Silver has delivered one of the most spectacular commodity rallies in recent memory, surging more than 200% over the past year to reach approximately $94 per ounce. This dramatic performance has not only outpaced nearly every other commodity but has also significantly exceeded gold's respectable 74% gain during the same period, highlighting silver's unique position in the precious metals market.

Industrial Demand Drives Silver's Transformation

Unlike gold, silver benefits from substantial industrial applications that have fundamentally altered its demand profile. The metal's excellent electrical conductivity makes it essential for electronics manufacturing, including circuit boards, switches, and solar panels. Industrial demand has grown from just under half of total silver consumption a decade ago to 60% today, according to London-based consulting firm Metals Focus.

The industrial demand continues expanding through emerging applications in electric vehicles and data centers supporting artificial intelligence infrastructure. This diversification provides silver with fundamental support beyond its traditional role as a safe-haven asset.

Supply Constraints Support Price Rally

Silver faces unique supply dynamics that contribute to price volatility. Approximately three-fourths of new silver production comes as a byproduct of mining other metals such as lead, zinc, and copper, rather than direct mining operations. This structure means rising silver prices don't immediately translate into increased supply.

The supply-demand imbalance has persisted since 2018, with silver demand consistently outstripping supply. The deficit reached 18% last year, and Metals Focus managing director Philip Newman anticipates another shortfall in 2026.

Technical Indicators Flash Warning Signals

Despite strong fundamentals, technical analysis reveals concerning overbought conditions. Silver currently trades at more than double its 200-day moving average of $46, prompting warnings from market analysts about potential corrections.

The silver-to-gold ratio has compressed dramatically from 100 ounces of silver per ounce of gold in May to the current 51 ratio, marking the lowest level in more than a decade.

Market Structure and Volatility Concerns

Silver's smaller market size compared to gold creates inherent volatility. While gold trades globally at $33 trillion, silver's trading volume reaches $5.3 trillion, making it more susceptible to significant price swings. Historically, silver maintains a beta of 1.4 relative to gold, meaning it typically moves 40% more than gold in either direction.

Exchange-traded fund flows have supported the rally, with silver holdings in ETFs increasing to 1.33 billion ounces in 2025 from 1.04 billion ounces in 2024. The $50 billion iShares Silver Trust represents a major vehicle for U.S. investor exposure to the metal.

Analyst Perspectives on Fair Value

Market experts suggest various fair value estimates for silver. Based on the long-term silver-to-gold ratio average of 65, silver's fair value would be approximately $74 per ounce at current gold prices of $4,840. This level would still represent more than 100% gains from the year-ago price of $31.50.

WisdomTree Europe's head of commodities research Nitesh Shah recommends waiting for silver to retreat to the $70-$75 range before considering purchases, setting a year-end price target of $88 based on gold prices, industrial demand, and other factors. Few analysts expect silver to fall below $20, where it traded in November 2022.

Silver prices on the Multi Commodity Exchange (MCX) have experienced significant volatility, declining by approximately ₹18,000 per kg over the past two trading sessions. The sharp correction follows easing geopolitical tensions and renewed optimism surrounding potential US-India trade relations, which has reduced safe-haven demand for the precious metal.

Price Movement and Market Performance

The March 5, 2026 silver futures contract on MCX registered a substantial decline, falling nearly ₹13,000 to close at ₹3,05,753 per kg, marking approximately a 4% drop. This correction comes after the white metal reached record highs, triggering a wave of profit-taking among investors.

Market Drivers and Sentiment

The price decline has been attributed to multiple factors affecting market sentiment. Easing geopolitical tensions involving Denmark-owned Greenland and the United States have reduced the appeal of silver as a safe-haven asset. Additionally, comments by US President Donald Trump at the World Economic Forum in Davos regarding potential trade deals have further cooled bullish momentum in the precious metals sector.

Trump's statement that "We are going to have a good deal" in reference to US-India trade relations has contributed to improved market sentiment, reducing demand for traditional safe-haven assets like silver.

Technical Analysis and Price Outlook

According to Ponmudi R, CEO of Enrich Money, MCX silver remains within a strong bullish channel despite the recent correction. The analyst notes that consistent buying emerges on dips, with the metal continuing to outperform as a high-beta precious metal play.

For COMEX silver, prices are trading around $92-$93 after recently touching record highs above $95.80. The metal remains above its short and medium-term averages, reflecting strong buyer dominance despite the recent volatility.

Expert Recommendations and Market Volatility

Manoj Kumar Jain of Prithvi Finmart has highlighted heightened volatility across precious metals markets. He recommends avoiding fresh positions in the current session and waiting for market stability to return.

Industrial Demand and Long-term Outlook

Despite the recent correction, analysts point to robust industrial demand supporting silver's long-term prospects. Key sectors driving demand include solar energy, electric vehicles, artificial intelligence, and electronics manufacturing. This industrial demand, combined with tightening global supply and safe-haven flows, continues to underpin the metal's structural strength.

Justin Khoo, senior market analyst at VT Markets, suggests that investors focus on strategic positioning rather than chasing record highs. He recommends tactical profit-taking near peaks for short-term traders while maintaining that silver remains a compelling hedge against inflation and market uncertainty for long-term investors. Overall, experts advocate buying on meaningful dips and holding core positions while maintaining balanced allocations with disciplined risk management.