As the trading landscape evolves heading into 2026, silver and copper have emerged as the dominant precious metals, surpassing gold in popularity among both institutional and retail investors. This shift comes as silver has nearly doubled in value this year, with a substantial portion of its gains occurring within just the last two months. This surge is attributed to a historic supply squeeze in the London market, fueled by heightened demand from India and an influx of investments into silver-backed exchange-traded funds (ETFs).
Although the supply crunch has eased recently with more metal being received in London vaults, supply challenges remain in other regions, particularly in China, where inventories have plummeted to their lowest levels in a decade. The increased volatility in the silver market highlights the intensity of the recent rally, as noted by Ed Meir, an analyst at Marex Group Inc. He observed a sharper parabolic price movement compared to prior rallies, indicating concentrated buying activity over a comparatively brief period.
In the current trading environment, silver has outshined gold. Since gold reached its all-time high on October 20, 2023, it has experienced minimal movement, while silver has surged over 11% to set a new record, and copper has risen nearly 9%. The iShares Silver Trust, the largest ETF tracking silver, has seen a spike in implied options volatility, recently reaching its highest level since early 2021, when silver garnered significant attention from meme-stock traders. In just the past week, nearly $1 billion flowed into this ETF, outperforming the largest gold fund and bolstering spot prices.
Western investors, who have historically underallocated their portfolios to precious metals, have increasingly turned to silver ETFs, indicating the potential for even greater inflows as allocations attempt to balance out. Trevor Yates, a senior investment analyst at Global X ETFs, emphasized this trend, suggesting ample room for further investment in the sector.
Additionally, options trading in Comex silver futures has experienced a surge as market participants seek protection against volatility and anticipate further price hikes. Retail traders are actively engaging in the market, with recent data from CME Group Inc. signaling high volumes in micro futures contracts, nearing levels previously seen in mid-October.
One striking example of the current market excitement is the trading of “lottery-ticket” style options, with over 5,000 lots of Comex silver February $80/$85 call spreads—equivalent to 25 million troy ounces—changing hands on two consecutive days, demonstrating strong confidence in a continued price rally into the new year.
Market analysts caution that the high levels of volatility will require sustained large price swings to maintain upward momentum, especially as silver approaches an extreme year-end valuation divergence, with a premium of 82% over its five-year average. This deviation could indicate significant market dynamics ahead, with possible historical implications for traders seeking opportunities in the precious metals sector. The enthusiasm surrounding silver hints at a potentially transformative period for traders and investors as they navigate the evolving landscape of precious metals in the years to come.