Société Générale’s quantitative model is signalling “bubble
conditions” in the silver market, but the bank’s analysts are less certain the
rally is driven only by speculation.
Silver fell sharply yesterday (Monday) after
margin requirements were raised. The move marked its largest single-day
percentage drop since early February 2021. Prices recovered today and remain up
about 153% this year.
Silver Rebounds Amid Mixed Global Markets
Société Générale’s commodities research team, led by Mike
Haigh, said the rally looks less extreme when viewed on a logarithmic scale
rather than a standard linear chart.
From that perspective, the move reflects
“the same compounding story” seen in silver over the past 25 years.
Market conditions were mixed on Tuesday. European equities
opened slightly higher. US futures traded lower. Silver rebounded and recovered
part of the previous session’s losses.
Rebound Continues Despite Bubble Framework Warning
Kathleen Brooks, research director at XTB, said silver was
“up more than 2.5%” on the day. She said that “supply concerns limit the
downside for the precious metal.”
Brooks added that the price had “clawed back
some of Monday’s losses” as tight physical supply supported the market.
Despite the rebound, Société Générale said this year still
stands out. Using a log-periodic power law framework that flagged earlier
bubbles in 2010 and 2020, the bank said the current move also fits its
definition of a bubble.
In that model, prices accelerate rapidly toward a
critical point. However, Haigh warned against relying only on quantitative
signals, saying structural changes linked to de-dollarization and geopolitical
risks are factors “a model cannot capture.”
SocGen’s model says ‘yes, silver’s in a bubble’ but its analysts say ‘no’ it isn’t. https://t.co/RLOrM1MU6V
— MarketWatch (@MarketWatch) December 30, 2025
China Export Curbs Threaten Silver Supply
The bank also pointed to rising supply-side pressures. China
plans to impose export restrictions from January 1. The country accounts for
60% to 70% of global refined silver supply. Société Générale estimates exports
could fall by 30%. This could deepen an existing global deficit of about 200 to
230 million ounces.
Possible regulatory action in the United States could add
further strain. If silver is classified as a national security concern, market
tightness could increase. Physical silver is already trading at premiums of 10%
to 15% in several major markets.
This article was written by Tareq Sikder at www.financemagnates.com.
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