After silver prices broke 100, refiners sighed: Physical demand for silver is unprecedented, and speculators are flocking in.

The silver market is facing unprecedented buying pressure, with both physical demand and speculative frenzy jointly driving prices to historic highs. Leading refiner and dealer MKS PAMP SA sighs that the current strength of silver demand is at levels never seen before, while the influx of short-term speculators is significantly impacting price trends.

On Monday, silver broke through a record high of $117 per ounce, marking the biggest single-day increase since the 2008 global financial crisis. So far this year, silver prices have risen by a cumulative 50%, extending last year’s stunning rally, which saw prices double—the best annual performance since 1979.

Behind this rally, global turmoil and the so-called “devaluation trade”—investors shifting from sovereign bonds and currencies to hard assets such as precious metals—form the fundamental support. But silver’s gains and speed have even surpassed those of gold, with extreme intraday volatility reflecting a market overwhelmed by speculative interest.

Insufficient market liquidity has amplified price swings. Based on current prices and average London market trading volumes, gold’s daily trading amount is about five times that of silver, while recent silver price volatility far exceeds normal levels.

Speculators’ FOMO Drives Price Chasing

MKS PAMP SA CEO James Emmett said in a Bloomberg interview that investors are being driven by “fear of missing out” (FOMO), constantly “chasing the price action.” He pointed out that silver is traditionally not a highly speculative market, but now it’s clear that more price volatility is being driven by short-term participants.

Some investors, worried about missing out on gold’s rally, have turned to silver as an alternative, viewing it as “a tool for macroeconomic and geopolitical investment.” This shift in investment logic has attracted a large amount of funds that might otherwise have been allocated to gold into silver.

Physical Demand Continues to Exceed Supply

Emmett stressed that physical demand remains the key driver of silver prices, with retail and wholesale orders continuously exceeding supply. A major reason for the tight market is a large amount of metal flowing into India, although outflows from Comex warehouses have provided some buffer for the London market.

India’s huge demand for silver was a key factor in last year’s historic short squeeze. Back then, buyers flooded into the London market ahead of Diwali, coinciding with a large volume of silver being locked in Comex warehouses due to tariff concerns, causing a severe market shortage.

This persistent market tightness has prompted some silver—like gold—to be shipped by air instead of traditional sea freight. Emmett said: “Now you simply don’t have time to let containers sit on ships and travel slowly.” The adoption of this unconventional shipping method highlights the urgency for immediate delivery, also reflecting the severity of the current supply-demand imbalance.

This logistics shift not only increases transportation costs but also indicates that the tightness in the wholesale market has reached a level where special measures are required, further supporting silver’s strong price performance.

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