December 31, 2025 | Silver Market Update: What’s Really Happening as 2025 Ends

Silver Market Update: What’s Really Happening as 2025 Ends

This is a follow-up to our post on Monday regarding the wild action with silver.  Today (Wednesday, December 31, 2025), marks the end of one of the most volatile years ever for silver. Earlier this week, prices surged over $83, an all-time high. Since then, silver has dropped sharply – twice in just three days – not because demand disappeared, but because exchanges stepped in to cool the market.

Below is what retail investors need to understand heading into 2026.

Two Silver Markets: Paper vs. Physical

Silver trades in two very different ways.

• The paper market consists of futures contracts that are usually settled in cash.
• The physical market involves actual bars and coins.

The paper market is estimated to be 50 to 300 times larger than the amount of real silver available. This works fine – until too many investors want the metal itself. When that happens, prices can move violently because there simply isn’t enough physical supply to meet demand.

Demand Is Growing Faster Than Supply

Silver isn’t just an investment – it’s essential for modern technology. Solar panels, electric vehicles, AI data centers, and electronics all rely heavily on silver.

The problem?

• The market has been in a supply deficit for five straight years.
• Demand is being met by draining existing stockpiles, not new mining.
• Most silver is mined as a by-product of other metals, so higher prices don’t quickly lead to more supply.

In short: demand keeps rising, but supply can’t respond.

Why Prices Dropped This Week

The recent selloff was triggered by exchange actions, not weakening fundamentals.

• Margin hikes: The CME sharply raised the cash required to hold silver futures -twice in five days.
• Forced selling: Traders unable to post more cash were forced to sell immediately, pushing prices from the mid $80s into the low $70s. (Note the lower panel of the chart below. This is the Relative Strength Index (RSI) Any reading over 70 is considered overbought. The reading for silver on Monday reached 78, very overbought. Since then, silver has sold off.)

As we noted on Monday, there were unconfirmed rumours that a large US bank needed emergency liquidity after being caught on the wrong side of the rally, adding to the speculation that this pullback was engineered to slow things down.

China Tightens Control

Starting January 1, 2026, China is restricting silver exports by labeling it a strategic mineral. Only approved firms will be allowed to ship it abroad.

Because China requires physical delivery, silver prices there remain higher than in the US. This gap signals real-world shortages, not speculation. Some US tech firms are now reportedly considering direct investments in silver mines to secure supply.

What This Means for Investors

The price drop is a temporary pressure release, not a fix. Margin changes don’t create more silver. The underlying reality remains unchanged:

• Industrial demand is strong
• Inventories are low
• Supply growth is limited

As global debt rises and currencies weaken, investor interest in hard assets like gold, silver, and other commodities continues to grow. Silver’s volatility reflects stress in the system – not a lack of relevance.

Bottom line

Silver is currently in a state of high volatility, characterized by a potential ‘Directional Change’ occurring over the last 72 hours.

• The Pullback: After reaching the $80+ peaks, the price is retracing
• The Target: . A normal technical pattern would be a retest of the most recent high just under $60.00 (horizontal green line on chart above).
• The Question: Is this a major long-term high, or simply the first ‘breakout high’ before a move to triple digits? Most indicators suggest this is not a permanent change in trend, but a temporary setback that could last into early January.
• Stay tuned!

Martin Straith December 31st, 2025

Posted In: The Trend Letter

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