Goldman Sachs: A silver price storm is coming in 2026, with extreme volatility expected.
2026-01-09 14:08:54
Amidst continued volatility in global financial markets, Goldman Sachs' latest analysis report has issued a warning about silver price trends. The report points out that due to persistently low inventories, the silver market is likely to continue facing extreme price volatility in 2026. This volatility will not only amplify upside potential but also significantly increase downside risks.
Analysts emphasize that this volatility is not due to a global silver shortage, but rather to market distortions caused by localized supply bottlenecks and geopolitical factors. Meanwhile, recent export controls implemented by major Asian countries have further exacerbated market complexity, potentially leading to fragmentation in the global silver market, reduced liquidity, and amplified price volatility. This article will delve into the impact paths of these factors and explore their potential implications for investors and the market.
The core issue in the silver market lies in the persistently low inventory levels, making prices exceptionally sensitive to capital flows. Goldman Sachs analysts Lina Thomas and Daan Struyven elaborate in a report that this thin inventory environment has created favorable conditions for market squeezes. During a squeeze, as investor funds flood into and absorb the remaining silver in London vaults, price increases accelerate rapidly, creating a strong upward momentum. However, once market tensions ease, this rise often reverses sharply, leading to a significant price drop. This extreme two-way volatility has become a prominent feature of the silver market, and investors must be highly vigilant about the amplifying effect of subtle changes in capital flows on prices.
The report further analyzes that the sharp fluctuations in silver prices are not a direct result of a global supply shortage, but rather stem from supply bottlenecks in specific regions. These bottlenecks have distorted the market structure, particularly in London, a key location for setting global benchmark prices.
In 2025, due to concerns about potential trade tariffs imposed by the Trump administration, a large amount of silver was transferred to US treasuries, directly leading to an exceptionally low level of silver supply in London. This transfer not only altered the global distribution of silver but also amplified the impact of external factors on prices. Analysts point out that in this context, any capital inflow or policy change could trigger a chain reaction, further distorting market dynamics.
Looking back at silver's strong performance in 2025, Goldman Sachs attributed it to multiple investor-driven factors. These included increased safe-haven demand, optimism regarding Federal Reserve rate cuts, and the popularity of asset diversification strategies. These inflows had already propelled silver prices to record highs, but a short squeeze in the London market further amplified the impact of these factors.
The report quantifies this sensitivity: under normal market conditions, a net demand of 1,000 metric tons per week would only drive silver prices up by about 2%; however, in the current environment of low inventory, this sensitivity has surged to about 7%. This significant increase means that even a medium-sized flow of funds could trigger sharp price movements, whether upward or downward.
Despite silver prices hitting record highs, Goldman Sachs analysts believe investor demand is not yet excessively inflated. They cite data showing that silver exchange-traded fund (ETF) holdings remain below their 2021 peak, leaving room for further growth. Particularly against the backdrop of the Federal Reserve's rate-cutting cycle and investors seeking diversification, ETF holdings are likely to continue rising, driving prices higher.
However, the report also warns of downside risks: if US trade policy becomes clearer, silver may flow back from US vaults to London, easing short-selling pressure and causing prices to fall. But if policy uncertainty persists, silver is likely to remain in the US.
Goldman Sachs used gold as an example to illustrate that even if Washington announces that gold is exempt from tariffs, most of the gold transferred to the COMEX vaults has not flowed back; if silver follows a similar pattern, even if the tariff policy becomes clear, extreme price volatility may continue for a long time.
Another key variable is new export restrictions to be implemented by a major Asian power in 2026, requiring all silver shipments abroad to obtain official approval. A Goldman Sachs report argues that this policy will not only exacerbate market volatility but could also lead to fragmentation of the global silver market.
By reducing cross-border flows, such controls will decrease overall liquidity and prompt market participants to shift towards building regional inventory buffers rather than relying on a globally shared system. This shift from integrated markets to isolated regional inventories will create inefficient structures, leading to more volatile and localized price fluctuations.
Analysts warn that rising disruption risks could prompt various parties to stockpile their own inventory, further amplifying price volatility and causing lasting impacts on global supply chains.
In summary, Goldman Sachs' analysis reveals the complex challenges facing the silver market in 2026: from low inventory levels to policy uncertainty, and the potential fragmentation effects of major power export controls, these factors intertwine to continue driving extreme two-way price volatility. While seizing upside opportunities, investors must carefully assess downside risks and develop flexible strategies to cope with market uncertainty. Looking ahead, if the global policy environment stabilizes, the silver market may gradually return to balance; otherwise, this storm-like volatility will test the resilience and wisdom of all participants.
