Silver prices have recently soared to $58.84 per troy ounce, marking a 10% increase since last Friday and pushing year-to-date gains over 100%. Although prices have dipped to around $57, limited supply and low inventory on Shanghai exchanges have fueled Silver’s strong performance this year. This price rise, now above mid-October’s previous all-time high, positions Silver as the best-performing commodity tracked. Recent declines have not dropped prices below significant October levels. While no new factors have emerged to explain the price increases, ongoing supply issues remain a key factor. There’s speculation about potential tariffs from President Trump, tied to Silver being classified as a critical mineral by the US Geological Survey. However, this speculation has been around for over a month, and its timing does not connect with the recent price shifts. Comex Silver inventories show little change, indicating current market behavior is not influenced by new events. With silver hitting a new high of $58.84, we are experiencing extreme volatility. The 100% gain since the start of 2025 has raised option premiums, making buying call options quite costly. Traders should be cautious about investing heavily in simple long positions after the recent slight drop to around $57. The strength in silver prices seems fundamentally driven, largely due to tight supply in key markets. Inventories on the Shanghai Futures Exchange fell below 1,000 metric tons in November 2025—an all-time low not seen since early 2020s supply chain disruptions. This tight supply suggests that sharp price dips may attract strong buying interest. Given this scenario, strategies that thrive on high volatility and stable prices become appealing. Selling cash-secured puts or starting bull put spreads below the current $57 can help traders collect attractive premiums. These methods benefit if silver stays above a certain price without requiring perfect predictions. Additionally, industrial silver demand has risen steadily throughout 2025, with global solar panel installations expected to rise over 35% this year. This consistent demand from the energy sector supports prices better than speculative price surges. In contrast, registered silver stocks on COMEX have remained stable at about 40 million ounces. Historically, we see similarities to the volatility of 1980, when silver prices shot up dramatically before a significant correction. This serves as a cautionary tale against excessive leverage at current high levels, as the risk of a swift pullback remains considerable, even with solid fundamentals in place. For traders anticipating further gains, using call spreads may be a better choice than buying calls outright. By purchasing a call at a lower strike and selling another at a higher strike, traders can lower initial costs and manage risk. This strategy allows for participation in price increases while providing protection against sudden downturns.

here to set up a live account on VT Markets now