From $120 plummeting to $72, is silver’s decline not over yet? Three major investment banks issue warnings.

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After the surge in silver prices in 2025, silver is now facing bearish pressure from multiple fronts.

On Thursday, the spot price of silver fell to around $72.96/oz, marking a cumulative drop of nearly 40% from the all-time high of $120 reached on January 28 this year.

Meanwhile, HSBC, UBS, and Macquarie have each released research reports warning of further downside risk for silver prices. Their core logic points in the same direction: High prices are intensifying demand destruction, while silver lacks the strategic demand support from central bank purchases that gold enjoys.

In a report released Thursday, HSBC bluntly stated that silver is "fundamentally overvalued," and expects the gold-silver ratio to widen further—indicating that even if gold rises, silver may continue to come under pressure. This judgment suggests that there may be a clear divergence in price trends between silver and gold, serving as a direct warning to investors holding long positions in silver.

Demand Erosion: High Prices Are Repelling Industrial Buyers

The key difference between silver and gold lies in silver's extensive industrial properties—from computers and smartphones to solar panels and automobiles, silver is a core raw material for many industrial products. This feature makes silver much more sensitive to economic cycles than gold, and renders it more susceptible to active demand contraction when prices rise sharply.

UBS pointed out in a report on May 22 that silver’s approximate 140% gain in 2025 has already started to deter buyers across industries, with high prices suppressing physical demand. "As long as prices remain at current levels, demand erosion may continue," wrote UBS analysts.

UBS further emphasized that, unlike gold, silver does not benefit from strategic purchases by central banks and is not an official reserve asset. "Therefore, silver is more vulnerable to swings in private investment and industrial demand, leading to potential underperformance compared to gold." UBS believes that silver's current investment value is insufficient to compensate for its accompanying volatility risk, and remains an "unattractive" allocation option for investors.

Three Institutions: Downside Risk Has Not Cleared

This round of silver's rally can only be described as dramatic. The cumulative gain for 2025 was around 140%, with silver piercing the $120/oz mark on January 28, before plunging nearly 30% in a single day—a rare record for single-day declines.

The price has since seen some recovery, but has not regained previous losses. Silver hit a 2026 low of $67.60/oz on March 20, rebounded to around $87/oz in mid-May, but has since weakened again, trading in a range of $75 to $78 in the past two weeks.

The latest reports from HSBC, UBS, and Macquarie point to downside risk for silver from various perspectives.

HSBC believes silver is "fundamentally overvalued," with limited upside, and expects the gold-silver ratio to widen—meaning silver will depreciate further relative to gold. "Gold prices will continue to influence silver, but we believe the gold-silver ratio may widen—even if gold rises, silver could still retreat," wrote HSBC analysts in Thursday’s report.

Macquarie highlighted macro policy risks. Its strategists expect the US Federal Reserve to raise rates in the first half of 2027, which will exert additional downward pressure on precious metal prices. In a May 21 report, Macquarie wrote: "Although we expect the average silver price to hold near current levels for the rest of this year, volatility will persist until the Middle East situation is resolved, and if the macro environment deteriorates further, significant downside risk exists."

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