Goldman: Silver faces continued 'extreme price swings' as the metal may stay stuck in the wrong places

• Silver's wild ride isn't over as supply bottlenecks keep the market distorted, Goldman Sachs warns.
• London is running low on silver while more of the white metal sits in US vaults, skewing prices.
• China's export controls and policy uncertainty could intensify market turmoil.

Silver prices are likely to remain volatile even after last year's historic rally, as market bottlenecks continue to distort prices, according to Goldman Sachs.

The turbulence is being driven less by a global shortage of silver than by where the metal is physically held, wrote Goldman analysts Lina Thomas and Daan Struyven in a Wednesday note.

London — where global benchmark silver prices are set — has been left with unusually low inventories after metal was pulled into US vaults last year amid concerns that Washington could impose tariffs.

"Thinner inventories have created conditions for squeezes, where rallies accelerate as investor flows absorb remaining metal in the London vaults and reverse sharply when tightness eases," wrote Goldman's analysts.

The spot silver price is around $76 per troy ounce, up 8.5% so far this year after prices more than doubled in 2025, far outpacing gold's gains.

Silver's historic rally reflected investor inflows tied to haven buying, expectations for Fed easing, and asset diversification. The London inventory squeeze is amplified these moves.

Goldman says extreme price moves are likely to persist in both directions.

Under normal conditions, a weekly net demand of about 1,000 metric tons would typically lift silver prices by roughly 2%. Goldman estimates that sensitivity has surged to about 7% in the current environment.

Silver could stay in the US

Despite the rally, Goldman said investor demand may not be overstretched.

Silver ETF holdings — which are backed by physical silver — remain below their 2021 peak and could rise on rate cuts and as investors continue to diversify.

Prices could pull back if policy clarity prompts silver to flow out of US vaults and back to London, but lingering policy uncertainty may keep metal stranded, wrote Goldman. Most gold has stayed in New York COMEX vaults even after Washington clarified last year that gold would remain exempt from tariffs, the bank added.

"If silver follows the same pattern, most silver may remain in New York COMEX vaults and extreme price action could persist even after a definitive statement on US silver tariffs," Goldman's analysts wrote.

Adding to the volatility, China — a leading silver exporter — introduced new restrictions on January 1 requiring official approval for outbound shipments.

The move risks fragmenting the global silver market, reducing liquidity, and amplifying price swings, the Goldman analysts wrote.

"Disruption risk may prompt participants to secure their own stockpiles rather than share buffers globally," they wrote.

"This shift from a pooled global system to isolated regional inventories would create an inefficient structure — transforming a smooth, integrated market into one prone to sharp, localized price swings," they added.