Silver Extends Rally on Speculative Momentum, as U.S. Bank Issues Warning

Speculative momentum continues to provide unprecedented support for silver prices, as the market has managed to climb back above the $91-per-ounce level. However, one bank believes the metal’s performance—particularly when compared with gold—may be overstretched.

Silver’s recovery and renewed push toward its recent record highs above $93 an ounce have driven the gold-to-silver ratio down to 50, its lowest level since March 2012. This marks a sharp reversal after the ratio had exceeded 100 in April 2025.

Silver has benefited from a strong resurgence in speculative demand alongside robust industrial demand, exacerbating supply-chain and liquidity constraints and triggering a prolonged short squeeze that has lasted for several months. Over the past year, silver prices have surged by around 150% and have continued to rise into the start of 2026.

By contrast, gold prices remain firmly supported above $4,600 an ounce, posting gains of more than 6% since the beginning of the year, while silver has climbed more than 27% to trade above $91 an ounce.

In a note issued on Wednesday, commodity analysts at BMO Capital Markets said the gold-to-silver ratio may have further room to decline in the near term, but changing supply dynamics could make the current trajectory unsustainable.

The analysts explained: “While geopolitical uncertainty and meme-like investment demand for silver could push the ratio lower in the very short term, we expect growth in the physical surplus to ultimately drive the gold-to-silver ratio higher in the years ahead, in line with a trend that has persisted since the 1970s.” They added: “Since the end of the Bretton Woods system in the 1970s, we have observed a strong causal relationship between physical surpluses and the gold-to-silver ratio, whereby periods of large surpluses lead to a sustained rise in the ratio, and vice versa.”

The bank noted that although investment demand has been the primary driver behind silver’s unprecedented rally, assessing true supply-and-demand dynamics requires a focus on consumption alone.

The analysts said: “When net physical investment demand is included, the silver market appears to be in a ‘deficit,’ implying declining inventories. However, since the vast majority of these inventories are held by investors, the only explanation is that investors are selling physical silver. Our analysis suggests that the more accurate measure is the balance between silver consumption (industrial, jewelry, and silverware) and supply, which typically exceeds that consumption.”

Under current conditions, BMO emphasized the importance of closely monitoring silver consumption in the solar energy sector.

They noted: “The solar sector accounts for roughly 58% of the increase in silver consumption since 2020. However, a slowdown in solar installations, combined with the ongoing trend toward thrift and substitution in solar technologies, suggests that demand from this sector may have already peaked.”

At the same time, the bank cautioned that it is still too early to determine whether other industrial sectors can offset a potential decline in solar-related demand.

They added: “After years of promises without commercial execution, signs are emerging that solid-state batteries are nearing commercialization, with silver–carbon anode technology seen as a key enabler. We estimate that this technology could add up to 100 million ounces of silver demand by 2030, assuming successful commercialization efforts led by companies such as BYD, Samsung, and LG Energy Solution.”

However, until solid-state batteries are commercially viable on a large scale, BMO believes silver supply is likely to continue rising, leading to underperformance relative to gold.

The analysts concluded: “Even assuming minimal thrifting and strong demand from the electric vehicle sector, we expect the physical surplus of silver to grow over the forecast period. While the current wave of optimism in the silver market could drive the gold-to-silver ratio lower in the coming weeks, the long-term trajectory, in our view, remains decisively upward.”