January 2026 has been a fairy tale turning into a night mare for long silver speculators. There had been a December 29 'rehearsal' of a silver smack down, but the rally resumed in the new year, with the metal promptly surpassing the $100 psychological limit. Targets morphed into unrealistic predictions. Then came Friday January 30, with the largest single day drop of the silver price.
Below you find the intraday graph of spot silver on Comex/Globex.
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| COMEX/GLOBEX spot Silver price on 28 till 30 January 2026 (viewed at true image size) |
Caracteristics accompanying a rapid or parabolic rally
Backwardation: This happens when there are premiums of short term contracts over long term contracts and of spot delivery over any contracts. It usually is a sign of a market in thight supply, hence with excess demand. Whether that demand is investor demand or industrial demand cannot be elucidated.
Premiums of silver bullion coins over large metal bars 'good for delivery'.
Coin dealers showing escalating delivery delays, buy/sell margins getting out of hand and eventually also withdrawing bids for silver coins offered.
Hedging
In stable or gently trending markets, mints and large dealers are hedged against silver fluctuations. They typically are short some contracts of silver, corresponding to the inventory they hold.
If silver is weakening, their loss on the inventory value is compensated by a revenue from the short contract and the reverse for a market trending higher. However the loss on the short needs to be paid immediately, whereas the gain on the inventory needs to be realized through sales.
In frothy markets mints and dealers may get into trouble as a result, facing liquidity problems (Hence eventually withdrawing offers on coins;)
6 months silver graph
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| COMEX/GLOBEX spot Silver over 6 months |
The 6 months graph is showing that the 30 January smack down wiped out the silver gains over 2026. That is illustrative of the extreme volatility in the silver market. Trading exchanges typically react to extreme volatility by increasing the margen requirements for the delayed market (long and short). Increasied margen requirements are generally affecting speculative longs more than institutional shorts. They may not have the funds to fulfill the increased margin requirement and are thus forced to sell.
In this way, forced selling may acerbate an initial pull-back to a catastrophic swoon. A market swoon may trigger a massive number of stop-loss selling levels on its way down.
Silver mining investors in complete denial
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| SIL/spot Silver over 6 months |
Silver miners are lagging the rise of the metal at an increasing pace as the silver rally accelerates. Miner stock prices also get more choppy. Ultimately the ratio jumps up on 30 January. This does not imply that miners completely ignore the silver price smack down, but that they slide much less than does the metal.
Silver mining investors have been in complete denial, both lagging the silver rally in its ascent and resisting much better than the metal at the silver smack down.
Silver miners are yearning for a much less volatile silver market, where the market price may correspond to the sales price realized and where investments decisions can be made using realistic price forecasts rather than factoring in discounts of over 50% on the current price level in their calculations.
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