Silver 2026 target price $125! Shanghai inventory running low may trigger delivery shocks

Silver breaks through $76 to hit a new high, with an annual increase of 2.5 times. Analyst Peter Krauth warns that the silver target price for 2026 is $125. If the deliverable silver inventory in the Shanghai market continues to decline, it could trigger settlement risks on exchanges, causing sudden price jumps at the delivery end. Krauth points out that the real risk is not interest rates or demand, but physical delivery shocks, which could become a key catalyst for price increases in 2026.

Delivery Crisis Becomes the Biggest Variable in 2026

Analysts believe that the truly quantifiable variable in the silver market may come from physical supply shocks at the “delivery end.” Unlike gold, silver is not only a financial asset but also an industrial material, especially indispensable in solar energy, data centers, electric vehicles, and high-end electronics manufacturing. Financial markets can reduce impact through product substitution or position switching, but the rigid demand for physical silver in the industrial supply chain cannot be replaced by “cash settlement.”

Currently, the market is highly focused on changes in the three major inventory and delivery centers in London, New York, and Shanghai. Some describe this process as a “transportation game”: silver flows between different regions to arbitrage and evade policies, but this movement does not increase total supply; it only changes short-term availability and pricing weights. More critically, the importance of these three locations is not equal—Shanghai is closer to the world’s most concentrated industrial consumption areas. If inventory shortages or delivery pressures emerge in Asia, the spillover effects could be more direct and impactful.

In extreme cases, if large industrial users insist on “receiving physical metal” at delivery points, and exchanges are unable to fulfill contracts, forcing cash settlement, market confidence could be shaken, triggering a gap-up in silver prices. Krauth emphasizes that such “price shocks” are difficult to predict in timing, but once they occur, they are likely to be a key catalyst driving silver prices to explode in 2026. Similar to the tense silver delivery situation in the LBMA in 2020, when silver prices surged from $12 to $30 within weeks, a rise of over 150%.

The Support Logic for the $125 Target Price

(Source: LBMA)

After silver entered the “new high range,” the gold-silver ratio became an important tool for market valuation. Historical data shows that since 1997, the gold-silver ratio has experienced multiple rapid downtrends, with an average decline of over 40%. This means that as long as the gold-silver ratio reverts to its long-term average, silver prices could continue to rise even if gold prices do not increase significantly.

Three Scenario Projections for Silver in 2026

Neutral Scenario: Gold remains at $4,400, gold-silver ratio falls back to the 55 average range, silver reaches $80

Optimistic Scenario: Gold approaches $5,000, gold-silver ratio declines further to 45-40, silver prices could reach $111-$125

Pullback Scenario: Gold falls back to $3,800, gold-silver ratio rebounds to 80, silver could retreat to around $50

Analysts’ neutral projection suggests that if gold stays around $4,400 and the gold-silver ratio drops to about 55, then silver could theoretically reach around $80. This aligns closely with recent highs and indicates that silver has not yet fully exhausted its mean reversion potential.

In a more bullish scenario, if gold approaches $5,000 and the gold-silver ratio further declines to 45 or even 40, silver could rise to between $111 and $125. Historically, during multiple gold-silver ratio downtrends, there have often been “overshoot” phenomena, where the ratio does not stop at the mean but dips even lower temporarily, driving accelerated gains in silver during the late stage of a bull market.

Structural Significance After Breaking $50

Analysis indicates that breaking through $50 has important structural significance. The $50 level was a key high point for 45 years; now that it has been effectively surpassed, the market is redefining new price ranges. In other words, this level may shift from a long-term resistance to a new “bottom reference.” Without historical resistance levels, the upside potential becomes harder to measure with traditional technical frameworks, and volatility is likely to increase.

This breakout carries significant psychological meaning. Many investors have set stop-loss or take-profit points near $50; once broken, these technical selling pressures are released. More importantly, surpassing a historical high often attracts a new wave of chasing momentum, creating a self-reinforcing positive cycle. In 2011, silver surged from $30 to $49.8 in less than three months, demonstrating the explosive power of breaking through key resistance levels.

Shift in Capital Structure: From Gold to Silver Allocation

Beyond supply, demand, and delivery factors, capital structure shifts may continue to drive silver. Analysts believe that when gold prices stay above $4,000, many retail investors view silver as a “more affordable alternative asset,” leading to a “shift from gold to silver” allocation. This psychological and capital flow dynamic often pushes silver to outperform gold in the late stages of a bull market and further drives the gold-silver ratio downward.

This phenomenon was evident during the 2020-2021 bull run. After gold broke above $2,000, retail funds flooded into silver ETFs and physical silver coins, pushing silver prices from $12 to nearly $30. If in 2026 gold remains high or hits new highs, similar capital migration could occur again.

Overall, the volatility of silver within record ranges will intensify significantly, but considering factors like mean reversion of the gold-silver ratio, inventory tightness, and delivery risks, the market risk structure remains skewed upward. Investors should balance trend opportunities with high volatility, paying close attention to inventory changes, delivery pressures, and the potential amplification of macro risks.