Platinum and silver capped an extraordinary 2025 with new record highs in December, extending a rally that swept across the precious metals complex. But beneath the headlines, a notable imbalance emerged: investment demand, especially via ETFs and speculative futures positioning, hasn’t risen enough to convincingly “confirm” prices at these extremes. This divergence highlights potential vulnerability, raising the odds that recent highs may prove susceptible to consolidation or a correction.
As the year came to a close, several forces converged in the market. The looming threat of U.S. tariffs led to an unusual volume of metal being moved into U.S. vaults, which, in turn, tightened liquidity in other regions and intensified price fluctuations. Additionally, residual policy uncertainty persisted due to unresolved investigations into U.S. trade and anti-dumping measures, particularly those involving Russian supply. This uncertainty has maintained a risk premium in the pricing of some platinum group metals (PGMs).
At the same time, there was a noticeable valuation “catch-up” concerning platinum and silver relative to gold. Early in 2025, both metals appeared historically undervalued compared to gold. Their subsequent sharp rallies drastically narrowed this gap, indicating that the market was undergoing a repricing, though this could also lead to overshooting.
Platinum, in particular, exhibited tight fundamentals, thin liquidity, and an overextended chart. By early January, platinum’s price had surged to around $2,301 per ounce, reflecting a nearly 30% jump in the preceding month. While fundamental conditions supported this strength, especially given expectations of market deficits in 2025 and likely in 2026, the rapidity of the price movement raised concerns. A year characterized by lower-than-normal PGM production in South Africa led to limited spot availability, especially during holiday periods when producers and parts of the supply chain typically slow down. In such a market, even minor increases in buying could lead to sharp price increases.
Lease rates for silver and PGMs remained elevated, albeit lower than their October peaks, suggesting ongoing tightness, though this alone did not warrant the sharp price surge observed.
Investment demand did not keep pace with the price spike. While platinum ETFs added about 197,000 ounces in December, the increase seemed modest given the rally's magnitude. In previous major upcycles, such as in 2020, ETF growth had been significantly higher during the peak phases. Moreover, while speculative futures positioning had increased, it remained below historical extremes, suggesting that prices had outpaced broad investor participation. Technical indicators also signaled that platinum might be “overbought,” with the Relative Strength Index (RSI) reaching its highest overbought reading on record and the price being approximately 44% above its 200-day moving average, a pattern often followed by corrections of 10% to 20%.
In the case of silver, the market surged to an all-time high near $84 per ounce in late December, following a 147% gain throughout 2025. However, by early January 2026, its price eased to around $80 per ounce, primarily due to profit-taking. The investment signals for silver were mixed to negative, as silver ETFs experienced cumulative outflows of roughly 13 million ounces since the start of the year, reducing total holdings to about 850 million ounces.
Additionally, market structure posed another challenge. The CME raised margin requirements across precious metals at the end of December, implementing two increases within the same week. Such margin hikes typically exert short-term price pressure, as they compel leveraged traders to scale back their exposure. Historically, silver has shown particular sensitivity to this dynamic, most notably in 2011, when rapid increases in margin requirements preceded a swift and significant pullback.
While ETF flows suggest weaker investment appetite at the margin, physical market policy could move in the opposite direction. China is tightening silver export controls in 2026, limiting outbound shipments to a smaller set of authorized companies and making approvals harder to obtain.
Given that China is the second-largest producer and exporter, and shipped over 4,000 tonnes in the first 11 months of 2025, these restrictions could support regional tightness, already visible in Shanghai premiums surging to record levels above London pricing.
Geopolitical tensions have helped keep gold elevated and, by extension, supported sentiment across the precious metals space. Early January saw renewed safe-haven buying amid international friction and U.S. political/legal developments that weighed on the dollar and boosted gold and silver.
Still, even with supportive macro drivers, markets that become technically stretched can correct simply because positioning, liquidity, and leverage dynamics shift, underscoring the importance of caution amid current conditions.
Prices for platinum and silver have reached record levels recently, yet exchange-traded funds have not followed suit and are not at record highs. Additionally, the positioning in futures markets is not approaching extreme levels, suggesting limited investor participation. Moreover, technical indicators suggest that the current market conditions are stretched. When prices rise faster than investor participation, it can create a fragile rally. While this doesn’t necessarily signal the end of the bullish trend, it does suggest the road ahead will likely involve sharp pullbacks, periods of consolidation, and increased volatility before the market can find its next sustainable upward movement.