Silver is trading around $60 an ounce, roughly half its late-January peak, as the metal's 2025-26 surge continues to be driven by physical tightness rather than the speculative corners or monetary bets that fueled past booms. The rally, which saw front-month COMEX futures jump 14% on January 26 — the biggest one-day percentage gain since March 1985 — has been supported by softer US inflation and growing expectations of Federal Reserve easing.
A rally rooted in physical demand
The current move began in the physical market, not on the futures floor. Real demand has been drawing down years of supply deficits. Silver has run a deficit since 2019, with exchange inventories at multi-year lows and one-month lease rates topping 30% in October 2025. This is not an engineered corner or a monetary bid — it's a response to sustained industrial and investment demand outstripping available supply. The 2025-26 spike is distinct from the leveraged corner of 1980 and the monetary bid of 2011.
Lessons from 1980 and 2011
The 1980 silver boom was caused by the Hunt brothers' corner, who accumulated 100-200 million ounces. It ended when COMEX margin rules forced a collapse on Silver Thursday, March 27, 1980. Silver did not reclaim that high until 2011 — a 31-year wait. The 2011 rally, peaking at $49 in April, was driven by QE2, a weaker dollar, and negative real yields. But when QE2 ended on June 20, 2011, and the Eurozone debt crisis weakened global growth, silver lost both its financial and industrial demand. It fell about 75% over nine years, bottoming near $12 in March 2020. The 2011 rally faded as the economy stabilized and risk appetite normalized.
What limits the downside
Federal interest costs are now near $1 trillion a year, which limits the room for materially tighter monetary policy. That caps silver's macro downside, even if the metal corrects from its highs. The current rally's foundation in physical deficit and low inventories means any pullback could attract buyers looking for real assets. The question is whether the Fed's expected easing will sustain the rally or if, like in 2011, a shift in policy or global growth will reverse the trend.
The next test for silver will come with the Fed's upcoming policy decision and any signs of easing that could support further gains. For now, the metal remains well below its January peak, but the structural deficit suggests the story is far from over.
