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As silver prices plummet, retail investors are scrambling to sell. But are they moving too soon?

Published: 03 Feb. 2026, 19:10 Updated: 03 Feb. 2026, 19:31

Silver bars are on display at a gold and jewelry shop in Seoul on Feb. 2. [NEWS1]

Silver prices are tanking, and retail investors are panicking. Analysts say turbulence is only short-term, but anxious retail investors still swarmed jewelry stores to sell off the "devil's metal" to minimize what they think may be a greater risk to come.

On the afternoon of Sunday, Kim Hyun-sang, 57, who works at a precious metals wholesale complex in Jongno 3-ga, central Seoul, received a call from a customer who had bought silver bars two days earlier.

The customer, who purchased five 1-kilogram (2.2 pounds) silver bars with 99.9 percent purity on Friday, asked whether the order could be canceled. Prices for 1-kilogram silver bars were trading around 8 million to 8.2 million won ($5,500 to $5,700) at the time, but fell over the weekend to 6.8 million to 7.2 million won.

“Even last week, we were out of silver bars, so we couldn’t ship immediately for customers buying several at once and had to place orders with factories,” Kim said. “Today alone, I’ve already gotten two calls asking if they can cancel because silver prices have plunged. I’m reassuring them it will rise again soon.”

Few people in the district were looking to buy silver products, aside from jewelry such as rings, while a steady stream of people tried to sell them instead.

Lee Bok-hee, 62, who came with her son and daughter-in-law, said she had bought 37.5 grams (1.3 ounces) of gold and 1 kilogram of silver as a wedding gift for her daughter-in-law when they married three years ago.

“Not long ago, she was thrilled, saying, ‘Mom, we hit the jackpot,’ and I felt proud,” Lee said. “She wanted to sell, so we came together, but it’s a bit disappointing that the price has dropped by more than 1 million won in just a few days.”

Silver bars sit at a precious metals shopping district in Jongno District, central Seoul, on Jan. 25. [YONHAP]

Some hurried to make the most of the whiplash. A couple in their early 30s dropped by to buy silver rings because "silver is so expensive now that it's not for college students anymore."

They added, "We heard that prices dropped, and so we're here to get ourselves some."

The volatility has been mirrored overseas. On Monday, the New York Commodity Exchange (Comex) showed silver futures for March delivery closed down 1.9 percent at $77 an ounce.

Silver’s surge, which hit a fresh all-time high on Jan. 26 by breaking above $115.50 an ounce, abruptly reversed. Prices plunged nearly 31.37 percent in a single day on Friday, sliding to $78.53. On the same day, gold futures for April delivery also fell 11.4 percent to $4,745.10.

MarketWatch reported that an estimated $7.4 trillion in market capitalization across the gold and silver markets was wiped out.

After the market closed, however, the wave of panic selling eased, and prices began to recover in over-the-counter trading. As of 2 a.m. on Tuesday in the United States, silver futures had rebounded to $83.05, while gold futures rose back to $4,791.

Gold and silver bars are pictured in this undated photo [BLOOMBERG/YONHAP]

Silver’s broader rally began in earnest early last year. Bloomberg reported that global gold and silver prices jumped 64 percent and 142 percent, respectively, over the course of last year.

Demand also surged in Korea. Sales of silver bars at the country’s four major banks — KB Kookmin, Shinhan, Woori and NH NongHyup — totaled 30.68 billion won last year, more than 38 times the 799 million won recorded in 2024. Among Korea Exchange-listed exchange-traded notes, two silver-linked products ranked between No. 2 and No. 4 in the top five for one-year returns.

Silver’s plunge on Friday came the same day U.S. President Donald Trump nominated Kevin Warsh as the next chair of the Federal Reserve. Markets interpreted Warsh as hawkish, pushing up the dollar and dampening expectations for interest rate cuts. Because silver is a physical asset that pays no interest, its attractiveness tends to fade as rates rise, since the opportunity cost of holding it increases.

“The pick of Warsh, 55, likely won’t ripple markets because of his past Fed experience and Wall Street’s view that he wouldn’t always do Trump’s bidding,” reported CNBC last Friday.

