Silver hit a record $121 an ounce on January 29. By mid-July it had crashed to near $54. The market has since stabilised. HSBC is only mildly positive and has left its price forecasts unchanged. The bank does not expect silver to challenge $100 again anytime soon.
The January peak was the end of a multi-year squeeze. Tariff fears that started in 2025 triggered heavy physical buying. Metal flooded into New York. London, the heart of the physical market, became extremely tight. Lease rates briefly topped 200%. The futures market showed near-record backwardation. Gold’s own record run added fuel. The gold:silver ratio compressed from 61:1 to 46:1 at the top.
The Middle East conflict changed everything. The dollar strengthened. Oil spiked. Markets began pricing tighter monetary policy instead of rate cuts. The new Fed chair reinforced that shift. At the same time, silver stocks started flowing back from New York to London. The physical tightness that had driven the rally eased. Industrial and jewellery demand weakened. The gold:silver ratio has now widened to around 72:1. Silver is being driven more by its own fundamentals than by gold.
HSBC sees the market deficit shrinking fast — from 140 million ounces in 2025 to just 5 million ounces this year. It expects only a mild widening to 12 million ounces in 2027. Mine supply is rising. Scrap and recycling are increasing. Industrial and jewellery demand continue to fall. Large-bar buying from China and India is recovering. Coin and small-bar demand may improve slowly. ETFs, which saw heavy selling earlier this year, are starting to rebuild. These flows should keep the market in a slight deficit. They are not large enough to power a strong new rally.
A firm US dollar and higher yields remain clear headwinds. If rate-hike expectations ease, silver could move higher. Fiscal concerns and geopolitical risk are supportive in principle. A return of tariff tensions could still spark another squeeze — silver is now on the US critical minerals list. For now these are secondary factors.