Silver recently crossed $100 an ounce for the first time ever, riding a historic rally that's left investors wondering if the party can possibly continue. The answer from one of Wall Street's sharpest minds is blunt: it can't.
Marko Kolanovic, former chief strategist at J.P. Morgan, isn't mincing words. He's calling for silver to trade at roughly half its current price later this year.
The Parabolic Move That Can't Last
Silver hit $113.25 per ounce earlier this week before pulling back to around $104-$110. That represents a staggering 264% gain from a year ago and a 54% surge in January alone.
The white metal has outpaced even gold's remarkable run, crossing the symbolic $100 threshold as investors piled into precious metals amid political chaos, debt concerns, and Federal Reserve uncertainty. But Kolanovic sees something different in the charts. He sees "meme traders attempting to take over the market" and a speculative mania that's destined to unwind violently.
Silver is not gold, given that it trades with higher volatility, responds dramatically to fear and greed, and has a track record of punishing late buyers. History offers a sobering lesson. In the 1970s, gold surged from around $40 to $200, sucking in euphoric buyers before crashing 50%. Many investors who entered the bull run at the “top” capitulated, convinced the rally was over. However, they missed the historic move to $800 later in the decade.
Mean reversion shook out weak hands, but the secular trend was far from finished. Kolanovic's warning suggests silver may be setting up the same psychological trap today. A 50% drop wouldn't be unprecedented. In fact, it would be historically normal for a commodity that's rallied this hard, this fast.
Why Analysts Say the Market is Broken
Not everyone is convinced the selloff is coming, but nearly everyone agrees something strange is at play. Multiple analysts have used the word "broken" to describe current price action in precious metals.
According to CNBC:
- MKS PAMP's Nicky Shiels pointed to "unheard-of volatility" and prices driven less by physical supply and demand than by wild liquidity flows.
- Galena Asset Management's Maximilian Tomei echoed that sentiment, noting that fundamentals alone can't explain a commodity being up 200%.
"The way silver is behaving is exaggerated, it's a series of disconnects," Tomei said. “The market is broken.” Part of the distortion stems from silver's dual nature. It's both an industrial metal and a safe-haven asset.
Solar panels, electronics, and electrification trends have driven record industrial demand, creating a structural supply deficit. At the same time, investors are piling into silver as a cheaper alternative to gold amid geopolitical tensions and currency weakness.
The result is a market flooded with speculative capital that has little to do with actual supply and demand. Much of the recent move reflects capital looking for a home, not a fundamental shift in the metal's economics.
The Bull Case for Silver Isn't Dead
Silver bulls aren't backing down. They argue this time really is different. Structural deficits, solar demand, and the electrification at scale are soaking up supply in ways that didn't exist in previous cycles. By that logic, silver isn't a bubble. It's the industrial metal of the decade.
HSBC expects the structural deficit to widen to 1.2 million ounces this year, which should offer fundamental support beneath the speculative froth. Even the U.S. Mint has taken notice, temporarily removing some silver coin products from sale while it reviews pricing in response to the rally.
Silver now sits between two regimes. Bears see a mania chart destined to crater. Bulls see a secular shortage with years left to run. Kolanovic's view is clear: silver behaves less like a store of value and more like a leveraged macro instrument. A 50% drop would simply represent a return to normal after an abnormal spike.
The bigger question is whether that crash would mark the end or just another 1970s-style shakeout before the next leg higher. Investors in silver ETFs like iShares Silver Trust (SLV), which is up 200% in the past year, will need to decide if they're holding for the long term or betting on momentum.
For now, the metal remains caught between fear and physics. One side will win. Kolanovic is betting it won't be the bulls.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
/Advanced%20Micro%20Devices%20Inc_%20logo%20on%20phone%20and%20website-by%20T_Schneider%20via%20Shutterstock.jpg)
/Qualcomm%2C%20Inc_%20logo%20on%20phone-by%20viewimage%20via%20Shutterstock.jpg)
/Chipset%20held%20over%20rush%20hour%20traffic%20by%20Jae%20Young%20Ju%20via%20iStock.jpg)