Neo Wealth Management has issued a stark warning about silver's current market position, suggesting the precious metal could face a dramatic correction despite trading near record highs in 2025. The firm's comprehensive analysis outlines multiple scenarios where silver prices could plummet to as low as $30 per ounce, representing a potential 60% drawdown that could extend recovery timelines into the early 2030s.

Industrial Demand Driving Current Rally

Silver's recent surge has been primarily fueled by robust industrial applications across emerging sectors. According to Shantanu Bhargava, CEO of HNI Digital Advisory and Managed Solutions at Neo Wealth Management, the metal is "trading at record levels amid a multi-year supply deficit." The report reveals that industrial demand constituted 59% of total silver consumption in 2024, with significant contributions from solar panel manufacturing, electric vehicle production, and AI data center infrastructure.

Historical Precedents Signal Vulnerability

Neo Wealth Management's analysis emphasizes that silver's most severe corrections have historically stemmed from investment outflows and liquidity shocks rather than fundamental weakness. The report cites two critical precedents that demonstrate the metal's vulnerability to rapid reversals.

Applying these historical patterns to current price levels, the firm projects that a 2008-style liquidity crisis could drive silver down to approximately $30 per ounce, while a 2011-style correction might see prices settle around $40 per ounce.

Market Structure Raises Red Flags

Current market conditions present several concerning indicators that suggest heightened vulnerability. COMEX silver futures open interest has reached 165,805 contracts, marking a 17.90% increase over the past year. More significantly, retail micro futures contracts have surged by 238%, indicating substantial leveraged speculative positioning that could unwind rapidly under market pressure.

The report also highlights silver's current backwardation status, where spot prices exceed futures prices, typically indicating short-term physical tightness. However, Neo Wealth cautions this condition may prove temporary, noting that "if only 10% of the amount held in silver-backed ETPs were liquidated, it could effectively erase the 2025 deficit and cause the backwardation to vanish instantly."

Downside Scenario Analysis

Neo Wealth Management presents a comprehensive stress-test scenario where global investment demand collapses entirely. Under such conditions, the current projected 120 million ounce supply deficit would flip into a 216 million ounce surplus. Using demand-elasticity modeling, the firm estimates a fundamental price floor of $61.00 per ounce in this scenario.

Mining Economics Provide Ultimate Floor

The analysis identifies $25.00-$30.00 per ounce as the ultimate price floor based on global mining economics. While the average All-In Sustaining Cost for primary silver miners was $13.00 per ounce in early 2025, this figure benefits from by-product credits from gold, copper, lead, and zinc production. In a severe downturn affecting these metals, by-product credits would diminish, raising true mining costs to approximately $22.00-$26.00 per ounce.

Investment Implications

Bhargava warns that "any investment initiated at the current price must take in a potential peak-to-trough drawdown of approximately 60%, with a recovery period that could extend into the early 2030s based on past bear market cycles." The firm notes that silver's high-beta characteristics mean it typically falls 2.50 times faster than gold during market stress periods. Additionally, potential U.S. dollar strength, which historically maintains negative correlation with silver, could further pressure prices, particularly affecting non-U.S. buyers.

Silver prices experienced a dramatic reversal on Thursday, falling over 8% intraday to hit a day's low of $86.12 after nearly touching the $94 mark just a day earlier. The sharp pullback comes after silver posted a strong rally in recent sessions, with traders pushing prices close to record territory on the COMEX exchange.

Technical Resistance and Market Dynamics

The following table highlights the key price levels and movements:

According to market watchers, the pullback reflects a combination of technical resistance, profit-booking, and macro triggers. Analysts note that silver touched its key resistance level of $93 per ounce before seeing a retracement, aligning with earlier projections.

Expert Analysis and Outlook

Renisha Chainani, Head of Research at Augmont, believes that this phase of consolidation is not unexpected. She maintains that a sustained breakout above the $92–$93 zone would be an important technical step before the $100 level can realistically be considered. However, she also notes that breaching the psychological $100 mark within the month may still require a significant catalyst.

Chainani adds that macroeconomic factors remain broadly supportive, citing expectations of lower real interest rates and a weaker U.S. dollar as reducing the opportunity cost of holding precious metals. Additionally, elevated geopolitical tensions continue to support silver's safe-haven appeal.

Industrial Demand and Supply Dynamics

Supporting the bullish outlook, Jigar Trivedi, Senior Research Analyst - Currencies & Commodities at Reliance Securities, had earlier pointed to a surge in industrial consumption as a key factor in silver's momentum. He highlighted tightening supply dynamics amid strong demand from:

• Energy transition sectors
• Electronics industry
• Electrification segments

While acknowledging elevated volatility ahead, Trivedi had projected a short-term upside in MCX Silver March contracts up to ₹3,00,000 per kg, contingent on structural deficits persisting.

Technical Perspective

From a technical standpoint, analysts had identified the following key levels:

The recent price action appears to validate those levels, with silver approaching the lower band. As per prior commentary in technical outlook reports, a retracement to $84 (approximately ₹2,60,000 per kg) was expected before any potential renewed upward move.

Market Outlook

The metal's sharp retreat underscores the challenges it may face in maintaining a consistent uptrend. While the broader macro setup remains constructive, market participants will be watching how silver reacts during upcoming trading sessions. The combination of technical resistance at key levels and profit-booking activity has created a pause in the recent bullish momentum, though underlying fundamentals continue to support the precious metal's longer-term prospects.