considering that the silver market's size is only one-tenth that of gold, the same capital inflows result in amplified volatility, further reinforcing its upward momentum.
Regarding the silver market outlook for 2026, Guoyuan Futures provided a relatively optimistic forecast. The institution believes that 2026 falls within the Fed's rate-cutting cycle, but US dollar support for gold prices may weaken. Additionally, safe-haven demand, inflation-hedging demand, and market concerns about US dollar credibility will continue to drive precious metal prices higher over the long cycle. Fundamentally, silver's industrial demand in 2026 is expected to remain stable with a slight decrease, but physical investment demand is anticipated to expand. Precious metal prices are expected to continue strengthening in 2026.
SDIC Essence Fund announces trading halt; shortages emerge for some silver products.
The intense price volatility quickly transmitted to financial products. In early 2026, the weekly volatility amplitude of COMEX silver futures was significantly greater than that of gold. As the only fund in the mainland market primarily investing in silver, the SDIC Essence Silver Futures (LOF) had announced purchase limits and frequent trading halts since late December 2025. On January 27, 2026, the fund again announced a trading halt.
The announcement stated that its two funds - SDIC Essence Silver Futures (LOF) A (Ticker: 161226) and Class C shares (Ticker: 019005) - would suspend subscription and systematic investment business starting January 28. The fund company explained that this move aims to protect the interests of fund unit holders. This is another similar risk control measure following the initiation of purchase limits and multiple trading halts since late last December.
Concurrently, recently, shortages have emerged for some banks' silver commemorative coins, crafts, and jewelry.
Regarding this, analysts Qu Rui and Bai Xue from Dongfang Jincheng's Research and Development Department pointed out that the temporary shortage of some banks' silver products is primarily due to the impact of recent explosive demand and supply chain mismatches.
On one hand, the continuous rise in silver prices has triggered a "buy the rally, not the dip" investment sentiment. Consultations and purchase intentions from individual investors have significantly increased, leading to a concentrated release of short-term demand that exceeds banks' stocking expectations. On the other hand, there is a structural mismatch in the global silver supply chain. According to the standard delivery specifications of the London market, COMEX, and the Shanghai Gold Exchange, refineries typically prioritize producing large bars of 1000 ounces or 15 kilograms. However, bank retail channels primarily deal in silver coins and small bars. Converting production specifications takes about 1-2 weeks, causing short-term supply shortages in the retail market. Simultaneously, globally deliverable silver inventories are at historical lows, further limiting banks' restocking capabilities and exacerbating the temporary shortage phenomenon.
Silver jewelry merchants face pressure and close shops; investors advised to note four major risks.
The soaring silver prices are rapidly transmitting downstream along the industrial chain, with silver jewelry merchants becoming the most directly impacted group.
On January 26, the hashtag #SilverPriceRallyForcesSomeJewelersToCloseTemporarily trended on social media. On social media platforms, numerous merchants also expressed difficulties continuing business, with some announcing temporary shop closures.
The operational challenges mainly concentrate on three aspects: difficulty procuring raw materials, with basic silver sheets even requiring premium payments to secure; dilemmas in product pricing, as silver jewelry cannot adjust prices in real-time like gold jewelry, and frequent price changes easily provoke customer resistance; comprehensive cost increases, as rising silver prices simultaneously drive up labor costs, plating fees, and other附加 expenses, further squeezing profit margins.
Facing the fervent market conditions, professional institutions also advise investors to remain calm. Analysts Qu Rui and Bai Xue from Dongfang Jincheng's Research and Development Department highlighted that silver investment requires particular attention to the following four risks:
First, price volatility risk. Silver's volatility is generally 2-3 times that of gold, with single-day declines potentially exceeding 7%. Under extreme conditions, crashes of even 9% have occurred.
Second, valuation bubble risk. The recent gold-silver ratio below 50 indicates significant overbought signals. Mean reversion is possible after such extreme ratios.
Third, liquidity and squeeze risk. Currently, the deliverable inventory in the London market is far insufficient to cover the claims represented by open interest. As the delivery month approaches, this could trigger a squeeze risk, intensifying price volatility.
Fourth, policy and geopolitical risks. Adjustments in Fed policy, price control measures by major economies, or policy changes in resource countries could all lead to sharp fluctuations in silver prices. Investors should also note the risk of capital flight from commodities during periods of intensified global financial market volatility.
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