Silver crash as an opportunity? What supports the second half of the year after the 37% drop

26. March 2026

Silver has seen one of the sharpest pullbacks in recent years within just a few weeks. From the high of US$97.30 on March 2, the price fell to US$61.21 by March 23, losing around 37%. For the market, this was an abrupt break from the previous momentum. Several factors coincided: geopolitical uncertainty, sharply rising energy prices, a firmer US dollar again, and a US Federal Reserve stance perceived as significantly more restrictive. Accordingly, sentiment on silver shifted in a short time from upside optimism to caution.

The current debate now centers on whether the slump was merely a severe correction within a broader uptrend—or the beginning of a longer period of weakness. According to observers, the short-term picture has clearly deteriorated, but the fundamental drivers for silver have not changed. This is precisely why attention is increasingly turning to the second half of 2026.

Silver came under pressure from the dollar, oil and the Fed

According to media reports, the sell-off in silver is primarily explained by a combination of macroeconomic headwinds. The war in the Middle East and the associated news flow increased market volatility. At the same time, energy prices rose sharply, reigniting inflation concerns. In parallel, the US Dollar Index climbed again toward the 100-point mark, while expectations for the Federal Reserve’s next rate moves shifted significantly.

In this context, the reassessment following the release of the US central bank’s so-called dot plot was particularly important. Hopes priced into the market for two rate cuts in September and December virtually disappeared. Instead, expectations shifted toward a more restrictive monetary policy, including a 20% probability of a 25-basis-point rate hike. At the same time, yields on 10-year US Treasuries rose to 4.44%. For silver, such an environment is traditionally challenging because higher yields and a stronger dollar reduce the short-term appeal of precious metals.

Additional headwinds also came from the market environment itself. These include nine consecutive days of outflows from gold ETFs and subdued central bank demand. Even though these points affect gold more directly, they generally worsen the overall picture for precious metals—and thus for silver as well.

Structural demand for silver remains intact, according to the market thesis

Despite these pressures, the initial analysis does not see the fundamental silver story as damaged. While global industrial activity has temporarily weakened, and the disruption around the Strait of Hormuz has weighed on risk appetite across many asset classes, active diplomatic channels and early signs that energy markets are already pricing in a de-escalation scenario suggest that a calming of the conflict could provide the next catalyst for a recovery.

A historical pattern is cited: after the end of the 1991 Gulf War, silver rose by more than 20% within six months as production, infrastructure investment and industrial activity in the Gulf region recovered. Applied to 2026, this would mean that the decisive phase for silver may not be the conflict itself, but the period afterward—when cyclical pressure eases and industrial demand moves back into focus.

This is exactly where the longer-term thesis comes in. The structural demand for silver from the solar industry, electric vehicles and the broader energy transition is still considered intact in the source text. These sectors consume silver at a pace that mine supply can hardly keep up with. A temporarily restrictive Fed tone or an oil price shock does not initially change these secular demand drivers.

Positioning and deficit make silver interesting for the second half of the year

Another building block of the positive view on silver is current market positioning. The text notes that large speculative market participants have aggressively reduced their net long positions and in some cases even flipped to net short. Such washed-out positioning is often seen as fertile ground for strong counter-moves, because even a moderate improvement in the environment can trigger a powerful short-covering rally.

In addition, there is an overarching commodities thesis. Silver could be at the start of a new phase of a commodities supercycle, especially as the metal is entering its fifth consecutive year of a structural deficit. If supply and demand fail to align over an extended period, this logic suggests the likelihood of sharper market moves increases.

Silver remains trapped between macro noise and a long-term deficit

This results in a two-part picture for silver. In the short term, uncertainty, rate pressure, geopolitical headlines and a volatile risk environment dominate. These factors have weighed heavily on the market since early March. At the same time, many experts do not view this weakness as a sign of a fundamentally broken market, but rather as a consequence of macroeconomic “noise.”

Decisive for the second half of 2026 would therefore be whether cyclical pressure eases and the structural drivers become more visible again. For silver, these would primarily be industrial demand from future technologies, the ongoing deficit on the supply side, and market positioning that, after a sharp cleanout, leaves room for counter-moves. The recent slump has clearly worsened the short-term situation—but it does not call the longer-term silver thesis into question; rather, it likely “only” pushes a possible next leg higher back in time.

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Source: https://goldinvest.de/en/silver-crash-as-an-opportunity-what-supports-the-second-half-of-the-year-after-the-37-drop/