Silver’s $58.49 Recovery Masks a 35% January Crash and a Deepening Supply Squeeze
Published on 07/25/2026 at 21:21 | Redaktion boerse-global.de
Silver has clawed back some ground after one of its most volatile stretches in years, closing Friday at $58.49 per ounce with a 0.99% daily gain and a 4.04% weekly advance. But the modest rebound belies the scale of the damage inflicted earlier this year, when a single day’s trading wiped out more than a third of the metal’s value.
The trouble began on January 30, when the CME raised margin requirements on silver futures, triggering a roughly 35% collapse in a single session. That rout came just one day after the metal had touched a 52-week high of $121.78, leaving it now more than 50% below that peak. The current price sits 51.97% off the January record, a gap that underscores how deeply the correction cut.
Gold-Silver Ratio Widens as Industrial Metal Lags
The divergence between the two precious metals has become stark. The gold-silver ratio, which measures how many ounces of silver it takes to buy one ounce of gold, has surged from around 43.5 in January to roughly 69 today. That reflects silver’s far heavier losses relative to gold, which has held above $4,000 per ounce for weeks, buoyed by steady ETF inflows and expectations that the Federal Reserve will hold rates steady at its upcoming meeting on July 28-29.
Market observers see silver trading in a broad range of $40 to $70 per ounce in the medium term, with an average near $56. Some warn the ratio could climb further to 76-78 if silver’s industrial demand continues to weaken against gold’s safe-haven appeal. Rising U.S. 10-year Treasury yields above 4.7% and a firm dollar have added headwinds, though they have not yet derailed the recent recovery attempt.
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Physical Demand in Asia Provides a Floor
On the ground in South Asia, silver has shown surprising resilience. In India, the kilogram price jumped by roughly 6,974 rupees to 222,721 rupees in the week through July 25, a 2.75% weekly gain. On an annual basis, that translates to a staggering 96.5% increase, far outpacing gold’s performance over the same period. In Pakistan, prices edged higher on Saturday after two consecutive days of declines.
This physical demand is being fueled by the same forces supporting gold: an escalating Middle East conflict, Houthi attacks on Saudi oil infrastructure, and oil prices that have breached $100 per barrel. At the same time, the Fed’s policy path remains uncertain — nine of 18 central bank officials signaled in the latest dot plot that another rate hike could come by year-end, a scenario that would weigh on non-yielding assets like precious metals.
Sixth Consecutive Supply Deficit Tightens the Screws
Beneath the daily price swings, the fundamental picture is growing more constrained. The Silver Institute projects a supply deficit of 46.3 million ounces in 2026, marking the sixth consecutive year that demand has outstripped available supply. Cumulative market outflows since 2021 have reached 762 million ounces, a structural shortfall that is steadily eroding the physical base of the market.
The solar industry is the primary driver of this demand, with photovoltaic production alone consuming roughly 151 million ounces of silver in 2026. This persistent deficit helps explain why silver remains significantly higher year-over-year despite the recent correction, and it provides a fundamental cushion that can absorb short-term selling pressure — even when geopolitical shocks or dollar strength send prices swinging wildly.
Analyst Targets Diverge Wildly
The outlook for silver has split the Street. Bank of America sees the metal reaching as high as $135 per ounce by 2026, banking on the supply deficit and silver’s role as a hedge against geopolitical risk. J.P. Morgan takes a far more cautious view, forecasting an average of $81 per ounce for 2026. The unusually wide gap between these targets reflects the fundamental tension between structural scarcity and macroeconomic headwinds like rising bond yields and a strong dollar.
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Chart Levels and the Fed Decision Ahead
Technically, silver is grappling with its 21-day moving average, which sits just above current levels and has acted as resistance. Analyst Christopher Lewis pegs a key hurdle at $60 per ounce, with support at $55 serving as the next line of defense. These levels will be tested in the coming days, with the Fed’s July 28-29 meeting looming as the next major catalyst.
The market is pricing in a rate pause, though the probability of a hike has edged higher recently. A dovish hold would likely support the stabilization effort, while a surprise tightening could reignite the volatility that has pushed silver’s annualized swings to nearly 42%. Both the 50-day and 200-day moving averages remain well above current prices, a reminder of how far the metal must travel to reclaim its former highs.
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