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Silver has been caught in a violent downdraft after a parabolic rally, with prices plunging from an early-January 2026 peak of $113 per ounce to around $77 by February — a 32% wipeout in a matter of weeks. The rout deepened in the months that followed: silver recorded its steepest monthly drop in June since September 2011, and for the second quarter as a whole the metal tumbled $16.57 an ounce, a 22.04% decline that marked the worst quarterly performance since the pandemic panic selling of Q1 2020.
The sheer ferocity of the selloff has rattled sentiment, yet a number of seasoned market participants insist the structural foundations of the silver bull market remain firmly in place.
Paul Wong, managing partner and market strategist at Sprott Inc., noted that the June plunge tracked gold’s sharp retreat and was driven by the same macro forces — a hawkish Federal Reserve, higher short-term rates and a resurgent U.S. dollar. Silver sliced through key support levels in a near-waterfall pattern, signaling a wave of capitulation-style selling. But Wong stressed that on a multi-decade timeframe, silver’s price chart remains among the most bullish he has seen, with the long-term fundamental thesis fully intact.
At the core of that thesis is a persistent supply deficit that has now run for seven or eight consecutive years. According to Wong, annual shortfalls have steadily eroded above-ground inventories, while the project pipeline offers little relief — there are hardly any large new mining developments capable of altering the medium-term supply picture. Sprott expects these structural deficits to persist for another seven to eight years.
Set against this rigid supply backdrop is an expansion of structural demand across multiple secular trends. Solar panel manufacturing, electrification, electric vehicle adoption, artificial intelligence infrastructure and data-center buildouts are all providing robust support for industrial silver consumption. Military demand is also rising as silver’s conductivity and strategic importance gain recognition across defense supply chains. On the monetary side, investors are increasingly treating silver as an alternative store of value — effectively a higher-beta expression of the same themes underpinning gold — and this growing monetary appeal further reinforces the price floor.
Physical market dynamics add another layer of support. Wong highlighted that physical inventories remain tight and delivery pressures continue to surface, reflecting solid physical demand relative to available supply. With more metal flowing toward Asian markets and physical ownership gaining importance, the influence of paper-market pricing mechanisms could gradually diminish over time.
The parabolic spike and subsequent crash were magnified by extreme speculative positioning in the options market. Wong explained that a massive buildup of call options amplified the rally, and the rapid unwinding of those positions intensified the decline. Encouragingly, silver option open interest has now retreated from levels four or five standard deviations above its norm back toward the mean, suggesting the most extreme option-driven volatility is fading.
Wong pointed out that sharp drawdowns are a normal feature of silver bull markets, not evidence of broken fundamentals. Historically, some of silver’s strongest advances have occurred after bouts of severe volatility and investor frustration. As essential industrial applications and monetary demand increasingly crowd out non-essential uses, silver is likely to see a gradually rising price floor, much like gold has experienced.
Against this backdrop, major institutions remain constructive. Experts at BlackRock and J.P. Morgan have previously indicated that silver could surpass $80 per ounce by the end of 2026 and potentially reach $100 by 2030. While near-term forecasts are always subject to revision, silver’s unique combination of persistent supply deficits, expanding industrial and monetary demand, and tight physical market conditions continues to offer multiple avenues for long-term appreciation. After the dramatic correction, the pillars of the structural bull market are still standing.
