In-depth Analysis of the Silver Market: Short Covering Signals and Prospects for the Gold-Silver Ratio

• The top five US banks sharply reduced their silver short positions from 34,738 contracts to 18,413 contracts, a reduction of 47%, sending a strong short covering signal [1]
• COMEX silver futures volume reached 204,585 contracts, equivalent to annual production, but open interest remained basically flat, indicating the market was dominated by short covering rather than new speculative long positions [1]
• Current silver price is $64.17/oz, 52-week low is $28.31, with a year-to-date increase of 118.6%, far exceeding gold’s 64.2% gain [0]

As seen from the chart, silver experienced an explosive rise in the second half of 2025, breaking through the key resistance level of $60 and hitting a new all-time high. This rally was accompanied by a significant increase in trading volume, but open interest growth was limited, a typical feature of a short squeeze.

• The global silver market has seen a supply deficit for the fifth consecutive year, with the 2025 deficit approaching 3,000 tons [2]
• Industrial demand accounts for nearly 60% of total demand, and photovoltaic industry silver usage is expected to account for 55% of global silver demand [3]
• The International Energy Agency predicts that by 2030, solar energy alone will drive an annual increase in silver demand of nearly 150 million ounces [3]

• COMEX registered silver inventory fell below the safety threshold, and the ratio of open interest to physical inventory once soared to 244% [4]
• London silver lending and lease rates rose again to above 7%, a high since late October, indicating that the cost for shorts to obtain physical silver has increased [2]
• JPMorgan Chase moved approximately 169 million ounces of silver from the “deliverable” category to the “non-deliverable” category in COMEX vaults, equivalent to nearly 10% of global annual supply being locked up on the books [4]

• The world’s largest silver ETF, SLV, holds over 16,000 tons, a new high of about three and a half years [2]
• Other silver ETF holdings also rose, and the pace of capital inflows did not slow down despite continuously rising prices [2]

• The current gold-silver ratio is 67.58:1 [0], far above the historical average of 50:1
• The historical range of the gold-silver ratio is between 16-125 times; it once exceeded 120 times during the 2020 pandemic [5]
• The gold-silver ratio has fallen by 20.7% this year, showing a clear convergence trend [5]

• The Federal Reserve cut interest rates by 25 basis points in December, and market expectations for monetary easing persist [6]
• A decline in real interest rates will reduce the opportunity cost of holding non-interest-bearing assets, which is positive for silver

• The AI revolution drives a surge in silver demand from the semiconductor industry
• The new energy transition promotes rapid growth in silver usage in the photovoltaic industry
• 5G construction and the popularization of electric vehicles further boost industrial silver demand

• Silver was included in the US 2025 Critical Minerals List, raising concerns about trade restrictions [2]
• Against the backdrop of great power games, physical silver is locked up by governments or institutions, exacerbating supply tightness

• If the gold-silver ratio returns to 16:1, based on the current gold price of $4,337.40 [0], the target silver price is approximately $270 per ounce
• This means silver still needs to rise by about 321% to reach the target

Based on the current expanding supply-demand deficit and tight inventory situation, analysts predict that silver’s technical target could reach over $300 [1], which is basically consistent with the 16:1 gold-silver ratio target.

1. Strong short covering momentum: Banks’ significant position reduction indicates the collapse of short defense lines
2. Structural supply-demand imbalance: The five-year continuous supply deficit is difficult to improve in the short term
3. Escalating inventory crisis: Physical and paper contracts split into two parallel universes [4]
4. Explosive industrial demand: New economies such as AI, new energy, and 5G drive strong demand
5. Friendly monetary policy: The Federal Reserve’s interest rate cut cycle is beneficial to precious metals

1. Regulatory intervention risk: Excessively rapid price increases may lead to regulatory risk control measures
2. Technical correction: Excessive short-term gains lead to profit-taking pressure
3. Fed hawkish turn: If inflation data exceeds expectations, it may change the monetary policy path
4. Unexpected economic recovery: A strong economy may boost the US dollar and suppress precious metal prices

• Build positions in batches on dips, focusing on the $60 support level [6]
• Participate through tools such as ETFs, futures, and options to reduce single-market risk
• Pay attention to silver mining stocks, which often lag behind commodity price performance

• Be cautious about chasing highs; pay attention to trading volume coordination
• Use option tools to lock in gains and control downside risks
• Closely monitor COMEX inventory changes and bank position data

The large-scale reduction of bank short positions sends a strong bullish signal, and the sustainability of the silver bull market has solid fundamental support. The return of the gold-silver ratio to the historical average of 16:1 has a basis for realization in the current macro environment, but it requires time and the cooperation of sustained explosive industrial demand.

Investors should recognize that this silver rally is not just a short-term trend driven by financial attributes, but also a historical opportunity jointly driven by structural supply-demand imbalance, inventory crisis, and industrial revolution. Under the premise of controllable risks, silver remains one of the most worthy investment targets in 2026.

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[0] Jinling API Data - Real-time and Historical Prices of Silver and Gold

[1] NetEase - “Soaring Silver: Should You Sell or Buy?” (https://www.163.com/dy/article/KGJT2VGP0519BD5M.html)

[2] AiCoin Official - Binance Square (https://www.binance.com/zh-CN/square/profile/aicoincom)

[3] Ticker Report - iShares Silver Trust (SLV) Sets New 1-Year High (https://www.tickerreport.com/banking-finance/13286110/ishares-silver-trust-nysearcaslv-sets-new-1-year-high-heres-what-happened.html)

[4] Cnyes - JPMorgan Turns Against Wall Street: Hoarding Silver, Carding Gold, Shorting Dollar Credit (https://news.cnyes.com/news/id/6272959)

[5] Futu Information - Silver Prices Catch Up to Gold: How Will the Investment Market Deploy After December Rate Cut? (https://news.futunn.com/post/66003795/european-natural-resources-fund-silver-prices-surge-to-catch-up)

[6] WSJ - Silver Breaks Through $60: The Hottest Metal of 2025 Enters a Decisive Moment (https://cn.wsj.com/articles/白银升破60美元-2025年大热金属迎来决定性时刻-d4ab913f)