Silver's Structural Shift: A Cyclical Metal with Long-Term Potential

Silver Rally Enters Structural Phase as Volatility Tests Investor Conviction, Says Apurva Sheth​

Technical Compression, Undervaluation and Macro Tailwinds Drove Early Call​

Silver’s rally over the past year has reignited investor interest, marked by sharp upward moves followed by equally swift corrections. According to Apurva Sheth, Head of Market Perspectives and Research at SAMCO Securities, the opportunity was visible well before the breakout, supported by a confluence of technical, valuation, and macroeconomic signals.

In an interaction, Sheth said three decisive factors stood out when his team first identified the silver opportunity.

The first was technical compression. Silver had remained confined to a multi month range of $21 to $26 per ounce, with long term moving averages converging. Historically, such compression phases have preceded strong directional moves.

The second factor was relative undervaluation. Silver was trading nearly 50 percent below its all time high, while the silver to gold ratio hovered near historic lows. This indicated that silver was inexpensive compared to gold.

The third was macro alignment. Expectations of US rate cuts, a softer dollar, and rising industrial demand, particularly from solar and electronics, created what Sheth described as a classic case of price compression meeting macro tailwinds.

From Accumulation to Structural Bull Market​

Sheth outlined that the silver thesis has evolved through three distinct stages since 2023.

The first stage was accumulation. During this phase, silver appeared undervalued, largely overlooked, and technically coiled for a move.

The second stage began with decisive breakouts above key domestic levels such as ₹78,000 per kg and later ₹1 lakh per kg. Historically, such breakouts have signaled strong forward returns. Momentum indicators during this phase reinforced the bullish thesis.

The third stage, according to Sheth, represents a structural bull market. He said it is no longer just a breakout trade. Sustained industrial demand, supply tightness, and exchange traded fund flows are broadening the cycle beyond short term speculation.

Volatility Remains a Defining Feature​

Despite the strong uptrend, the rally has not been linear. Sheth highlighted the sharp correction on January 30, 2026, when silver fell more than 26 percent in a single session. This marked the second largest single session decline in 46 years after 1980.

The pace of both the rally and the correction underscores the metal’s inherent volatility. According to Sheth, such swings are characteristic of silver’s price behavior and should be factored into investment decisions.

From Cyclical Call to Structural Shift​

Initially, the bullish call on silver was driven by valuation and cyclical factors. Silver was inexpensive relative to gold, and the macro cycle appeared to be turning toward rate cuts.

In April 2024, when Comex silver was consolidating in the $21 to $26 per ounce range, Sheth’s team had outlined a potential move toward $50 per ounce under a favorable scenario.

Today, he sees the thesis shifting toward a structural narrative. Multi year base formation, expanding industrial usage, and supply side constraints are reinforcing the argument that the current move may extend beyond a short term cyclical rebound.

Retail Strategy: Allocation Over Speculation​

Given the current global macro backdrop, Sheth advised retail investors to adopt a disciplined approach rather than rush into the trade.

He outlined three key principles:

• Avoid fear of missing out
• Focus on allocation instead of speculation
• Monitor macro indicators such as the US dollar, real yields, and ETF flows

Silver tends to perform well when the dollar weakens and liquidity conditions ease, he noted.

From a portfolio construction perspective, Sheth suggested an exposure of 5 percent to 15 percent, depending on individual risk appetite. However, he cautioned that volatility remains a defining characteristic of the asset class.

“The opportunity today is not about chasing,” Sheth said. “It’s about disciplined participation in what appears to be a structural cycle.”

While probabilities may favor an upward bias, he added that investors must remain prepared for sharp interim swings, a reminder that silver’s appeal lies both in its cyclical dynamics and its long term industrial relevance.