Silver overtakes Nvidia as volatility grips a historic rally

Silver has rarely moved quietly, but its latest surge has redrawn the market landscape. The metal has risen more than 185% year-to-date, briefly trading above $84 an ounce and pushing its estimated market value to $4.65 trillion, overtaking Nvidia to become the world’s second-largest asset by valuation. The move marks silver’s strongest annual performance since 1979, a year etched into market history for inflation shocks and commodity turmoil.

What followed was a reminder of silver’s reputation. Within little more than an hour of futures reopening, prices swung violently, shedding nearly 10% before stabilising near $75. That whipsaw now sits at the centre of a larger question: is silver entering a structurally supported bull market, or replaying a familiar cycle where leverage and volatility eventually overwhelm fundamentals?

What’s driving Silver’s historic surge?

Silver’s breakout reflects more than speculative enthusiasm. Expectations that the US Federal Reserve will deliver deeper rate cuts in 2026 have revived demand for hard assets, though the CME FedWatch tool shows an 82.8% probability of rates remaining unchanged at the next January meeting.

Lower real yields have historically supported precious metals, but silver has amplified this trend, benefiting from its dual role as both a monetary hedge and an industrial input.

Beneath that macro backdrop lies a supply imbalance that has been building for years. 2025 is projected to be the fifth consecutive year in which global silver demand exceeds supply, shifting the market from cyclical tightness into structural deficit. 

Industry estimates place global demand at nearly 1.12 billion ounces this year, against a supply of roughly 1.03 billion ounces, resulting in an annual shortfall of approximately 95 million ounces. Since 2021, cumulative deficits are estimated to be around 800 million ounces, equivalent to nearly an entire year of global mine production. That gap has been bridged by drawing down inventories across major hubs, steadily eroding the market’s shock absorber.

The supply side has struggled to respond despite rising prices. Mine production in 2025 is estimated to be approximately 813 million ounces, remaining broadly flat year-over-year. 

Roughly two-thirds of global silver output is produced as a byproduct of mining for metals such as copper, zinc, and lead, limiting how quickly the supply can react to silver-specific price signals. Recycling offers only marginal relief, with secondary supply rising by around 1%, far short of what would be needed to close the deficit. In practice, tightening demand is transmitted through inventories and futures markets, instead of amplifying volatility when positioning shifts.

Policy risk has added further strain. Beijing confirmed that, as of 1 January 2026, silver exporters will be required to obtain government licences, restricting overseas sales to large, state-approved producers. With China controlling an estimated 60–70% of global refined silver capacity, even modest export constraints carry outsized implications for physical availability. That risk premium has helped drive prices sharply higher, while also making the market more sensitive to sudden changes in sentiment.

Why it matters

Silver’s rally carries implications well beyond commodity trading desks. Unlike gold, silver is deeply embedded in modern industry, from electrification and solar panels to electric vehicles and data centres. That dual identity explains why the surge has drawn warnings from industrial leaders. Tesla CEO Elon Musk described rising silver prices as “not good,” citing the metal’s importance across a wide range of manufacturing processes.

Analysts remain divided on whether the move is sustainable. Tony Sycamore, a market analyst at IG, warned that a potential “generational bubble” may be forming as capital flows into precious metals collide with genuine supply stress. In his view, the scramble for physical silver has become self-reinforcing, pulling prices away from levels justified by near-term industrial demand.

That tension matters because silver’s price sits at the intersection of financial speculation and real-world production costs. Extreme moves risk distorting both sides of the market.

Impact on industry and markets

For the industry, sustained high prices carry consequences. Solar manufacturing now accounts for a significant share of annual silver consumption, while electric vehicles require materially more silver than internal combustion engines. Analysts estimate that prices approaching $130 per ounce would erode operating margins across the solar sector, potentially slowing adoption at a time when global renewable targets are accelerating.

Financial markets face a different stress point. The Chicago Mercantile Exchange has announced its second silver margin hike in two weeks, raising initial margin requirements on March 2026 contracts to approximately $25,000. The move increases pressure on leveraged traders as volatility surges.

History looms in the background. In 2011, a series of rapid margin hikes coincided with silver’s peak near $50, triggering forced deleveraging and a sharp correction. The 1980 episode was even more severe, as regulatory intervention and aggressive rate hikes crushed a highly leveraged rally. While today’s measures are less extreme, analysts warn that even moderate reductions in leverage can overwhelm physical buying in the short term.

Expert outlook

The near-term outlook hinges on whether physical demand can absorb the forced selling of futures. COMEX inventories have reportedly fallen by around 70% over the past five years, while China’s domestic silver stocks sit near decade lows. Deeply negative silver swap rates suggest buyers are increasingly demanding real delivery rather than paper exposure.

Risks remain elevated. Hedge funds face year-end rebalancing, commodity index adjustments loom, and geopolitical headlines remain fluid. A sustained break below $75 could signal a deeper consolidation phase, while renewed stress in physical markets may quickly revive upside momentum.

For now, silver stands at a crossroads where structural scarcity collides with financial leverage. The coming sessions are likely to determine whether this historic rally matures into a longer-term re-pricing, or fractures under the weight of its own volatility.

Key takeaway

Silver’s surge past Nvidia suggests more than speculative excess. A multi-year structural supply deficit, combined with tightening inventories and rising industrial demand, has collided with leverage-heavy markets. Margin hikes and geopolitical shifts may drive sharp corrections, but the underlying scarcity story appears unresolved. Investors may wish to closely monitor physical inventories, China’s policy signals, and futures market positioning as silver enters its most critical phase.

Silver technical outlook

Silver has seen a sharp pullback after aggressively riding the upper Bollinger Band, signalling that upside momentum has become overstretched. Price remains elevated, but the recent rejection suggests short-term profit-taking after an extended rally.

On the downside, $57.00 is the first key support, followed by $50.00 and $46.93. A sustained move back towards the Bollinger mid-band would increase the risk of a deeper corrective phase. Momentum is cooling, with the RSI dropping sharply from overbought territory, reinforcing the case for consolidation rather than immediate trend continuation.