7 Key Facts About the Deepening Silver Squeeze and its Implications in 2026

Jakarta, Pintu News – The silver price rally has continued to strengthen sharply in recent days, with the futures contract surging past USD 117 per ounce, continuing its meteoric rise of around 275% over the past year as physical supply pressures tighten. This has created what is often referred to as a short squeeze in the silver market, where short contracts amount to far more than the supply available for physical delivery.

1. Short Squeeze Occurs as Physical Supply Dwindles

Recent reports show silver stocks registered in warehouses listed for delivery are much lower than the total outstanding contracts. The registered inventory is only able to cover about 14% of the current futures outstanding position, creating a large imbalance between paper claims and physical supply. If contract holders set a demand for physical delivery, the pressure on the market could increase dramatically.

Read More: 5 Key Gold Price Predictions for 2026-2030 in the Context of Global Asset Markets

2. Commercial Short Positions Exceed Supply

Data from the Commitments of Traders (CFTC) report shows that commercial traders hold huge short positions. Their net short amount is much larger than the real silver inventory available to fulfill futures contract claims. This forces short sellers to possibly buy physical metal at higher prices, reinforcing upward pressure on prices.

3. Backwardation Condition Indicates High Physical Demand

The silver market has experienced backwardation in recent months, where spot prices are higher than futures in the upcoming month. This backwardation indicates that physical demand is currently higher than available supply, a rare technical signal in the precious metals market. Traders now tend to hold contracts with the nearest delivery date due to the urgency of physical demand.

4. Solar Industry Increases Demand Pressure

Industrial demand, especially from the solar panel production sector, has also narrowed silver supplies. Silver has become a significant part of the production cost of photovoltaic panels, increasing pressure on global inventories. This high industrial demand exacerbated the gap between physical supply and futures claims.

5. Silver vs Gold: Differences in Market Structure

In contrast to gold, gold stocks in warehouses do not show similar supply pressures; gold has a relatively healthier stock to open interest ratio. Gold futures are in a more normal contango structure, indicating relatively more adequate physical supply. This emphasizes that the current squeeze phenomenon is more intense in the silver market than gold.

6. Risk of Sharp Correction Amid Rally

Although the current market structure favors a continuation of the price rally, analysts also warn that an overly tense market is prone to sharp corrections. If profit-taking increases or if exchanges increase position limits or margins, market dynamics could change rapidly. This means that high volatility remains a key characteristic of short-term silver price movements.

7. Broader Implications for Investors

For investors, the short squeeze phenomenon in silver reflects how supply imbalances and derivative positions can drive rapid movements in real assets.

This trend also provides context for market cycles where safe-haven assets such as precious metals experience strong demand compared to riskier assets such as crypto at certain periods. Understanding fundamentals such as physical supply and futures market structure is important before making investment decisions in precious metals or related assets.

Also Read: 5 Important Insights Predicted SHIB Will Drop First Before Reaching New ATH

Follow us on Google News to stay up to date with the latest crypto and blockchain technology. Check Bitcoin price, USDT to IDR and Nvidia stock price tokenized via Pintu Market.

Enjoy an easy and secure crypto trading experience by downloading the Pintu crypto app via Play Store or App Store now. Also, experience web trading with advanced trading tools such as pro charting, various order types, and portfolio tracker only at Pintu Pro.

*Disclaimer

This content aims to enrich readers’ information. Pintu collects this information from various relevant sources and is not influenced by outside parties. Note that an asset’s past performance does not determine its projected future performance. Crypto trading activities are subject to high risk and volatility, always do your own research and use cold hard cash before investing. All activities of buying and selling Bitcoin and other crypto asset investments are the responsibility of the reader.

Reference
– Oihyun Kim/BeInCrypto. The Silver Short Squeeze: Only 14% of Futures Are Covered. Accessed January 30, 2026.