The chart of silver looks incredible. The recent gains have been parabolic.
Usually, when we see such fast gains, there is always talk of a correction. But so far, the bears have been proven wrong repeatedly… at $50, at $60, at $70, at $80, and now silver has crossed $90 per ounce. The magical three digits are within sight.
In the global market, silver has tripled over the last one year. We’ve seen similar gains in India.
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And the market’s expectations are for the upward momentum to continue in 2026.
But will that be the case?
Long-term silver investors are laughing all the way to the bank. But they also want to know whether there is further upside if they continue to hold.
Will the silver price continue to rise in 2026 or will the price fall? To find the answer, we must understand the factors that influence silver’s price.
#1 Interest rate cuts
Globally, central banks have been reducing interest rates, barring a few exceptions.
The idea is to support growth as inflation has declined meaningfully in many countries. Governments want to support growth rates and employment in 2026 and prevent a growth slowdown.
Thus, investors are positioning for a world where money gets cheaper again. Precious metals like silver don’t generate income, but they have the trust of the masses.
When the benefit of holding cash/bonds declines (falling interest rates), silver tends to do well. This is because demand shifts from fixed-income assets to precious metals.
#2 Geopolitics
Investors are responding to modern conflicts that are prolonged, unresolved, and embedded into the global economy by hedging their bets.
This makes silver particularly attractive because investors are uneasy but not outright fearful. Markets aren’t pricing in disaster; they’re pricing in fragility in the global economy.
#3 Industrial demand
Traditionally, silver was viewed largely as a cheaper alternative to gold as a hedge against inflation. But over the past few years, silver’s identity has changed in investors’ minds.
Today, silver is perhaps the most unique among all commodities.
The white metal is increasingly being recognized as a ‘Green Metal’, thanks to its critical role in the renewable energy and clean technology revolution.
As the global economy adapts to energy transition, digitisation, and electrification, silver’s industrial relevance has become difficult to ignore. It’s used extensively in EV batteries, connectors, and electronics. It’s also a key component in solar panels, accounting for about 20 gm of silver per panel.
High-tech electronics, 5G infrastructure, and semiconductor components all use silver due to its superior conductivity.
#4 Speculation
Then, there is old-fashioned speculation. Traders want to buy silver because the price is going up…and for no other reason.
Silver has a reputation for spectacular short-term gains and losses. It attracts momentum and speculation in abundance.
But a sensible response would be to not chase the price. A reversal can happen any time.
And that point brings us to…
Could silver price fall in 2026?
The short answer is yes; it can.
When the entire market is talking about a rising price of silver, it’s easy to forget that the opposite can easily happen…as it has happened many times in the past.
In that case, it would trigger losses for leveraged traders who are long on silver today.
The factors that can cause a fall in the silver price are the same as the ones that are responsible for its rise…only in reverse.
Expectations of interest rate cuts moderate or come to an end.
Geopolitical tensions ease.
Industrial demand will remain strong, but the speculation behind it could moderate.
Investors should closely watch for any potential changes in the underlying factors driving silver prices, especially the speculative factor, as it has been the biggest driver of the price.
Conclusion
At Equitymaster, we believe in having a small exposure to silver as a part of the precious metal component of your portfolio.
However, investors should not see silver as a potential substitute for any other asset, especially stocks. It’s highly unlikely that the price will multiply year after year.
It makes sense to hold some precious metals, including silver, in one’s long-term portfolio, but it does not make sense to speculate on its short-term price movements.
If you are seriously considering an investment in silver, have a time horizon well beyond 2026. Just because the price has tripled in the last year doesn’t automatically make silver a great investment.
Do your due diligence.
Happy investing.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from equitymaster.com
