After the "8 consecutive rises," silver has pulled back. Will this time the "silver bull market" collapse like in 1980 and 2011 after reaching a "new high"?

Silver began to pull back after reaching a historic high, but analysts believe this time is fundamentally different from the two previous crashes, with supply and demand fundamentals and technical patterns more similar to gold's breakout path in recent years.

On Friday, silver continued its pullback trend, briefly falling below the $57 mark. Earlier this week, it had touched nearly $59 per ounce, a historic high, after rising for eight consecutive trading days, with a single-day pullback exceeding 2%. The relative strength index on the 14th showed that silver had retreated from the overbought zone to below 70, with the previous rapid upward momentum slowing down.

Silver has nearly doubled in price this year, raising concerns among some market participants about a repeat of the crashes in 1980 and 2011—when silver quickly retraced all gains after breaking through $48. However, Sprott Money analyst Craig Hemke believes that the current economic, monetary, and physical supply environment is completely different from history.

The tension caused by silver price fluctuations actually reflects deep changes in the supply and demand landscape. Although the tightness of silver in London has recently eased, China's inventory is nearing a ten-year low, and the market is facing a structural supply shortage for the fifth consecutive year. Expectations for the Federal Reserve to cut interest rates next week provide further support for this non-yielding asset.

Will History Repeat Itself?

The silver bull markets of 1980 and 2011 both ended in similar ways.

In 1980, silver skyrocketed from $10 to $48 in four months, but two months later, it fell back to $10.

In the bull market that began at the end of 2010, silver rose to $48 in eight months, then fell back to $26 in the following months.

These two crashes have left the current market filled with doubts. Some traders worry that silver will sell off quickly after breaking through $48, just like the previous two times. Some analysts even believe that silver has formed a bearish double top pattern this year.

However, Hemke points out that the technical pattern of this round is clearly different. Silver broke through $48 on October 3 of last year, and then closed above $50 for the first time the following week, continuing to rise after testing support near $48 multiple times. This ability to hold the $48 level is something that was not present in 1980 and 2011. He stated that to confirm the double top pattern, silver needs to fall below $46.

A Breakthrough Path More Like Gold

Hemke believes that the current price pattern of silver is more similar to the breakthrough process of gold in 2023-2024, rather than the previous two silver bull markets.

In December 2023, gold broke through the strong resistance level of $2,000 and surged to $2,100, followed by a sharp pullback. Just 17 days later, gold broke through $2,100 again but fell back once more. In the following months, gold oscillated in the $2,000 range until it truly broke through and continued to rise in March 2024.

At that time, many experts judged the two pullbacks of gold after touching $2,100 as double tops and false breakouts, but it was ultimately proven to be just a consolidation phase. Hemke predicted in September last year that the price movement of silver in the coming weeks would resemble gold's performance from late 2023 to early 2024—rising to historical highs of $48-50, experiencing sharp pullbacks, failing multiple attempts to break through, and finally completing a true breakout.

He expects the real breakthrough for silver to occur in early 2026. "Just like gold two years ago, silver is consolidating and bottoming near historical highs." If a breakthrough occurs next year, similar to gold's doubling since March 2024, silver could reach $100 per ounce in the mid to late 2027.

Structural Shortage Support

Fundamental data supports this technical analysis. The supply-demand dynamics remain extremely favorable for silver.

Many analysts believe that the transfer of silver from London to New York last spring due to tariff concerns laid the groundwork for the record surge in October. With demand rebounding, especially from India, traders are scrambling to find available metal. Silver quickly flowed back from New York to London, alleviating the tension, but did not resolve the fundamental issue.

The problem is not a lack of metal in London, but an overall global shortage of silver supply. This cannot be resolved through transfers between warehouses. According to Metals Focus data, silver will face a structural market deficit for the fifth consecutive year this year.

The agency predicts that this year's supply gap will reach 95 million ounces, bringing the five-year cumulative deficit to 820 million ounces, equivalent to one year's average mineral output. Since 2010, the cumulative supply gap in the silver market has exceeded 580 million ounces.

To make up for the supply gap, silver users must tap into existing above-ground inventories, which typically requires higher prices to achieve. The fact that China's inventory is nearing a ten-year low further confirms this supply tightness. The Federal Reserve's shift to an accommodative monetary policy and expectations of interest rate cuts will also continue to support silver prices in the coming year. Data released on Thursday showed that U.S. unemployment claims fell to a three-year low, but did not shake market bets on a rate cut next week