Silver price to make comeback at US$200?
Basically, someone yelled “Fire!!!” and investors bolted for the exit. The ensuing chaos caused unprecedented violent swings for silver price, creating generational wealth for traders. And then, there are those who got burnt by the insane price movements. Shell-shocked investors must be left wondering what exactly happened, why it happened and how the hell did it get here for silver. And will silver price make an incredible comeback? If so, how high will the next rally of silver price be?
To make money from the wild swings in silver price, it is important to understand a bit more about the fundamentals for silver. Investors should take note that although silver is often associated as a form of precious metal like gold, it has different investment characteristics as compared to gold. Gold is often viewed as safe haven and central banks held physical gold as reserve to serve as a form of hedge against uncertainties.
On the other hand, central banks don’t hold silver as reserves. Hence, silver lacks market depth which gold typically enjoys. Silver is also more ideal for traders seeking price discoveries due to the fact that silver is significantly more thinly traded as compared to gold. In early 2026, the total value of global gold mining output is estimated to be roughly 6.5 times larger than that of silver. This relatively smaller market is the primary reason for the “heart-attack” volatility in January 2026.
30 January 2026 will go down in history as an earth-shattering event for silver investors as silver price plunged 31%, falling from a record high of US$120 per troy ounce to US$85 per troy ounce. This epic event occurred within a day.
The stunning reversal of silver price caught many investors by surprise as silver price has been on a relentless form for the past one year, surging by an incredible 4-fold to smash a record high of US$120 per troy ounce on 29 January 2026.
Despite the meltdown of silver price, my conviction is that its historic rallies were justified by geopolitical conflicts and that any pullbacks would be healthy to avoid excessive bubble. But that does not explain the rationale for the supersonic rally of silver price for the past 1 year. In my previous article, I have shared my insights on the trigger for the swings in silver price. In this article, I will dive deeper and share my insights on why silver price could rocket to US$200 per troy ounce.
Why silver price rocketed in 2025?
Historically, the global silver market was a “triopoly” dominated by the LBMA (UK), COMEX (US), and SGE (China). However, when it comes to silver spot price, all roads lead to LBMA. As of 31 January 2026, the vaults in LBMA reported 27,729 tonnes. This is a significant drop from the 33,000 tonnes prior to 2020. According to the Silver Institute, total supply of silver from mining production has peaked in 2016, resulting in “structural deficit” for the past 5 years – total demand outstripped total supply in the silver market.
While LBMA’s holdings of 27,729 tonnes may look healthy, it is important to note that over two-thirds of that was “allocated” (owned by ETFs like iShares Silver Trust or private individuals) and could not be used to settle institutional trades. The remaining one-third constitutes the “free float” for withdrawals and trading activities. By late Q4 2025, London’s free float had collapsed to approximately (roughly 6,200–9,300 tonnes.
The surge in the demand for silver was driven largely by fears of US Donald Trump imposing tariffs on the import of silver. That fear has caused some suppliers to withhold silver supplies in their warehouses. The fear is real as silver is extensively used for industrial purposes – EV, solar panels and AI data centers. Any tariffs imposed by US government on silver could cause even more damage to the already strained supply chain system. The resulting squeeze in the supply of physical silver led to a surge in the paper market as silver price rocketed from US$30 per troy ounce in early 2025 to US$70 per troy ounce by end of December 2025.
Black Friday Crash (30th Jan 2026)
The Black Friday crash of silver price was triggered by the knee-jerk reaction to the nomination of Kevin Warsh as the next Federal Reserve Chair. Markets viewed Warsh as “hawkish” and could cause a shift in US interest rate. But the watershed event that impacted silver price was the action by CME Group to raise margin requirements twice in a short period of time, forcing many traders to deleverage and liquidate their positions.
Consequently, silver price caved in and collapsed from $120 per troy ounce to a low of $73. However, the collapse in the “paper market” of silver is a sharp contrast to the “physical market”. A critical factor in 2026 is the paper-to-physical ratio. For every ounce of physical silver in an LBMA vault, there are hundreds of ounces traded in paper contracts. When there is a crash like the latest one, it is actually leveraged liquidations.
In actual fact, there is a shortage of physical silver that threatens a default by LBMA as the free float reached a critical point. Both COMEX and SGE reportedly had to transfer silver to bailout LBMA to prevent the default in December 2025. This re-routing of silver caused inventories in COMEX and SGE to plummet.
The situation in SGE is critical as its inventory has plummeted 91% from the 2020 peak of 5,280 tonnes to the current 450 tonnes. The key reason for the plunge is due to the fact that China now produces 70% of the world’s EVs and installs over 270 gigawatts of solar annually. This industrial demand is gobbling up the SGE inventory faster than it can be replenished by mines or imports. In fact, Singapore’s Silver Bullion now holds even more silver bullion than SGE (600 tonnes)!
On the other hand, COMEX vaults have seen 2,283 tonnes withdrawn in the last 30 days alone. At the current depletion rate, the deliverable silver in COMEX could be wiped out within months if the institutional buys continue unabated.
Conclusion
The December 2025 of the bailout of silver market in UK has left the global system fragile as inventories in SGE and COMEX are at critically tight levels. On this basis, I believe that the next ramp up of silver price could take place soon.
In recent years, much of silver demands are driven in part by the development of AI infrastructure due to silver’s physical attributes (high thermal and electrical conductivity). AI data centers require massive amounts of silver for high-performance GPUs, servers and connectors. As Big Tech companies pour billions of dollars into building AI data centers, the industrial demands for silver are expected to increase exponentially. For example, the electrical and electronics industrial demand for silver has surged from 350 million ounces in 2021 to 460 million ounces in 2024.
My overall view of silver is that it is more for trading purpose. As a wealth builder, I think it is important to keep an open mind and have a diversified portfolio comprising of growth and value assets. This is the reason why I am looking at SPDR Gold ETF recently and BullionStar’s BullionStar Savings Program (BSP).
In Singapore, two of the most bullion dealers are BullionStar and UOB. The main advantage of BullionStar’s (BSP) is the opportunity to convert your gold savings to physical bullion bars, produced by LBMA refineries, at any time without any extra cost whatsoever. The problem with BullionStar’s BSP is that it could not be bought using SRS. As I am looking to diversify my SRS portfolio, SPDR Gold ETF looks like a viable option to slowly accumulate gold shares that are backed by physical gold.
On the other hand, BullionStar’s BSP (Silver) is accessible for investors just starting out in their investment journey. For just $4.326, you can buy 1 gram of allocated silver. Take note that there is storage fee of 0.19% per year and 19.79% of spread when you sell back the silver to BullionStar. As such, you need to factor in these costs before you purchased BullionStar BSP. Till then, enjoy the ride.
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