Goldman: Silver likely to experience ongoing 'significant price volatility' as the metal could remain concentrated in less favorable locations

Goldman Sachs Warns of Ongoing Silver Market Volatility

• Goldman Sachs cautions that silver's turbulent price swings are likely to continue as supply chain issues persist.
• London is experiencing a shortage of silver, while significant reserves remain stored in US vaults, distorting global prices.
• Uncertainty surrounding China's export policies could further destabilize the silver market.

Silver prices are expected to remain unpredictable, even after last year's dramatic surge, due to ongoing supply disruptions, according to analysts at Goldman Sachs.

According to Goldman analysts Lina Thomas and Daan Struyven, the current market instability is less about a global shortage of silver and more about the uneven distribution of physical stockpiles.

London, which sets the global benchmark for silver pricing, has seen its inventories dwindle to unusually low levels. This is largely because large amounts of silver were moved to US storage facilities last year amid concerns over potential US tariffs.

"With inventories running thin, the market is vulnerable to squeezes—sharp price rallies occur as investors absorb the remaining silver in London, only to reverse quickly when supply constraints ease," the analysts explained.

The current spot price of silver is about $76 per troy ounce, marking an 8.5% increase this year after more than doubling in 2025—outpacing gold's performance.

The surge in silver prices has been fueled by safe-haven buying, expectations of Federal Reserve rate cuts, and a desire for diversified assets. The squeeze on London's inventories has intensified these trends.

Goldman Sachs anticipates that significant price swings will likely continue in both directions.

Typically, a weekly net demand of 1,000 metric tons would boost silver prices by around 2%. However, Goldman estimates that in the current climate, price sensitivity has jumped to approximately 7%.

US Vaults May Continue to Hold Silver

Despite the recent rally, Goldman believes that investor demand for silver is not yet excessive.

Holdings in silver-backed ETFs remain below their 2021 highs and could increase if interest rates fall and investors seek further diversification.

Prices could retreat if clearer policies encourage silver to move from US vaults back to London. However, ongoing uncertainty may keep these reserves locked in place. Goldman notes that most gold has remained in New York's COMEX vaults, even after the US clarified last year that gold would not be subject to tariffs.

"If silver follows a similar path, the majority could stay in New York COMEX vaults, and intense price volatility might persist even after a definitive US policy statement on silver tariffs," the analysts wrote.

Adding to the instability, China—one of the world's top silver exporters—implemented new rules on January 1 requiring official approval for all silver exports.

Global Market Fragmentation and Increased Volatility

Goldman Sachs warns that these developments could splinter the global silver market, reduce liquidity, and lead to even more pronounced price fluctuations.

"The risk of disruption may drive market participants to build up their own reserves instead of relying on shared global stockpiles," the analysts noted.

"This transition from a unified global inventory system to isolated regional stockpiles would undermine market efficiency, making the silver market more susceptible to abrupt, localized price changes," they added.