Silver and Copper Surge as Gold Loses Ground in Metal Markets

Silver and copper have overtaken gold as the leading investments in the metals market heading into 2026. Traders are positioning for **record rallies**, driven by a supply squeeze and increasing demand, particularly from India and silver-backed exchange-traded funds (ETFs). Silver prices have nearly doubled this year, with significant gains occurring recently due to heightened demand, despite a slight easing in the supply crunch in London.

The **London market** has experienced a historic supply squeeze, contributing to the surge in silver prices. Although this situation has improved in recent weeks with more metal being shipped to London vaults, other markets, particularly in China, are facing supply constraints. According to data, Chinese inventories are at their lowest levels in a decade.

Ed Meir, an analyst at **Marex Group Inc.**, noted that the recent silver rally has been marked by increased volatility. “If you look at the chart, there’s been a steeper parabolic move up than seen in previous rallies,” Meir explained, highlighting the concentrated buying that has occurred in a shorter timeframe.

Since gold bullion hit a record high on **October 20**, it has mostly remained stable. In contrast, silver has gained over **11%**, reaching a new high, while copper has increased almost **9%**. The **iShares Silver Trust**, the largest ETF tracking silver, has seen a rise in implied options volatility, reaching levels not observed since early 2021. During this period, silver briefly attracted interest from retail traders, reminiscent of the meme-stock phenomenon.

The past week has seen nearly **$1 billion** flow into the iShares Silver Trust, surpassing inflows into the largest gold fund. This influx has provided further support to silver prices. Trevor Yates, a senior investment analyst at **Global X ETFs**, noted that western investors, who have historically under-invested in precious metals, are increasingly turning to silver ETFs. There remains significant potential for additional inflows as market allocations normalize.

Retail traders have also entered the market in significant numbers. Data from **CME Group Inc.** indicates that the five-day average volume on micro futures contracts is at levels only previously seen in mid-October. This enthusiasm is reflected in the trading of options, with over **5,000 lots** of Comex silver February call spreads, equivalent to **25 million troy ounces**, changing hands recently.

Despite the excitement, analysts caution that the higher volatility will need to be sustained by larger price swings to support continued rallies. Mike McGlone, a senior commodity strategist at **Bloomberg Intelligence**, noted that silver is currently trading at an **82% premium** to its five-year average as of **December 2**, approaching the most extreme deviation from this mean since **1979**. The ultimate endpoint of the silver rally is uncertain, with Meir stating, “When a chart breaks out like this, there are no resistance signposts.”

In addition to silver, copper’s appeal has surged due to growing demand for electrification and clean energy projects. The price of copper recently reached an all-time high of over **$11,600** per ton on the **London Metal Exchange**. The volatility in copper prices has also increased, driven by recent market dynamics.

The announcement by former US President **Donald Trump** in February regarding tariffs on copper has significantly impacted pricing and trade flows. The tariffs prompted futures in New York to spike above those on the LME, leading to a surge in US imports as traders capitalized on the price differential.

Greg Sharenow, a portfolio manager at **Pacific Investment Management Co.**, emphasized that the downside for copper prices is likely limited due to strong underlying demand and structural shortages. Supply disruptions at major mines coincide with rising demand from the energy transition, further tightening global balances.

The recent fluctuations in both silver and copper markets highlight an ongoing trend of increasing investor interest and potential for future growth. As market dynamics evolve, traders will closely monitor these crucial metals, which have emerged as primary investment opportunities amid shifting economic conditions.