Silver prices break through the $83 historic mark, does the frenzy indicate a transformation in the monetary system?

The silver market is experiencing unprecedented volatility. Just after spot silver prices broke through $83 per ounce on December 28, with an annual increase of over 175%, the market saw a dramatic reversal on December 30—silver prices plummeted nearly 10% in a single day, falling back to around $70 per ounce, marking the largest single-day decline since 2021.

Renowned silver analyst Peter Klaus believes that the market confirmed a new bottom at $50 per ounce in October, but the true major rally for silver may still be ahead. His model indicates that, based on current gold prices and the gold-silver ratio adjustments, silver could challenge its historical high of $300 per ounce in the long term.

Silver Price Surge and Pullback

The silver market played a rollercoaster at the end of the year. On December 28, spot silver prices continued to rise, gaining over 5%, breaking through the $83 per ounce mark and hitting a new all-time high. This breakthrough signaled a remarkable rally in silver for 2025, with a cumulative increase of over 175% compared to the nearly $29.50 opening price at the start of the year.

However, the record high did not last long. The market experienced a dramatic shift on Monday, with silver prices undergoing a significant correction. According to the latest data, spot silver prices retreated from the all-time high, dropping nearly 10% in one day to around $70 per ounce. This sharp correction marked the largest single-day decline for silver since 2021.

Similar trends appeared in the gold market. After reaching a new high of $4,543.51 per ounce during early trading, gold prices fell more than 4.5%, influenced by a broad correction in the precious metals sector.

Supply-Demand Imbalance and Market Frenzy

Behind silver’s astonishing performance lies profound structural changes. Peter Klaus pointed out that the core driver of the silver market is the re-pricing of a long-term structural deficit. He analyzed that over the past five years (including this year), the cumulative deficit in the silver market is about 800 million ounces, nearly equivalent to a full year of global mine supply. The International Silver Institute predicts that this deficit will persist over the next five years. The immediate sign of tight supply is the depletion of inventories at major exchanges. Klaus noted that as early as 2024, inventories at key exchanges in London, New York, and Shanghai had already declined significantly. Now, with exchange inventories exhausted, the market is forced to confront this severe supply gap.

Changes on the demand side are equally significant. Solar panel manufacturers’ consumption of silver constitutes a major part of industrial demand, and newer, more efficient technologies could further increase silver usage. Additionally, investment demand has exceeded expectations. According to the Silver Institute, investment in silver-backed exchange-traded funds (ETFs) in 2025 is expected to approach 200 million ounces, far above the previous forecast of 70 million ounces.

Divergent Market Views and Future Predictions

The future direction of the silver market has sparked intense debate among analysts. Optimists like Peter Klaus believe that silver is entering a “mania phase,” with the gold-silver ratio potentially dropping from around 68 to 15. Based on this assumption, and using the current gold price of approximately $4,500, silver’s target price could reach $300 per ounce.

Ramnivas Mundada, Head of Economic and Corporate Research at GlobalData, offers a macro perspective, estimating that gold could rise another 8%-15% in 2026, while silver could increase by 20%-35%. He believes that the strength of precious metals is not only a typical safe-haven trade but also a systemic response by institutions to geopolitical risks, the slowdown of the US economy, and de-dollarization trends.

Not all institutions are so optimistic. TD Securities offers a more cautious outlook, suggesting that the London silver market has already replenished the inventories lost over the past year and that silver prices could fall back to around $40 per ounce in the next year. Montreal Bank’s forecast is relatively moderate, projecting an average silver price of $56.3 per ounce in 2026.

Insights from the Cryptocurrency Market Divergence

The financial markets at the end of 2025 show a rare divergence. Since reaching a historic high in October, Bitcoin and the overall crypto assets have experienced a noticeable pullback, with Bitcoin hovering around $90,000 per coin. Meanwhile, gold, silver, and US stocks have accelerated their gains in the year-end phase, forming a clear “split trend.” This divergence suggests the market may be undergoing a structural shift. Mundada from GlobalData pointed out that the rise in precious metals in 2025 indicates a deep structural change in the international monetary system—moving from a dollar-centric framework toward a more multipolar order.

Crypto investor Robert Kiyosaki shows strong interest in silver. He predicts that silver prices could triple from current levels by the end of 2025 and calls silver “the biggest bargain today.” Kiyosaki emphasizes the importance of holding physical silver rather than investing in silver ETFs, reflecting his longstanding skepticism of paper assets and fiat currencies.

Investment Strategies Amid Market Volatility

In the environment of sharp fluctuations in the silver market, investors need more cautious strategies. Klaus pointed out that although silver is in an excellent market position, this does not mean a correction is impossible. He admitted, “A slight correction recently wouldn’t surprise me.” But he remains confident that the key factors supporting silver’s rise will continue to play a significant role for quite some time.

Investor Robert Kiyosaki urges investors to focus on physical silver and avoid ETFs, citing concerns over paper assets and fiat currencies. His strategy echoes his earlier views on storing Bitcoin in cold wallets rather than through spot ETFs. This preference for physical assets contrasts with the current market’s mixed investments in digital currencies and traditional precious metals.

On digital asset trading platforms like Gate, investors can access a diversified range of assets. Gate supports over 4,100 cryptocurrencies, offering users a broad spectrum of investment options. The platform charges a flat 0.1% spot trading fee and provides security measures such as two-factor authentication and cold storage, helping investors manage risks in turbulent markets.

Market divergence periods are often also times to reassess asset allocations. Mundada from GlobalData noted that this round of precious metal rally is “not only a typical safe-haven trade but also a systemic response by institutions to geopolitical risks, US economic slowdown, trade tensions, and de-dollarization trends.”

Although silver prices quickly retreated after reaching a historic high, many analysts maintain a long-term bullish outlook. Klaus’s predicted $300 target for silver aligns with GlobalData’s forecast of a 20%-35% increase in silver by 2026. In contrast to the frenzy around silver, the cryptocurrency market is experiencing a correction phase. This divergence may indicate that global capital is responding more deeply to geopolitical risks and the US economic slowdown in a “systemic” manner.