Silver prices have crossed $100 per ounce for the first time, following a strong increase. Last year, prices jumped nearly 150%, and they have risen by 40% this year, outpacing gold. Several factors are driving silver’s rise: a weaker US dollar, lower real yields, and greater interest in hard assets. Silver has also faced a historic short squeeze and strong retail buying. Increased industrial demand, especially from solar energy, electrification, and grid infrastructure, is tightening the silver market. This is happening while mine supply growth stays limited. Overall, despite some risks, the outlook is still positive. We see strong industrial demand, tight supply, and significant market interest keeping the market robust. With silver’s momentum from its record performance in 2025 still in play, we believe this trend will continue in the near future. The 40% gain so far in January 2026 suggests that short-term strategies, like buying call options, might keep producing good results. However, the chance of a sharp price drop is very high. The rapid rise in prices has pushed implied volatility to multi-year highs, with the Cboe Silver ETF Volatility Index (VXSLV) likely exceeding 60. This situation makes buying options very expensive and at risk of a sudden drop in volatility if prices stabilize. As a result, traders are leaning towards defined-risk strategies like bull call spreads, which help lower premium costs while still offering upside potential. On the fundamentals, the market’s tightness is supported by strong data from late last year. Global solar panel installations in 2025 increased by an estimated 35%, using over 200 million ounces of silver and putting significant pressure on physical supply. This strong industrial demand creates a more solid price foundation than previous, purely speculative rallies. In the futures market, managed money net-long positions on the COMEX are now at their highest since the peak in 2011. We need to remember that a sharp reversal followed that peak, highlighting how quickly sentiment can change in precious metals. For investors with large long positions, purchasing protective puts or setting up collar strategies is wise to secure some of the recent gains. The mention of a short squeeze and strong retail buying suggests that a big part of this rally is speculative. If there are signs that this speculation is fading, it could lead to a quick sell-off. Therefore, we will carefully watch open interest figures and exchange inventory levels for early signs of a shift in sentiment.

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