Silver prices plunged on January 30, 2026, as margin limits triggered forced selling, even though physical silver supply remained below demand.Shutterstock
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Before silver plunged, Kolanovich and Brandt issued blunt warnings about a rebound in the silver paper market.
previous JPMorgan Chase Strategist Marko Kolanovic’s career stretches back more than 20 years, with stints at Merrill Lynch and Bear Stearns before 16 years at JPMorgan, which helped him get there Institutional Investors Hall of Famepredicting a 50% increase for the metal in the coming year.
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BrandtA 50-year commodities trading veteran who began his career in 1976 at ContiCommodity Services, a division of Continental Grain Company, sent a similar message, comparing the current parabolic peak to the 2011 high (which he also accurately predicted).
However, in the wake of silver’s plunge, these veterans believe things have gone too far, creating an opportunity for a short-term rebound.
“As much as I’ve written against silver over the past few days, it’s likely to bounce back today (a big 16% drop!),” Kolanovic wrote on X (formerly Twitter).
Brandt struck a note of cautious but short-term optimism, saying “silver may rebound today.”
He believes we could be in for a rebound that could set the stage for a more sustained rally before another wave of losses wipes out speculators.
“2026 is not 2011. In my opinion, the 2011 rally was destined to go back to the mid-teens. Not this time. I do believe there is more to come for silver, but not until the know-it-all bulls know it all[ly] was washed away. Then the price can go back up. Maybe not until later 2026, or even early 2027,” Brandt wrote on X.
The chaotic sell-off exposed a huge structural break: the “Great Divorce” between paper contracts and physical metal.
For decades, Wall Street banks have controlled the price of silver by selling billions of dollars in “paper silver” (futures contracts that rarely result in actual delivery). But in 2026, China restricted silver exports, causing problems for companies in industries that need the physical metal for next-generation solar and artificial intelligence technologies.
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Facing a sixth straight year of supply shortages, these industrial buyers are no longer content with cash. Instead, their appetite for bullion has been so high that it has triggered a physical scramble that has driven inventories in COMEX and LBMA vaults to their lowest levels in decades. As a result, this scramble creates a “backward” trap, where silver that’s delivered immediately is worth far more than the paper promise of delivery next month.
According to Investing.com, the ratio of paper silver to physical silver continues to soar, with the ratio of paper silver to physical silver soaring to 528 million ounces, while physical silver exposure is 113 million ounces.
this The disconnect is real and substantial. Industrial buyers need silver to build next generation technologies, and AI demand is causing a structural disconnect between paper and physical markets as these companies need to deliver.
When paper currency prices “tumbled” yesterday, it wasn’t because demand disappeared, it was because silver futures soared, causing margin requirements to skyrocket and leveraging speculators being driven out of the market.
CME Group moves to Percentage-based margin system In January 2026, the maintenance margin will be increased to 15% for standard positions (to 16.5% for high-risk positions). The exchange effectively ended the era of cheap “paper” speculation, which allowed traders to control 5,000-ounce contracts with minimal collateral, creating a “margin trap” to prevent clearinghouses from collapsing due to price spikes. $120 per ounce.
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The move is reminiscent of how past silver surges have ended, including in 1980, when regulators similarly undermined the Hunt brothers’ silver positions by raising margin requirements.
In short, the move accelerated forced liquidations as prices fell and highly leveraged and exhausted speculators were forced to place bets unable to meet the new rules.
While stock prices were flashing red, physical premiums in Shanghai and Dubai actually surged, reaching as much as $20 over Western spot prices.
In my decades of market tracking, I can’t help but think the next likely outcome is much the same: volatility in the paper market and continued supply shortages.
That won’t change unless the economy derails industrial demand or miners are able to increase supply, which is no easy feat given the nature of the mining industry.
In fact, silver supply may still be hurt this year, even as some miners look to bring new production online.
January 28, FresnilloWorld’s largest silver miner cuts 2026 guidance to 42 to 46.5 million ounces from 45 to 51 million ouncesCEO Octavio Alvidrez cited “operational phases” and a shift to narrower, lower-grade veins. at the same time, Hecla Mining Another large manufacturer (HL) plans to produce 15.1 to 16.5 million ounceslower than 2025 production.
That said, some production may come online. silver storm mining Idle production at La Parrilla in Mexico, which features 2,000 tons per day [tpd] mill), at the same time pan american silver (PAAS) Cerro Moro’s silver production is expected to increase in the second half of 2026. Pan American’s guidance is for silver production to jump to 25 to 27 million ounces in 2026 from approximately 22.8 million ounces in 2025.
Related: Top banks reset gold price targets to late 2026
This article was originally published by TheStreet on January 31, 2026, and first appeared in the Investment section. Click here to add TheStreet as your preferred source.
