Silver is extremely overbought and investors shouldn’t chase prices - BCA’s Ibrahim
NEW YORK (January 22) Silver is continuing its unstoppable rally, establishing a new record high above $95 an ounce; however, more analysts are becoming increasingly cautious on the precious metal.
In her latest precious metals report, Roukaya Ibrahim, chief strategist at BCA Research, said that although the silver market remains well supported over the long term, she does not recommend chasing prices at these levels, as the odds of a major drawdown in silver prices have risen.
In the first month of the new year, silver prices have risen 31%, following their nearly 150% rally in 2025. The precious metal has benefited from a perfect storm, as rising investment demand and robust industrial consumption compete for dwindling physical supplies.
However, Ibrahim noted that a speculative frenzy has become the main driving force behind the rally and could prove to be unsustainable.
“We still view the macro and geopolitical outlooks as providing a supportive backdrop for silver prices in the medium and long run. Notably, we have been bullish silver in our commodity matrix for the past year,” Ibrahim said in her report. “ On the other hand, the magnitude of the latest upsurge is difficult to justify by fundamentals. Silver and the broader precious-metals complex are showing clear signs of FOMO-driven buying.”
The entire precious metals sector has seen significant investor demand since the second half of 2025. Analysts have said that interest is being driven by renewed demand for hard assets to hedge against currency debasement and ongoing economic and geopolitical turmoil.
While this environment is not expected to change anytime soon, Ibrahim noted that much of this data has already been priced into the market. She added that inflation pressures, while elevated, have not escalated, and the U.S. dollar appears to be stabilizing, albeit at lower levels.
Ibrahim also pointed out that while silver prices have been driven by a broken supply-chain short squeeze, there is also a significant amount of misinformation circulating in the marketplace. She explained that fears that China’s export controls could exacerbate global physical liquidity in particular have been unfounded.
“There is essentially no change in China’s silver export policy. Rather, the requirement that exporters obtain licenses to ship the metal abroad is simply a rollover from previous years,” she said.
At the same time, the lack of immediate tariffs on silver imports into the U.S. should help improve global market conditions; however, Ibrahim added that there is still a lot of uncertainty surrounding U.S. trade policies.
“The administration left open the possibility of future tariffs if 'satisfactory agreements are not reached in a timely manner.’ Lingering tariff uncertainty is likely to keep current dislocations in the silver market from fully unwinding,” she said.
The biggest risk for silver could come from industrial consumption, as higher prices force some manufacturers to seek cheaper alternatives, either by thrifting the precious metal or finding substitutes.
“The cure for high prices is high prices. In that sense, silver’s parabolic move to fresh record highs could eventually be self-defeating. Already, there are signs that demand-side adjustments to higher silver prices are taking place,” she said. “In an effort to lower the cost of its solar modules, the fourth largest solar cell manufacturer in the world, Longi, recently announced that it will start using base metals instead of silver in its solar cells. This follows similar announcements by other Chinese solar manufacturers, including top PV manufacturer JinkoSolar and Shanghai Aiko Solar.”
On the investment side, Ibrahim said that her modeling suggests silver prices are extremely overbought.
“In real terms, silver price’s deviation from its 200-day moving average is nearing levels that previously preceded price pullbacks,” she said.
Although the Montreal-based research firm has turned cautious on silver, it remains bullish on gold. Ibrahim said she expects the gold/silver ratio to begin rising after falling to a multi-year low.
“Gold has the most attractive risk-reward profile among precious metals,” she said. “It will continue to benefit from safe-haven demand. Moreover, it remains the sole beneficiary of broad-based EM central bank efforts to diversify their reserves. Therefore, we favor gold vis-à-vis other precious metals.”
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