Silver shocked markets in early 2026, surging to ₹4,10,000 per kg on January 29 before crashing more than 30% to around ₹2,50,000 per kg by early February. If you hold precious metals, here’s what happened and what it means for your portfolio.
Why Silver Rallied and Then Crashed
The rally was driven by China’s new export licensing rules (effective January 1, 2026), which tightened supply from a country that produces 60-70% of global refined silver. The old quota system was replaced with a stricter licensing framework, reportedly favoring only large producers with higher output and stronger financial capacity. Strong industrial demand from solar panels, EVs, and semiconductors added fuel. Silver’s superior conductivity makes it hard to replace in many modern technologies. Physical silver premiums in some markets have stayed elevated even when spot prices fell, highlighting a gap between physical silver demand and paper silver trading. Heavy speculative buying, especially in Chinese markets, pushed prices to unsustainable levels.
The crash came just as fast. Profit-taking by traders, a stronger US dollar, rising interest rate expectations, and broader commodity weakness all triggered the reversal.
On banks, historical criticism of silver shorting remains valid, but positioning has changed. JPMorgan reportedly closed its roughly 200 million ounce silver short position between June and October 2025 and moved to a net long stance. Recent CFTC data also suggests U.S. banks as a group are now net long in silver for the first time in memory, marking a clear shift from the past.
Should you hold silver?
It depends on your timeline, risk tolerance, and overall allocation. Precious metals typically work best as a small portion (5-10%) of diversified portfolios.
Overall, silver sits between strong real demand and unpredictable financial markets. Looking ahead, forecasts remain widely split, with cautious views like UBS expecting ₹1,90,000 – ₹2,05,000 per kg , while some bullish analysts see a path toward ₹3,15,000 – ₹4,45,000 per kg over time, driven by solar, clean energy, and potential supply constraints.