Silver's towering ascent – and the winds that may test it
A look at how silver has soared to dazzling heights – but with momentum flashing red and market forces shifting, is this rally built to last?
Duration: 8 Mins
Date: Oct 20, 2025
I recently attended the CMT Association's Global Investment Summit in Dubai.1 While there, I visited the world's tallest building, the Burj Khalifa – a dramatically high structure that rises quickly out of the ground, leaving the competing skyline far below it. Its slender, soaring form reminded me of the price chart of silver this year, as it ascended quickly in several significant moves higher that defy gravity.
Silver climbed 78% year to date to $51.43 an ounce, overcoming concerns about economic strength from changing tariffs and terms of trade.2 Yet even the Burj Khalifa was engineered with volatility dampeners to withstand turbulence, does the silver bull market have what it takes to last?
Has silver risen too far, too fast?
One way to gauge momentum is through the relative strength index (RSI). An RSI above 70 often signals overbought conditions; below 30, oversold in a typical asset. Silver's current RSI is 84, a level reached only eight times in the past 25 years.3
Historically, when silver's RSI hit 84:
- Prices rose at least a bit further eight out of eight times at some point in the next 12–18 months.4
- Five of eight instances produced positive returns over the next 12 months.5
- But in three of the eight cases, prices were in the final throws of an uptrend, peaking less than 6% higher within the following month, suggesting that RSI 84 can mark a short-term top.6
How did we get here?
The silver bull market has had many drivers.
One factor is strong demand in India, where 80% of silver is imported, and some consumers have switched away from gold ahead of Diwali, helping create local shortages.7
The US administration added silver to the draft Section 232 notice in April, including it as a critical mineral.7 An update is due out any day and could include a decision on whether to impose tariffs on silver imports to the US. Trading has occurred ahead of this decision, although we suspect that ultimately, silver is unlikely to receive a tariff.
The silver market has been in deficit since 2021, drawing down above-ground inventory.8
Silver exchange-traded products (ETP) typically hold silver fully allocated in London, meaning they are unavailable for lease/lending. As interest in ETPs has increased this year, the availability of silver in the largest market in London has tightened.
Tariff uncertainty could soon test silver's strength. If the US excludes silver from its critical minerals tariff list, bars may flow back to London, where lease rates have surged to 200%, reflecting scarcity.9
Silver's market is nine times smaller than gold's, magnifying the ability of speculative flows and volatility to move the silver price.9
Silver fundamentals
Despite its rally, structural demand remains robust:
- Bank of America lifted its 2026 silver target from $44 to $65.9
- The supply/demand balance has been in a supply deficit since 2021. Despite the deficit, silver returns for the last four years have been -11.72%, +2.27%, -0.66%, and +21.46%, respectively, which hardly reflected the shortage in the market during those years.10
- Industrial demand is accelerating across electric vehicles, data centers, and the global electrification build-out.
- Mining supply growth remains constrained by regulation, and last year's production was 8.8% below 2016 levels.8
- The supply/demand balance for this year was projected to be a deficit even before accounting for investor demand. ETF holdings have risen 108 million ounces in 2025 – more than doubling the projected supply deficit, underscoring the key role of investors.11,8
Gold's parallel run
Gold has also surged 59% YTD to $4,142/oz.12 The metal tends to pause when trading ~20% above its 100-day moving average – the same overextension seen now and at prior peaks in 2020, 2024, and early 2025.13 Historically, such points led to multi-month consolidations rather than reversals.
Gold fundamentals remain constructive
- Central banks remain net buyers, accumulating 1,000 tons annually for three straight years. This trend has continued with 439 tons purchased through August 2025, typically followed by a strong Q4.14
- China's reserves in gold (6.7%) remain far below the US (77%), implying ongoing diversification.15,16
- ETF investors hold 97 million ounces, up 14 million this year but well below the 2020 high of 111 million.17
- Speculative positions (267,000 contracts) sit between the 2020 peak and long-term average.18
- Despite being labeled the "most crowded trade" by the Bank of America Fund Managers Survey in October, the same survey noted gold allocations average only 2.4% – hardly excessive.19
Final thoughts
Both gold and silver have delivered extraordinary gains, supported by fundamentals like structural demand and real supply constraints, but changeable investor enthusiasm also played a large part. In all markets, including commodities, we believe prices can move too far, too quickly. Silver's RSI is flashing extreme momentum rarely seen, warranting caution even if the price continues higher over the next year. The bullish fundamentals for silver remain, but for this price rise to eventually continue in a healthy manner, a consolidation is needed. Gold is trading 20% above its historic support level, and some consolidation would also be healthy even if it were as simple as price stabilizing at current levels for a month. For both metals, investor appetite has been a visceral reaction as the erosion of purchasing power in the last five years has been significant and remains a topic of daily discussion. Official inflation numbers mark the incremental change in some prices, but the real pressure remains on price level of goods which are dramatically higher than in 2019. Developed market debt levels are unlikely to meaningfully improve in the immediate future. As in architecture, enduring strength in markets depends not only on how high they rise – but on the strength of the support below them. In both metals, the fundamental foundations of the bull market remain intact. Gold demand comes from many sectors and does not look extreme. Silver investor demand seems concentrated and more vulnerable. As was my experience in Dubai, the elevator ride to the 154th floor was impressive, the view from the observation deck humbling, and the ride back to the ground all too quick.
