Silver hits record $119 per ounce amid crash warnings

10:50

By: Dakir Madiha

Silver hits record $119 per ounce amid crash warnings

Silver surged to a historic peak of $119 per ounce on January 29, fueled by the Federal Reserve's decision to hold interest rates steady. The metal's parabolic climb has sparked stark warnings from market veterans drawing parallels to past speculative manias.

Former JPMorgan chief strategist Marko Kolanovic delivered the most bearish outlook. He predicts silver is "almost guaranteed to drop about 50% from these levels within roughly a year." Having left the bank in 2024, Kolanovic argues the rally shows classic signs of momentum-driven speculation and meme-style trading, detached from sustainable fundamentals.

The metal climbed over 60% in January alone, its strongest monthly gain since December 1979. That was when the Hunt brothers' market cornering peaked before collapsing. Silver has risen about 275% over the past year. Veteran commodities trader Peter Brandt highlighted similarities to prior tops. He noted on X that nearly two years of global production, over 1.5 billion ounces, has traded on exchanges. This mirrors April 25, 2011, at that cycle's high.

Citigroup took a contrarian stance, raising its short-term price target to $150 per ounce. The bank calls silver "gold squared" or "gold on steroids." Analysts attribute the surge to robust physical and speculative demand, especially from China, in a relatively illiquid market.

Optimists point to structural supports distinguishing this rally from pure speculation. The silver market faces supply deficits for seven straight years. Industrial demand hit records in 2025. Solar panel production alone is set to consume 120 to 125 million ounces in 2026. Electric vehicles add another 70 to 75 million. China's January 1 reclassification of silver as a strategic material, imposing strict export licensing, has tightened global supply further.

HSBC analysts urged caution. They suggest silver's outperformance likely reflects momentum rather than a shift to safe-haven status. "It is unlikely that silver has become a new safe-haven asset. More likely, as it started catching up to gold, momentum took over and retail investors piled in," they wrote. The iShares Silver Trust saw trading volume near $40 billion in a single session, rivaling State Street's SPDR S&P 500 ETF.

Kolanovic cautioned that unlike pure speculative assets, commodity bubbles confront physical realities. High prices curb industrial demand, boost recycling, and spur hedged supply.