Silver Hits $115: Supply Shortage Crisis
Silver has shattered all records, breaking $115 per ounce in January 2026—a price that seemed unimaginable just two years ago. What's driving this historic surge? A perfect storm of retail buying frenzy, industrial demand, and physical supply shortages that's reshaping the precious metals landscape.
The Record-Breaking Rally
Silver's ascent past $115/oz represents more than just a price milestone—it signals a fundamental shift in supply-demand dynamics. While gold's climb to $5,200 has captured headlines, silver's percentage gains have been even more impressive.
The metal that once traded below $30/oz in 2024 has nearly quadrupled, driven by forces that show no signs of abating.
Why Is Silver Surging? The Three Key Drivers
1. Unprecedented Retail Demand in Asia
The most dramatic factor is massive retail buying in China and India. Investors in these markets, seeking alternatives to volatile stock markets and weakening local currencies, have turned to physical silver in volumes that are overwhelming supply chains.
Swiss refiners are now air-shipping silver to meet Asian demand—an extraordinary measure that underscores how tight the physical market has become. Normally, silver travels by sea; air freight costs are only justified when premiums are high enough to absorb the expense.
2. Industrial Demand Explosion
Unlike gold, silver has critical industrial applications that consume over 50% of annual supply:
- Solar panels: Each gigawatt of new solar capacity requires approximately 200 tonnes of silver
- Electric vehicles: EVs use significantly more silver than traditional cars
- Semiconductors: The AI boom is driving unprecedented chip demand
- 5G infrastructure: Continued buildout requires silver for electronics
With the green energy transition accelerating globally, industrial silver demand is projected to create a 200 million ounce annual deficit for years to come.
3. Supply Cannot Keep Up
Silver mining cannot respond quickly to price increases. New mine development takes 10+ years from discovery to production. Most silver is produced as a byproduct of copper, lead, and zinc mining—meaning silver supply depends on demand for other metals, not silver prices alone.
The Shanghai Premium: A Tale of Two Markets
Perhaps the most telling indicator of the supply crisis is the Shanghai premium over COMEX prices:
| Market | Silver Price | Premium to COMEX |
|---|---|---|
| COMEX (US) | $115/oz | Baseline |
| Shanghai | $126+/oz | +$11 (9.5%) |
| Singapore/HK | $118-120/oz | +$3-5 (2.6-4.3%) |
When Asian buyers are willing to pay 9-10% above international prices, it signals genuine scarcity of physical metal. This premium has persisted for weeks, indicating it's not a temporary arbitrage opportunity but a structural imbalance.
COMEX Warehouse Mystery
Paradoxically, COMEX warehouses in the US hold over 100 million ounces of silver—seemingly ample supply. So why the shortages elsewhere?
The answer lies in the two-tier market that has emerged:
- Paper market: Futures contracts trade in New York with apparent liquidity
- Physical market: Actual metal is scarce outside the US, with delivery times extended and premiums elevated
Much of the COMEX inventory is held for institutional hedging purposes and isn't available for retail or industrial use. The result is a bifurcated market where paper prices and physical availability have diverged.
Singapore Silver Market Impact
For Singapore investors interested in adding silver to their portfolios, the supply situation has practical implications:
- Higher premiums: Expect 5-10% premiums over spot at dealers, up from the typical 3-5%
- Limited availability: Popular sizes (100g, 1kg bars) may be out of stock or require ordering
- UOB silver: Check current UOB silver prices for the latest rates on 100g and 1kg bars
- Delivery delays: Custom orders may take 2-4 weeks versus the usual 1-2 weeks
Silver vs Gold: Which Is the Better Buy?
With both metals at record highs, investors are asking which offers better value. Consider these factors:
| Factor | Gold | Silver |
|---|---|---|
| Industrial demand | ~10% of supply | ~50% of supply |
| Volatility | Lower | Higher (more upside/downside) |
| Storage convenience | High value density | Bulkier per dollar |
| GST status (SG) | Exempt | Exempt (IPM grade) |
| Supply constraints | Moderate | Severe |
For a deeper analysis, see our post on why silver is outpacing gold in 2026.
Where to Buy Silver in Singapore
Options for Singapore investors seeking physical silver:
- UOB: Offers 100g and 1kg silver bars from PAMP Suisse
- Silver Bullion Singapore: Wider selection including coins and smaller bars
- BullionStar: Online ordering with vault storage options
- The Safe House: Boutique dealer with various products
Always verify the dealer's reputation and compare premiums before purchasing. In the current environment, calling ahead to confirm stock is wise.
Will the Silver Shortage Continue?
Several factors suggest the supply crunch will persist:
- Mining lag: No significant new silver supply will come online before 2028-2030
- Green energy acceleration: Solar and EV demand will only grow
- Retail buying momentum: Asian investor appetite shows no signs of fading
- Geopolitical uncertainty: Trade wars continue driving safe-haven demand
However, sharp price spikes often trigger profit-taking and demand destruction. A pullback to $90-100/oz wouldn't be surprising before the next leg higher.
Frequently Asked Questions
Why did silver hit $115 in 2026?
Silver reached $115/oz due to a perfect storm of supply constraints: massive retail buying in China and India, record solar panel installations, a projected 200 million ounce deficit, and safe-haven demand from trade war fears.
What is causing the silver supply shortage?
The shortage stems from 70% of silver being mined as a byproduct of other metals, limiting supply flexibility. Meanwhile, demand surges from solar panels, EVs, and investment buying. New mines take 10+ years to develop.
Why are Shanghai silver prices higher than COMEX?
The Shanghai premium of $11+ reflects intense physical demand in Asia. When buyers pay significant premiums for immediate delivery, it signals genuine scarcity rather than speculation.
Is silver a better investment than gold right now?
Silver offers higher potential returns but with higher volatility. Many investors hold both; see our portfolio allocation guide for suggested ratios.
Where can I buy silver in Singapore?
UOB offers silver bars through their precious metals service. Alternatives include BullionStar and Silver Bullion. Note that silver is subject to 8% GST, unlike investment-grade gold.
Conclusion
Silver at $115/oz is both a reflection of genuine supply constraints and a warning about momentum-driven markets. For Singapore investors, the key is understanding whether you're buying for long-term portfolio diversification or attempting to catch a short-term trade.
The supply shortage is real. The industrial demand is structural. But prices never move in straight lines. Consider dollar-cost averaging into positions rather than going all-in at current levels.
Monitor both silver and gold prices on our homepage for the latest UOB rates, and explore why silver is outpacing gold in 2026.