After the record rise in silver, analysts suggest: it's time to take profits

Since the beginning of this year, silver prices have soared by 126%, nearly doubling the increase of gold. Multiple analysts believe that this record-breaking surge has become excessive, and investors should consider taking profits. (Current spot silver weekly chart) Sameer Samana from Wells Fargo Investment Institute and Brett Donnelly from independent research firm Spectra Markets both pointed out that after this record-breaking rise, silver needs a breather. Although the macroeconomic and supply-demand factors that previously drove silver prices up still exist, analysts believe that the current surge exhibits "impulsive" characteristics and has largely detached from the economic realities of the real world. Additionally, Donnelly warned that historical data shows that after asset prices double in a single year, subsequent returns often perform poorly. At the same time, technical indicators have also issued similar warning signals. Market observers noted that current technical indicators for silver are nearing overbought territory, which typically signals an impending price correction. Based on both fundamental and technical considerations, strategists recommend that investors lock in profits and patiently wait for market corrections before seeking opportunities. Impulsive Rise Detached from Fundamentals Brett Donnelly from Spectra Markets pointed out that although the physical silver shortage expected during 2025 has somewhat contributed to the dramatic price fluctuations, the current increase seems to exceed what fundamental factors can support. Donnelly bluntly stated that this rebound has occurred in a "impulsive" manner, almost unrelated to changes in the real world. He noted that while silver has surged in recent months, the U.S. deficit situation has not undergone substantial changes. Meanwhile, other assets that were originally seen as hedges against currency depreciation, such as Bitcoin and stock indices, have lost their direction. Therefore, silver's current performance appears particularly isolated and lacks broad market logic support. Historical Data Suggests Weakening Returns Although Donnelly is not inclined to recommend shorting silver at this moment, he has issued a significant signal: after experiencing a 100% increase within a year, the forward returns of the asset are typically poor. He analyzed historical data and found that after strong years with returns reaching or exceeding 100%, silver often faces more challenges in the following years. Although cases of annual returns exceeding 100% are rare, when they do occur, "the performance in the following year is often lackluster." Based on this, Donnelly's view is that investors should sell silver and large tech stocks as they enter 2026. For those seeking to hedge against currency depreciation, he recommends holding onto gold. Technical Indicators Show Overbought Sameer Samana from Wells Fargo Investment Institute has drawn similar conclusions from a technical analysis perspective. In Wells Fargo's weekly investment report, Samana focused on the trends of technical indicators. Samana observed that the relative strength index (RSI), which measures price momentum, has reached 68, a level that is very close to the overbought zone. Additionally, silver's 50-day moving average is currently above the 200-day moving average. In his view, these signs indicate that silver is in a "considerably overbought" state. Therefore, he suggests that investors "may want to take profits and wait for a pullback."