When silver surged from around $30 to nearly $120 per ounce within just a few months this year, most investors were focused on one question: How much higher could it go?
Then came the sharp correction, with prices falling back to around $50 per ounce, and market sentiment changed almost overnight.
What I find particularly interesting is how much physical silver may have returned to the market during this period. If tens of millions of ounces were indeed sold, this one-time wave of supply may have temporarily eased pressure on the physical silver market for several months.
I don’t believe it solved the long-term problem. It may simply have made it less visible for a while.
Panic May Have Returned Tens of Millions of Ounces to the Market
This year’s selling wasn’t driven solely by investors taking profits. Panic likely played a major role as well.
As silver rapidly climbed toward $120 per ounce, it attracted a wave of new buyers eager not to miss the rally.
But within a matter of weeks, prices collapsed to around $50 per ounce, and sentiment reversed just as quickly. Fear replaced euphoria.
Many investors who had purchased near the peak began selling their physical silver to avoid even larger losses. Some long-term holders also decided to lock in profits while prices remained historically high.
That combination may have released an unusually large amount of physical metal back into the market.
At one point, reports also suggested that several refiners and bullion dealers were overwhelmed with buybacks and processing investment-grade silver. To me, that indicates the volume of physical metal being sold was far from insignificant.
No one knows the exact number, and we probably never will. However, based on this year’s price action, investor behavior, and overall market conditions, I believe it is reasonable to estimate that between 30 and 100 million ounces of physical silver may have been sold.
Some of that metal likely ended up in industrial supply chains, while the rest found new long-term owners.
While the West Was Selling, Asia Was Buying
Another aspect of this year’s market stood out to me.
While many investors in the United States and Europe were selling physical silver, demand across much of Asia remained exceptionally strong. A significant portion of the metal sold in Western markets likely made its way east.
I also believe the structure of the precious metals market is gradually changing.
Just a few years ago, most attention was focused on London and New York. Today, Hong Kong, Shanghai, and Singapore are becoming increasingly important.
This can be seen in Hong Kong’s efforts to strengthen its own infrastructure for trading and settling physical precious metals, with the ambition of becoming one of the world’s leading precious metals hubs.
At the same time, the Shanghai Gold Exchange, where trading is primarily backed by physical metal, continues to grow in importance and exert greater influence on the global market.
Singapore is also becoming increasingly significant. Thanks to its strategic location, stable financial environment, extensive vaulting infrastructure, and expanding role in the physical precious metals trade, it is emerging as another major gateway through which gold and silver flow into Asia.
In my view, this is about much more than new exchanges, vaults, or trading centers.
The more important shift is the direction in which physical metal is moving.
For decades, large quantities of precious metals flowed primarily into Western financial centers. Today, that flow is increasingly reversing, with gold and silver moving from Europe and North America toward Asia.
To me, this is one of the most significant structural changes in the precious metals market in recent years.
If this trend continues, Western markets may find it increasingly difficult to source physical metal when demand eventually accelerates again. Once physical gold or silver reaches Asia, it often remains there for many years and is far less likely to return to Western markets.
Where Did the Sold Silver Most Likely Go?
I don’t believe most of the silver ended up with new retail investors.
Instead, I think a large portion likely passed through bullion dealers, refiners, and wholesale distributors before ultimately reaching industrial users.
If I had to estimate, I would say roughly 20 to 60 million ounces may have found their way into industrial supply chains.
The exact figure is unknown, but this range seems realistic based on this year’s market developments.
That temporary influx may have provided some relief for manufacturers.
Companies gained access to additional physical metal without requiring higher mine production or a significant increase in recycling.
In other words, part of industrial demand was satisfied using silver that had already been mined years earlier and simply changed ownership.
It is also important to remember that no new silver was created.
Global above-ground silver stocks did not increase. The metal merely moved from investors to industrial consumers.
From a long-term perspective, I don’t think anything fundamental has changed.
If the world continues consuming more silver than is mined and recycled each year, additional metal will eventually have to come from investors or other available above-ground inventories.
How Much Could the Physical Silver Shortage Have Been Delayed?
This is probably the most important question.
The world consumes roughly one billion ounces of silver every year.
Even if 100 million ounces of physical silver were sold this year, that represents only a fraction of annual demand. More importantly, it wasn’t newly produced silver—it simply changed hands.
At the same time, investor sentiment deteriorated sharply.
After the steep price decline, many investors lost confidence, and investment demand for physical silver cooled significantly.
As a result, the market received temporary relief from two sources:
Additional physical supply from investors who sold.
Lower investment demand as many buyers stepped to the sidelines.
For these reasons, I believe this year’s wave of selling may have eased pressure on the physical market for several months and perhaps delayed a more severe shortage by around one year.
However, I do not believe it eliminated the long-term structural deficit.
In my opinion, that underlying imbalance remains essentially unchanged.
Why Might Next Time Be Different?
One aspect of this year’s events stands out to me.
Many of the investors who wanted to take advantage of this year’s exceptionally high prices have already sold their silver. If prices rise sharply again in the future, there may simply not be as many willing sellers as there were this year.
Not because no one will want to sell, but because a significant portion of the available physical metal has already changed hands during this year’s rally and subsequent correction.
That could mean that during the next major price increase, the market may not have access to the same additional supply of physical silver that temporarily appeared this year.
I believe this year’s wave of selling was, to some extent, a unique event.
If a large share of that physical silver has now moved into the hands of long-term investors—or into countries with consistently strong physical demand—the amount of metal available for resale during the next rally could be significantly smaller.
If that happens, the physical silver market could come under much greater pressure than it did this year.
My View
This year’s events reinforced one important lesson for me.
The price chart is important, but it never tells the whole story.
What matters even more is understanding where physical silver is actually coming from, who is willing to sell it, and where it ultimately ends up.
In my opinion, this year’s panic selling returned a meaningful amount of physical silver to the market and may have provided temporary relief for industrial consumers.
At the same time, the geographic balance of demand appears to be shifting.
While investment demand in the United States and Europe cooled sharply after the price collapse, Asia seems to be buying physical silver very aggressively.
New precious metals trading infrastructure is expanding in Hong Kong and Shanghai, while Singapore is becoming increasingly important as a major storage and distribution hub.
To me, it appears that the center of gravity of the physical precious metals market is gradually moving east.
That also raises another interesting possibility.
If the physical market really was under significant pressure and industry urgently needed additional metal, then this year’s sharp price decline may have provided large market participants with an ideal opportunity to bring physical silver back onto the market from weaker hands.
I’m not claiming that this is what actually happened, because there is no evidence to prove it.
However, I do think it is a possibility worth considering.
If this line of thinking is even partially correct, then this year’s selloff may have been more than just another normal market correction.
It may have represented one of the last major opportunities to acquire physical silver from investors while fear dominated the market.
Once that metal moves into industrial supply chains or into the hands of long-term investors in Asia, it may not return to the market in similar quantities during the next price rally.
For that reason, I do not believe this year’s events solved the long-term structural deficit in the silver market.
In my view, they merely postponed it.
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