Silver prices surged to a record $93.75 per troy ounce, causing the Gold/Silver ratio to dip below 50 for the first time since 2012. Silver rose by about 30% this year compared to Gold’s 7% increase. In the previous year, Silver’s price rose by almost 150%.
US President Trump’s intent to negotiate agreements on critical minerals temporarily eased tariff concerns. As a consequence, Silver prices declined by over 7% from their peak. This lower tariff risk enabled more Silver from COMEX to reach China, where supply is tight. Since October, 97.5 million ounces have left COMEX stocks.
Silver Market Dynamics
Acute shortages in London’s market likely received a portion of these Silver deliveries. China’s inventory depletion reached its lowest level in a decade. The reduction in COMEX inventories indicates a tight Silver market and contributed to October’s price surge. Silver prices remain steady without tariff risks.
The CME group’s new Silver futures contract starting February 9 will have a 100-ounce lot size, aimed at retail buyers. Current COMEX Silver futures have a 5,000-ounce lot size, making them less accessible to retail buyers. This new contract could further boost market activity.
Given the market’s behavior, we should view the current price action as a consolidation after last year’s historic run. After peaking at $93.75 in 2025, silver has since pulled back to trade near $82 an ounce, which shows that the intense tariff fears have subsided. This suggests options traders should anticipate continued high volatility, making strategies that profit from price swings, rather than direction alone, potentially attractive.
Silver Supply And Demand
The fundamental tightness that drove the 2025 rally remains a critical factor for us to watch. Recent CME data shows COMEX registered silver inventories are hovering near 35 million ounces, which, while up slightly from the Q4 2025 lows, is still down over 60% from the start of last year. This low level of available physical supply suggests a solid floor for prices and that any significant dips could be short-lived.
Industrial demand continues to provide strong underlying support for the silver price. Reports from late 2025 indicated a 15% year-over-year surge in demand, largely from the solar and electric vehicle sectors, and early 2026 projections show this trend continuing. For derivatives traders, this strong fundamental demand suggests that selling out-of-the-money puts could be a viable strategy to collect premium, as a market collapse appears unlikely.
We must also consider the new market participants following the introduction of the 100-ounce silver futures contract in February of last year. This contract brought a wave of retail interest into the market, contributing to the sharp price movements we saw throughout 2025. The increased volume, which has sustained into this year, means traders should be prepared for quicker, sentiment-driven price swings and adjust their position sizing accordingly.
Finally, the Gold/Silver ratio remains a key indicator for relative value trades. After briefly touching below 50 during the peak excitement last year, the ratio has now stabilized around 55. This is still a historically low level, indicating silver’s continued strength relative to gold and presenting opportunities for spread trades between the two metals.