Still, analysts say silver’s outsized swings compared to other assets reflect a supply-and-demand turning point that emerged in the 2020s. Through the mid-to-late 2010s, global supply slightly outpaced demand, but recent demand tied to new industries, including solar power, AI, 5G and electric vehicles, has pushed the market into what some describe as a structural deficit.

Silver bars are displayed at a jewelry shop in central Seoul on Feb. 1. [NEWS1]

According to the Silver Institute, global annual silver demand last year totaled about 1.148 billion ounces, while supply, even including recycled material, remained stuck at about 1 billion ounces.

More than half of silver is now used for industrial purposes, reflecting its strong thermal and electrical conductivity and durability. Last year, industrial demand accounted for 59 percent of total silver demand, more than double the combined demand for physical investment at 17.8 percent and jewelry at 17.1 percent.

The largest component of industrial demand is the electrical and electronics sector, which accounts for 40.53 percent of total demand. Solar photovoltaics alone consume roughly 20 percent of global silver supply, and the AI boom has boosted demand for high-performance connectors, semiconductor packaging and 5G communications equipment needed for server infrastructure.

“As digitization and AI adoption accelerate, so does the demand for critical minerals, such as silver, used in their applications," said the Silver Institute on Dec. 9, 2025.

Electric vehicles also require roughly twice as much silver as internal combustion cars, at about 25 to 50 grams per vehicle. Silver demand from the electric and autonomous vehicle sector is maintaining solid growth of more than 3.4 percent a year as in-vehicle electronics and charging infrastructure expand, according to UK-based Metals Focus.

Silver and gold bars are displayed at the Korea Gold Exchange in Jongno, central Seoul. [NEWS1]

Supply, however, remains unstable. A 2025 report by the Silver Institute said the top three producers, Mexico at 24 percent, Peru at 14 percent and China at 13 percent, effectively dominate more than half of global output. Silver is also chemically less stable than gold, making it more vulnerable to corrosion and deterioration. Silver used in industrial applications is also not easily recyclable.

Experts largely summarize the outlook as "short-term mixed and long-term bullish." Many say the next one to three months could remain volatile due to the aftereffects of last month’s large margin calls and swings in the dollar tied to U.S. monetary policy, warranting a cautious approach.

“Recent gold and silver prices have shown unprecedented volatility driven by speculative money from China, trend-following commodity trading adviser funds and retail exchange-traded fund [ETF] investors,” said Seo Sang-young, a researcher at Mirae Asset Securities.

JPMorgan Chase also wrote in a note on Jan. 16 that "mounting risks from loosening ex-U.S. supply and ETF outflows to softer industrial demand and tighter Chinese trading curbs, leave silver vulnerable to a sharp correction."

Over the longer term, however, optimism persists because industrial demand led by AI is expected to continue, and there is no clear substitute material.

Silver bars are displayed at the Korea Gold Exchange in Jongno, central Seoul. [YONHAP]

“Silver production is limited because it is largely a by-product of zinc and copper smelting, while supply risks have grown as China, a major exporter, strengthened controls on silver exports last month,” said Ok Ji-hoe, a researcher at Samsung Securities.

Some analysts also urge watching the gold-silver ratio, which measures silver’s relative value against gold. As of Tuesday, the ratio stood at 57.34, below its historical average of 59.46. In general, a ratio above 80 to 1 is often read as a sign that silver is undervalued relative to gold. Compared to levels that neared 100 in 2025, the current ratio suggests silver may be relatively overvalued.

Others note that there may still be room for the ratio to fall further than its 2011 level of around 32 to 1. Citigroup recently said that if the gold-silver ratio returns to 2011 levels, silver could reach $170 an ounce.

Analysts add that silver prices have also been influenced by investment demand in China and India, U.S. moves to designate critical minerals, short squeezes linked to shortages in London’s spot market and silver’s role as a safe-haven asset sensitive to geopolitical tensions.

Even so, given silver's extreme volatility, which has earned it the nickname “the devil’s metal,” experts recommend taking a staggered, phased approach to buying.

“The silver market is tiny compared to assets like gold, so volatility is inevitable,” said Seok Byoung-hoon, a professor of economics at Ewha Womans University. “Because it is affected by global events, those buying for speculative purposes need to approach it step by step.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KIM SEON-MI [[email protected]]