Has Silver Bubble Burst? Forecast as of 30.12.2025 | LiteFinance
Despite the sell-off at the end of 2025, silver is set to deliver its best annual performance to date. Rising competition for physical metal across the US, Europe, and Asia, combined with ETF inflows, fuels the XAG/USD rally. Let’s discuss this topic and make a trading plan.
The article covers the following subjects:
Major Takeaways
- Higher margins stalled the XAGUSD pair.
- ETF holdings have risen by 150 million ounces so far in 2025.
- Record silver premiums in China are supporting the metal.
- Open short trades below $75.75.
Weekly Fundamental Forecast for Silver
Trading activity in the precious metals market cooled after the CME raised margins for some Comex silver futures contracts in late 2025. The recent sell-off was the sharpest since February 2021, when the exchange took a similar step to rein in surging demand. That move triggered a 42% pullback in the XAG/USD pair over the following 18 months. Will history repeat itself this time?
The silver market is far smaller than the gold market, making it more vulnerable to speculation. The Hunt brothers’ episode remains a well-known example, but it was eclipsed by the scale of the 2025 precious-metals hype. Rumors that Washington could impose import tariffs after classifying silver as a critical mineral prompted capital to shift from London to New York, pushed up leasing costs in the UK, and bolstered the XAGUSD rally.
Silver Lease Rate in London
Source: Bloomberg.
After a period of stabilization, Europe found itself competing with Asia for physical metal. Robust demand from China sent premiums in both Shanghai and London to record levels over the Christmas period.
London–Shanghai Silver Premium Spread
Source: Bloomberg.
The hype became so intense that, in an effort to shield investors from speculative excess, a silver ETF in China managed by UBS SDIC Fund Management temporarily suspended trading. At its peak, the fund traded at a 60% premium to its net asset value, yet the buying frenzy in precious metals proved impossible to contain.
Silver has, remarkably, become more expensive than oil for the first time on record. Even a decline in the gold-to-silver ratio to 60 failed to cool bullish sentiment in XAG/USD. At its 2011 peak, the gold-to-silver ratio stood at around 30, implying scope for further gains in silver. To return to its inflation-adjusted 1980 high, silver would need to rise to roughly $200 per ounce.
ETF Holdings of Silver
Source: Bloomberg.
The XAG/USD rally was further supported by a 150-million-ounce increase in silver ETF holdings since the start of 2025, although positions remain well below 2021 levels. Seasonal factors also played a role: over the past decade, silver has risen by an average of 7% toward year-end. This year’s Christmas rally was not confined to equities.
Weekly Trading Plan for XAGUSD
Rising competition among the US, Europe, and Asia for silver has turned the market bullish. However, the XAG/USD pair rose too quickly, forming a bubble that was bound to burst sooner or later. Whether that process has already begun or still lies ahead remains unclear. If the silver price fails to settle above $75.75 per ounce, consider short trades.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of XAGUSD in real time mode
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