Will history repeat itself? The silver market's hot trend sparks concerns of a crash, but analysts claim "this time is different."

The silver market led investors through a heart-stopping journey this year, almost doubling in price. However, some analysts are worried that silver is heading towards a disappointing end. These bearish sentiments are based on historical experience, as silver rapidly collapsed after hitting record highs twice in 1980 and 2011. Therefore, the market is filled with tension, reflected in the current price fluctuations of silver. Some traders fear that we will see silver being rapidly sold off like it did after breaking $48 per ounce in 1980 and 2011. Will history repeat itself? Analyst Craig Hemke of Sprott Money doesn't think so. He believes that this time is different, "the current economic, monetary, and physical conditions are completely different from 1980 and 2011." Hemke does not expect silver to follow the "grandfather path" of the 1980s or the "father path" of 2011. He thinks the current situation is more like the trajectory of "Uncle Gold" in the past few years. Learn from history So, what happened in 1980 and 2011? In both cases, silver quickly surged above $48, then dropped back down even faster. In 1980, the price of silver skyrocketed from $10 per ounce to $48 in just four months. Two months later, it was back to $10. Starting from the end of 2010, silver rallied again, hitting $48 within eight months. But again, it quickly retraced, dropping to $26 in just a few months. This time does indeed look different. Silver touched $48 on October 3rd and closed above $50 in the following week. It consolidated briefly around $48, testing this level several times, and then took off again in recent weeks. The fact that silver has held above $48 for this long makes this rally different from 1980 and 2011. Some market participants claim that silver has formed a double top this year (a bearish signal). But Hemke points out that to confirm a double top, the silver price would need to drop below $46, "before then, having two peaks at the same level represents only a trading range and consolidationnothing more." Aiming for gold Hemke believes that the current price pattern is more similar to the breakout of gold in 2023 and 2024, rather than the silver bull markets of 1980 and 2011. Market participants may remember that in December 2023, gold finally broke through the strong resistance level of $2000 per ounce, soaring to $2100, followed by a sharp reversal. Just 17 days later, gold reclaimed $2100, only to face another sell-off. In the following months, gold traded in a range around $2000 per ounce until it broke out again and surged in March 2024. When gold rebounded twice from $2100 within a few weeks, many experts claimed it was a double top and false breakout. As Hemke points out, they were proven wrong. It was just a period of consolidation and range trading. "The price of gold did not peak, but rather built a bottom in the consolidation range. The real breakout came 90 days later, in early March 2024." Hemke believes that silver also exhibits a similar technical pattern. He wrote in late September: "I expect the price action of silver in the coming weeks to replicate, to some degree, the gold action from late December 2023 to early 2024. First, a rally to historic highs of $48-50, followed by a sharp reversal, with several failed attempts before the final and official breakout. Let's use the gold chart from late 2023 as an analogy for the silver trajectory." Looking ahead, we may see further consolidation and sideways trading for some time. But Hemke believes that the real breakout for silver is still ahead. "It's not 1980, nor is it 2011. Silver is not going to crash, nor has it just formed a double top. Instead, like gold two years ago, silver is consolidating near and above its old historic highs, with the real breakout expected in early 2026." Hemke suggests that next year's breakout could potentially push silver to new record highs. "Gold has doubled since the breakout in March 2024, a similar move for silver would see its price reach $100 per ounce in mid to late 2027." Silver shortage Fundamental factors support Hemke's technical analysis. Supply and demand dynamics still strongly support a bullish outlook for silver. Many analysts claim that due to tariff concerns, silver shifted from London to New York in the spring, laying the foundation for the record rally in October. With demand rising (especially in India), traders are scrambling to find available silver. The quick transfer of silver from New York to London eased the tension at the time, but did not solve the fundamental issue. The issue is not that London doesn't have enough silver, it's that there simply isn't enough silver overall. This problem cannot be solved by just moving silver from one warehouse to another. The crux is that demand has exceeded supply for several years in a row. According to Metals Focus' data, silver is heading towards its fifth consecutive year of structural market deficits. Metals Focus predicts that demand will exceed supply by 95 million ounces this year. This will make the cumulative market deficit over five years reach 820 million ounces, equivalent to the average annual mine output. Since 2010, the silver market has accumulated over 580 million ounces of supply deficits. To compensate for the supply deficit, silver users will have to tap into existing above-ground inventories. This is likely to require higher prices. The Federal Reserve's shift to loose monetary policy and rate cuts may also support silver in the coming year. When looking at the technical and fundamental aspects together, despite the precedents of 1980 and 2011, there is no reason to be bearish on silver.