For the quarter ended June 30, silver fell $16.57 per ounce, a decline of 22.04%, marking its worst quarter since the first quarter of 2020, according to Paul Wong, managing partner and market strategist at Sprott Inc. June alone saw silver's largest monthly decline since September 2011. "Silver's selling wave in June tracked gold's plunge and was driven by the same macro forces: an expectedly hawkish Fed raising short-term rates and the U.S. dollar," Wong noted in a recent analysis. "Silver easily broke below support levels in a near-waterfall pattern, suggesting capitulation-driven selling sentiment."
The volatility has been extreme even by silver's standards. After topping $113 per ounce in January, prices collapsed roughly 32% to $77 by February before continuing their descent. As of mid-July, spot silver was trading around $58 per ounce—its lowest level since December 2025—with September futures opening at $57.95. The metal's year-over-year gain has shrunk to 48.2%, down dramatically from 173.3% as recently as mid-May.
In an interview with Kitco News, Wong explained that massive speculative positioning in the options market played a significant role in both silver's parabolic rally and its subsequent collapse. "Until you get rid of all these crazy options positions, it's more of a meme stock than a commodity in the short term," he said. "But eventually what happens is you'll shake out the option guys."
Wong noted that call option open interest reached four or five standard deviations above the norm at the market's peak, an extraordinary level of speculative froth. Encouragingly, he said, positioning has now normalized: "They're back to about close to the mean now."
Despite the punishing price action, Sprott sees silver's fundamentals as unchanged. Wong points to a unique mix of ongoing supply deficits, rising industrial demand, increasing monetary relevance, and tight physical market conditions that create "multiple avenues for future appreciation." The silver market has run structural deficits for seven or eight consecutive years, and Wong expects that trend to continue. "It'll probably continue to run deficits for seven or eight years going forward," he told Kitco News. Unlike many commodities, few large new mining projects are on the horizon to materially alter the medium-term supply picture, keeping silver supply relatively inelastic as demand expands.
On the demand side, several secular growth trends are converging: solar panel manufacturing, electrification, electric vehicles, AI infrastructure, and data centers all underpin industrial consumption. Military demand is also becoming increasingly important as silver's conductivity gains recognition across defense supply chains.
Wong also highlighted silver's monetary dimension. "Investors often focus on gold as the primary monetary metal, but silver has historically participated in periods of currency debasement and monetary uncertainty," he wrote, describing silver as "a higher-beta expression of the same themes that support the gold market." Notably, Wong argues that silver may develop a rising price floor similar to gold's, as essential industrial and monetary demand gradually crowds out less essential uses such as photography, silverware, and some jewelry. "When the percentage becomes a more essential input, its inelasticity will rise with it," he said.
Renewed conflict in the Middle East has further complicated the macro backdrop. According to analysts at Heraeus, a Memorandum of Understanding signed between Iran and the U.S. on June 17 had led to progressing talks, the removal of sanctions on Iranian oil, and the lifting of the Strait of Hormuz blockade. That fragile détente collapsed on July 6, when the Iranian Revolutionary Guard Corps fired missiles at commercial ships, prompting U.S. retaliatory strikes and Iranian attacks on Bahrain, Kuwait, and Qatar.
Precious metals initially fell sharply; gold dropped below $4,100 per ounce and silver below $60 per ounce, while Brent crude and WTI rose above $80 and $75 per barrel, respectively. With the U.S. now reinstating its naval blockade of Iranian ports and imposing a 20% fee to guard ships transiting the Strait of Hormuz, Brent crude has climbed nearly 14% over the past five days, reviving inflation concerns and raising the prospect that interest rates will stay higher for longer.
Amid the turmoil, central banks have used the price weakness as a buying opportunity, at least for gold. Heraeus reported net central bank purchases of 41 tonnes in May, led by Poland (18 tonnes) and China (10 tonnes). The National Bank of Poland's reserves now stand at 614 tonnes, surpassing the Netherlands as the tenth-largest holder globally and closing in on its 700-tonne target. Uzbekistan and Kazakhstan added 9 and 7 tonnes, respectively, largely from domestic production.
China's buying continued into June, with the People's Bank of China purchasing 15 tonnes, its twentieth consecutive monthly addition and its largest since October 2023. The PBoC now holds 2,346 tonnes, representing roughly 9% of its total reserve value.
Retail silver demand, by contrast, has evaporated during the correction. The Perth Mint reported June silver sales of just 294,000 ounces, down 19% from May, which was itself the lowest monthly total since April 2012, and down 37% year-over-year. Gold bar and coin sales fared better, rising 53% month-over-month to 29,700 ounces.
On the production side, the expansion of the Sierra Gorda joint venture in Chile, owned by KGHM and South32, offers a rare example of new supply. A fourth grinding line will boost processing capacity by roughly 25%, with first production expected in 2030 and full rates by 2031. The project is projected to increase annual silver production incrementally to around 1.7 million ounces, alongside higher copper, molybdenum, and gold output. KGHM remains one of the world's largest silver producers, with group production expected to reach 43.3 million ounces in 2025.
Forecasts for silver vary widely, but many remain bullish despite the correction. Experts at BlackRock and J.P. Morgan predict silver will surpass $80 per ounce by the end of 2026 and could reach $100 by 2030. Geopolitical instability may also drive retail investors toward silver coins and bars as a more accessible alternative to increasingly expensive gold.
Investors should remain prepared for turbulence, however. Silver has always been significantly more volatile than gold due to its smaller, less liquid market, and as Wong points out, that's not necessarily a negative sign. "Sharp drawdowns are a normal feature of silver bull markets, not evidence that the underlying fundamentals have failed," he said. "Historically, some of silver's strongest advances have occurred following periods of severe volatility and investor frustration." For long-term investors, the message from Sprott is clear: the recent correction may have tested sentiment, but with persistent supply deficits, expanding industrial and monetary demand, and increasingly tight physical markets, silver's multi-decade chart "remains among the most bullish chart patterns we are aware of."
