Silver in October 2026—it’s time to put it back on the watchlist.
At the start of the year, silver was "impossible to get": London lease rates surged above 30%, overnight borrowing costs briefly topped 100%, and silver hit a historic high above $120 at the end of January. A few months later, the narrative completely reversed—silver was cut in half from its $121 peak, briefly falling to $50 in early July, while Shanghai inventories soared from 256 tonnes to nearly 1,500 tonnes.
In September, silver fell another 9.21% to around $60, driven by a combination of three headwinds:
📌 1: The Fed kills hopes of rate cuts
A 25-basis-point rate hike in September wasn’t a surprise. The real blow was the dot plot: the median rate projections for the end of 2026 and 2027 were both 4.1%, effectively signaling that the Fed had no plans to cut rates through 2027. The 10-year Treasury yield surged to 5.21%, and the 30-year yield climbed to 5.40%—both multi-year highs. Silver pays no interest, so the higher rates go, the greater the opportunity cost of holding it. As a result, the market completely ignored its role as a geopolitical safe haven.
📌 2: Oil prices’ "reverse transmission"
Tensions around the Strait of Hormuz pushed Brent crude above $105. Under normal circumstances, geopolitical tensions benefit precious metals. But this time, the transmission mechanism changed: surging oil prices → rising inflation expectations → stronger expectations of rate hikes → higher real interest rates → pressure on silver. Instead of safe-haven buying, the market got a more hawkish Fed.
📌 3: A "demand vacuum" in the fundamentals
Solar-sector silver thrifting is happening now (silver use per watt has fallen from 5 mg/W to below 3 mg/W), while increased demand from AI and data centers has yet to take over. Deutsche Bank also issued a major warning: the multi-year supply deficit has officially ended, with the market expected to shift to a surplus in 2027, as inventories build across all three major exchanges. The narrative and inventories both turned against silver, and sentiment became extremely bearish for a time.
But as October got underway, the script changed:
🔄 Bets on a rate hike fell sharply from 70% to 25%, Goldman Sachs pushed its expectation for the next hike to December, and UBS set a year-end price target of $70.
⚡ AI is on track to take over as a source of demand: data centers are expected to use more than 42.3 million ounces of silver, equivalent to Chile’s entire annual mine production. The Silver Institute expects a deficit of 46.3 million ounces to persist in 2026.
📉 Most of the bad news is already priced in: the impact of solar-sector silver thrifting has been fully felt, Shanghai inventory accumulation has slowed, and COMEX speculative net longs have fallen to a near one-year low, leaving short positions less crowded.
Keep in mind: holding above $60 ≠ an immediate reversal. The high-interest-rate environment remains in place, and a rate hike in December is still possible. Investment banks are notably divided—Goldman Sachs sees $85–100, while UBS sees $70–75.
Keep an eye on three signals: whether real Treasury yields can peak, whether additional AI-related silver demand can meaningfully take over before 2027, and the flow of inventories in London and on COMEX.
One thing is clear: the worst of this sharp sell-off is probably behind us. Silver—it’s time to put it back on the watchlist.
#兴业银锡 $XAG
#FollowEachOther# #FollowBackGuaranteed#
At the start of the year, silver was "impossible to get": London lease rates surged above 30%, overnight borrowing costs briefly topped 100%, and silver hit a historic high above $120 at the end of January. A few months later, the narrative completely reversed—silver was cut in half from its $121 peak, briefly falling to $50 in early July, while Shanghai inventories soared from 256 tonnes to nearly 1,500 tonnes.
In September, silver fell another 9.21% to around $60, driven by a combination of three headwinds:
📌 1: The Fed kills hopes of rate cuts
A 25-basis-point rate hike in September wasn’t a surprise. The real blow was the dot plot: the median rate projections for the end of 2026 and 2027 were both 4.1%, effectively signaling that the Fed had no plans to cut rates through 2027. The 10-year Treasury yield surged to 5.21%, and the 30-year yield climbed to 5.40%—both multi-year highs. Silver pays no interest, so the higher rates go, the greater the opportunity cost of holding it. As a result, the market completely ignored its role as a geopolitical safe haven.
📌 2: Oil prices’ "reverse transmission"
Tensions around the Strait of Hormuz pushed Brent crude above $105. Under normal circumstances, geopolitical tensions benefit precious metals. But this time, the transmission mechanism changed: surging oil prices → rising inflation expectations → stronger expectations of rate hikes → higher real interest rates → pressure on silver. Instead of safe-haven buying, the market got a more hawkish Fed.
📌 3: A "demand vacuum" in the fundamentals
Solar-sector silver thrifting is happening now (silver use per watt has fallen from 5 mg/W to below 3 mg/W), while increased demand from AI and data centers has yet to take over. Deutsche Bank also issued a major warning: the multi-year supply deficit has officially ended, with the market expected to shift to a surplus in 2027, as inventories build across all three major exchanges. The narrative and inventories both turned against silver, and sentiment became extremely bearish for a time.
But as October got underway, the script changed:
🔄 Bets on a rate hike fell sharply from 70% to 25%, Goldman Sachs pushed its expectation for the next hike to December, and UBS set a year-end price target of $70.
⚡ AI is on track to take over as a source of demand: data centers are expected to use more than 42.3 million ounces of silver, equivalent to Chile’s entire annual mine production. The Silver Institute expects a deficit of 46.3 million ounces to persist in 2026.
📉 Most of the bad news is already priced in: the impact of solar-sector silver thrifting has been fully felt, Shanghai inventory accumulation has slowed, and COMEX speculative net longs have fallen to a near one-year low, leaving short positions less crowded.
Keep in mind: holding above $60 ≠ an immediate reversal. The high-interest-rate environment remains in place, and a rate hike in December is still possible. Investment banks are notably divided—Goldman Sachs sees $85–100, while UBS sees $70–75.
Keep an eye on three signals: whether real Treasury yields can peak, whether additional AI-related silver demand can meaningfully take over before 2027, and the flow of inventories in London and on COMEX.
One thing is clear: the worst of this sharp sell-off is probably behind us. Silver—it’s time to put it back on the watchlist.
#兴业银锡 $XAG
#FollowEachOther# #FollowBackGuaranteed#