At 14:08 Beijing time, spot silver was trading at $76.84 per ounce.
Analysts emphasize that this volatility is not due to a global silver shortage, but rather to market distortions caused by localized supply bottlenecks and geopolitical factors. Meanwhile, recent export controls implemented by major Asian countries have further exacerbated market complexity, potentially leading to fragmentation in the global silver market, reduced liquidity, and amplified price volatility. This article will delve into the impact paths of these factors and explore their potential implications for investors and the market.
Low inventory levels exacerbate price sensitivity
The core issue in the silver market lies in the persistently low inventory levels, making prices exceptionally sensitive to capital flows. Goldman Sachs analysts Lina Thomas and Daan Struyven elaborate in a report that this thin inventory environment has created favorable conditions for market squeezes. During a squeeze, as investor funds flood into and absorb the remaining silver in London vaults, price increases accelerate rapidly, creating a strong upward momentum. However, once market tensions ease, this rise often reverses sharply, leading to a significant price drop. This extreme two-way volatility has become a prominent feature of the silver market, and investors must be highly vigilant about the amplifying effect of subtle changes in capital flows on prices.
Localized supply bottlenecks are causing market distortions.
The report further analyzes that the sharp fluctuations in silver prices are not a direct result of a global supply shortage, but rather stem from supply bottlenecks in specific regions. These bottlenecks have distorted the market structure, particularly in London, a key location for setting global benchmark prices.
In 2025, due to concerns about potential trade tariffs imposed by the Trump administration, a large amount of silver was transferred to US treasuries, directly leading to an exceptionally low level of silver supply in London. This transfer not only altered the global distribution of silver but also amplified the impact of external factors on prices. Analysts point out that in this context, any capital inflow or policy change could trigger a chain reaction, further distorting market dynamics.
The driving mechanism for the historic surge in 2025
Looking back at silver's strong performance in 2025, Goldman Sachs attributed it to multiple investor-driven factors. These included increased safe-haven demand, optimism regarding Federal Reserve rate cuts, and the popularity of asset diversification strategies. These inflows had already propelled silver prices to record highs, but a short squeeze in the London market further amplified the impact of these factors.
The report quantifies this sensitivity: under normal market conditions, a net demand of 1,000 metric tons per week would only drive silver prices up by about 2%; however, in the current environment of low inventory, this sensitivity has surged to about 7%. This significant increase means that even a medium-sized flow of funds could trigger sharp price movements, whether upward or downward.
Investor demand potential and potential downside risk
Despite silver prices hitting record highs, Goldman Sachs analysts believe investor demand is not yet excessively inflated. They cite data showing that silver exchange-traded fund (ETF) holdings remain below their 2021 peak, leaving room for further growth. Particularly against the backdrop of the Federal Reserve's rate-cutting cycle and investors seeking diversification, ETF holdings are likely to continue rising, driving prices higher.
However, the report also warns of downside risks: if US trade policy becomes clearer, silver may flow back from US vaults to London, easing short-selling pressure and causing prices to fall. But if policy uncertainty persists, silver is likely to remain in the US.
Goldman Sachs used gold as an example to illustrate that even if Washington announces that gold is exempt from tariffs, most of the gold transferred to the COMEX vaults has not flowed back; if silver follows a similar pattern, even if the tariff policy becomes clear, extreme price volatility may continue for a long time.
Export controls by a major Asian power amplify the risk of global fragmentation.
Another key variable is new export restrictions to be implemented by a major Asian power in 2026, requiring all silver shipments abroad to obtain official approval. A Goldman Sachs report argues that this policy will not only exacerbate market volatility but could also lead to fragmentation of the global silver market.
By reducing cross-border flows, such controls will decrease overall liquidity and prompt market participants to shift towards building regional inventory buffers rather than relying on a globally shared system. This shift from integrated markets to isolated regional inventories will create inefficient structures, leading to more volatile and localized price fluctuations.
Analysts warn that rising disruption risks could prompt various parties to stockpile their own inventory, further amplifying price volatility and causing lasting impacts on global supply chains.
Conclusion
In summary, Goldman Sachs' analysis reveals the complex challenges facing the silver market in 2026: from low inventory levels to policy uncertainty, and the potential fragmentation effects of major power export controls, these factors intertwine to continue driving extreme two-way price volatility. While seizing upside opportunities, investors must carefully assess downside risks and develop flexible strategies to cope with market uncertainty. Looking ahead, if the global policy environment stabilizes, the silver market may gradually return to balance; otherwise, this storm-like volatility will test the resilience and wisdom of all participants.
At 14:08 Beijing time, spot silver was trading at $76.84 per ounce.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