Endnotes
1 The Chartered Market Technician® (CMT) is a global credentialing body with nearly 50 years of service to the financial industry. Its designation marks the highest education within the discipline and is the preeminent designation for practitioners of technical analysis worldwide.
2 Bloomberg data: silver price 12/31/2024–10/14/2025.
3 Bloomberg data: silver RSI 1/5/2004, 4/10/2006, 2/28/2008, 9/29/2010, 4/22/2011, 7/4/2016, 9/4/2019, 7/22/2020, and 10/13/2025.
4 Bloomberg data: Silver returns after hitting RSI 84: 1/5/2004 (1/5/2004–1/5/2005 +3.25%, max +30.6% to 4/6/2004); 4/10/2006 (4/10/2006–4/10/2007 +8.95%, max +22.4% to 11/6/2007); 2/28/2008 (2/28/2008–2/27/2009 -27.55%, max +5.37% to 3/5/2008); 9/29/2010 (9/29/2010–9/29/2011 +39.76%, max +121.0% to 4/28/2011); 4/22/2011 (4/22/2011–4/23/2012 -34.91%, max +3.27% to 4/28/2011); 7/4/2016 (7/4/2016–7/4/2017
-21.05%, max +1.47% to 8/2/2016); 9/4/2019 (9/4/2019–9/4/2020 +36.92%, max +48.64% to 8/10/2020); 7/22/2020 (7/22/2020–7/22/2021 +7.37%, max +26.67% to 8/10/2020); and 10/13/2025.
5 Bloomberg data: silver, 12-month returns.
6 Bloomberg data: silver, maximum returns in the 12 months following RSI 84: 7/4/2016 (max +1.47% to 8/2/2016); 4/22/2011 (max +3.27% to 4/28/2011); 2/28/2008 (max +5.37% to 3/5/2008).
7 "Explainer: What's causing the silver shortage in India this festive season?" Reuters, October 2025. https://www.reuters.com/world/china/whats-causing-silver-shortage-india-this-festive-season-2025-10-13/.
8 "Silver Supply and Demand." World's Silver Survey 2025. The Silver Institute, October 2025. https://silverinstitute.org/silver-supply-demand/.
9 Silver price hits new peak as short squeeze deepens." Mining.com, October 2025. https://www.mining.com/silver-price-hits-new-peak-as-short-squeeze-deepens/.
10 Bloomberg data: silver, price returns 12/31/2020–12/31/2021 -11.72%; 12/31/2021–12/31/2022 +2.27%; 12/31/2022–12/31/2023 -0.66%; and 12/31/2023–12/31/2024 +21.46%.
11 Bloomberg data: silver, ETF ounces held 12/31/2024–10/14/2025.
12 Bloomberg data: gold, price 12/31/2024–10/14/2025.
13 Bloomberg data: gold, price and 100-day moving average on 8/6/2020, 4/22/2024, 10/30/2024, and 4/21/2025.
14 "China gold market update: Wholesale demand fell in August." World Gold Council, September 2025. https://www.gold.org/goldhub/gold-focus/2025/09/china-gold-market-update-wholesale-demand-fell-august.
15 "Gold Reserves by Country." World Gold Council, October 2025. https://www.gold.org/goldhub/data/gold-reserves-by-country.
16 Diversification does not ensure a profit or protect against a loss in a declining market.
17 Bloomberg data: gold ETF ounces held 12/31/2024–10/14/2025.
18 Bloomberg data: CFTC net contracts 12/31/2016–9/23/2025.
19 Gold Shines Above $4,200 on Fading Confidence in Policy Anchors." Investing.com, October 2025. https://www.investing.com/analysis/gold-shines-above-4200-on-fading-confidence-in-policy-anchors-200668605.
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