Silver: Cycles

Gold's wilder cousin: big gains, bigger swings

Silver behaves like a more volatile version of gold. The World Bank price averaged $64.6 per ounce in September 2026, up 51% on a year earlier and almost three times the level of five years ago. The 10-year range runs from $14.1 to $92.1, so today's price sits well below the peak. In real 2010 dollars the 2025 average of $34.3 beat 2011's $31.7. Drivers mix monetary demand with industry, especially photovoltaics, and USGS cites a continuing supply deficit. Speculative episodes recur: in the 1970s Bunker Hunt took physical delivery and hoarded bullion (Morgan, pdf p. 459).

Silver price

Chart: Silver monthly price

Chart: Silver annual real price

US price, Engelhard industrial bullion, average

Super-cycles in silver

Silver has clear super-cycles, and they are more violent than gold's. It is half monetary metal, half industrial input, and its market is small: a year's mine output was worth about $32 billion at the 2025 average of $38/oz (USGS). Booms came in 1979-80, 2003-2011 and 2020-2026, each ending in a crash of 50% or more. In real 2010 dollars the 2025 average of $34.3/oz was above the 2011 figure of $31.7 (World Bank). Because most supply is a by-product, high prices do not quickly bring new mines, and swings in investor demand set the cycle.

1. 1979-1980

   The Hunt brothers and Middle Eastern partners built huge futures and physical positions amid double-digit inflation. COMEX imposed liquidation-only rules and higher margins in January 1980 and the corner collapsed.

   From $1.3/oz (Oct 1971) to a $38.9 monthly average (Jan 1980), then $12.7 (May 1980) (World Bank Pink Sheet monthly averages, Oct 2026 update)

2. 1981-2001

   Disinflation, high real rates and a long decline in photographic demand once digital imaging arrived. Large above-ground stocks overhung the market.

   Low of $3.6/oz monthly average (Mar 1993) (World Bank Pink Sheet monthly averages, Oct 2026 update)

3. 2003-2011

   China's growth, the first silver ETFs (2006), a weak dollar and post-2008 monetary easing. The peak in April 2011 came with heavy speculative buying; CME raised margins several times and prices broke.

   From a $4.1/oz monthly average low (Nov 2001) to $42.7 (Apr 2011), then down to $14.1 (Dec 2015) (World Bank Pink Sheet monthly averages, Oct 2026 update)

4. 2020-2026

   Solar paste demand surged, the market ran five annual deficits to 2025, and London ran short of free metal in October 2025, with lease rates spiking. Investment then pushed prices to records. India's duty rise to 15% in May 2026 cooled imports.

   From $14.9/oz (Mar 2020) to $92.1 monthly average (Jan 2026); $64.6 in Sep 2026 (World Bank Pink Sheet monthly averages, Oct 2026 update)

What drives the cycle

• Investor flows (ETFs, futures, bars). The market is small, so swings of a few hundred million ounces in ETF or bar demand overwhelm industrial changes.
• Gold price and the gold-silver ratio. Silver tends to follow gold with higher beta; investors buy silver when the ratio looks stretched.
• Solar installations and silver thrifting. PV was about 16% of 2025 demand; fast thrifting cut PV silver use 6% in 2025 and a forecast 19% in 2026.
• By-product supply from base metals. Zinc, lead and copper mine plans set most supply, so disruptions at copper mines (e.g. Los Pelambres weather shutdown, 2026) cut silver too.
• Indian import demand and duty. India is the largest importer; duty changes and rupee prices move Indian buying by thousands of tonnes a year.

Metrics to track