Silver’s record rally fuels bubble debate: Should investors step back as prices hit new highs?

Silver prices have surged to record highs in early 2026, reigniting debate over whether the rally is sustainable or edging into bubble territory. Alok Jain of Weekend Investing draws comparisons with past commodity cycles and explains why today’s silver surge, though stretched in the near term, lacks the traits of earlier speculative manias. 

Gold and silver prices continue to surge amid a powerful rally in precious metals, prompting renewed debate over whether silver’s sharp ascent is sustainable. Gold has touched a fresh lifetime high of Rs 1,50,008 per 10 grams and is trading around Rs 1,49,550, up nearly 2.7 per cent in the session. Silver, meanwhile, has scaled new all-time highs, hitting ₹3,27,101 per kg and trading close to ₹3,26,793, reflecting a gain of more than 5 per cent on the day.

Globally, silver climbed to $94.75 per ounce before settling near $93.25–$93.30, while Indian prices consolidated firmly above the historic ₹3 lakh per kg level. The metal has delivered returns of about 30 per cent in less than three weeks of 2026, raising questions about whether the rally is approaching bubble territory.

According to Alok Jain, Founder of Weekend Investing, comparisons with past speculative episodes are inevitable, particularly the silver bubble of the late 1970s. “The 1970s was a crazy period where inflation was running very hard, the US had huge fiscal deficits, and there was a lot of safe-haven demand,” Jain said, referring to an era marked by the Vietnam War, Cold War tensions and a rapidly devaluing US dollar.

Jain recalled how the rally was amplified by the actions of the Hunt brothers, who aggressively accumulated silver. “They realised that silver was extremely underpriced as a commodity versus the financial products and the money supply that was available,” he said, adding that the brothers went on to control nearly one-third of the world’s private silver supply through physical holdings and futures positions.

That concentration of power ultimately triggered regulatory action. “The easiest way for exchanges and regulators to break the back of a big bull or a big bear is to increase margins,” Jain said. As margin requirements were raised sharply, forced liquidations followed, causing silver to collapse. “Silver went from about $50 in January to nearly $10 by March. In the complete picture, silver lost 78 per cent in just a few months,” he noted.

Silver and geopolitical uncertainty

Jain stressed that the current market setup is materially different. “Right now, there is no elephant in the room that has been identified,” he said, pointing out that today’s rally is driven by broader macro forces rather than a single dominant player. These include declining confidence in fiat currencies, geopolitical uncertainty, and a renewed shift toward real assets.

He also highlighted that inflation, while a concern, is nowhere near the extremes of the late 1970s. “We are not anywhere near that situation right now,” Jain said, referring to the period when US interest rates were raised to nearly 20 per cent, draining liquidity from precious metals.

Is silver overpriced right now?

From a valuation standpoint, Jain believes silver is not structurally overpriced. “If you plot the S&P 500 to gold or silver, you’ll find that ratio is still very, very high versus long-term averages,” he said, suggesting commodities still lag financial assets over the long run.

However, Jain issued a clear warning on risk management. “Liquidity, whenever it goes away, will disappear overnight. The strongest fundamental thesis can be defeated by regulatory intervention,” he cautioned. He described silver as “a very speculative commodity” and warned investors not to equate it with gold, which benefits from sustained central bank demand.

“Silver will not spare you if and when the tide turns,” Jain said, urging investors to avoid leverage and remain nimble. His broader view, however, remains constructive. “My gut feel is that we correct in the short term and this trend continues for several more years. A super commodity bull cycle is certainly on, and it doesn’t seem like we are at the top end of it yet.”