Is Now the Right Time to Buy Silver? What the Numbers Tell Us for 2026

After silver’s stunning 144% surge in 2025, many investors are wondering whether they should jump in now or wait for a pullback. The short answer: it depends on your timeline and risk tolerance. While the fundamental case for silver remains compelling, expecting another year of triple-digit gains could set you up for disappointment. Here’s what the data and history suggest about purchasing silver in early 2026.

Understanding Silver’s Twin Engines: Industrial Demand and Monetary Hedging

Silver’s 2025 performance wasn’t driven by a single factor. Yes, fears of supply constraints played a major role—China tightened its export restrictions on precious metals toward the end of 2025, with new curbs taking effect on January 1, 2026. But the full story is more complex.

On the supply side, China’s restrictions target producers’ shipments to protect domestic electronics manufacturing and gain leverage in trade negotiations. This created genuine supply concerns, especially since China ranks as the world’s second-largest silver exporter (after Hong Kong). Approximately 58% of annual silver demand comes from industrial applications like electronics manufacturing and solar panels, while jewelry accounts for another 18%. Investors represent only about 16% of demand, which means industrial disruptions can trigger dramatic price swings.

On the demand side, investors have been accumulating silver as a hedge against currency depreciation and fiscal instability. The U.S. government ran a $1.8 trillion budget deficit in fiscal 2025, pushing the national debt to $38.5 trillion. With another trillion-dollar-plus deficit projected for fiscal 2026, investors increasingly fear the only resolution is expanding the money supply—which would further erode the dollar’s purchasing power. Since the U.S. abandoned the gold standard in 1971, the dollar’s real purchasing power has declined roughly 90%, making any dollar-denominated asset like silver appear more valuable in nominal terms.

The Reality Check: What History Says About Silver Returns in 2026

Here’s where expectations need tempering. Over the past 50 years, silver has delivered a compound annual return of just 5.9%—far more realistic than 2025’s extraordinary performance. Silver is also one of the more volatile precious metals. Before 2025, it hadn’t reached a new record high in 14 years, and it has suffered declines exceeding 70% on multiple occasions following powerful rallies.

The upside is real, but the downside risk is material. China holds significant power in this market; if it reversed its export restrictions tomorrow, silver would almost certainly experience a sharp correction. This volatility makes silver unsuitable for investors seeking steady, predictable returns or those with short time horizons.

The Practical Case for the iShares Silver Trust

For most investors, the iShares Silver Trust (NYSEMKT: SLV) offers a more convenient alternative to buying physical metal. You can purchase or sell shares instantly through any major brokerage without worrying about storage and insurance costs. Physical silver comes with real expenses—secure vaulting can easily run $100-300 annually per $10,000 invested.

The ETF does charge an expense ratio of 0.5% annually, which translates to roughly $50 per year on a $10,000 position. While not free, this is typically cheaper than storing physical metal, making SLV a reasonable vehicle for gaining silver exposure.

However, the ETF doesn’t eliminate market risk—it just removes the logistics. If silver declines, SLV will decline with it.

Should You Buy Silver Now? A Decision Framework

Your answer depends on three factors:

1. Your investment timeline: If you’re buying for the next 1-2 years, manage expectations carefully. History suggests lower returns ahead. If you’re investing for a decade or longer, the volatility becomes more manageable and the 5.9% long-term average becomes more relevant.

2. Your macro outlook: If you believe the U.S. government will continue running massive deficits and the Federal Reserve will ultimately choose currency devaluation over fiscal austerity, silver becomes more attractive as an inflation hedge. If you expect policy shifts toward deficit reduction, the bullish case weakens.

3. Your risk tolerance: With potential 70% drawdowns possible in this market, silver should only represent a small portfolio allocation for conservative investors. More aggressive investors with higher risk tolerance can afford larger positions, provided they maintain that long-term perspective.

The fundamental case for silver remains intact—supply constraints are real, currency risks are elevated, and industrial demand remains strong. But 2025’s 144% return was exceptional, not typical. Buying silver now is reasonable for long-term investors seeking portfolio diversification and a hedge against monetary instability. It’s far less suitable for those chasing a repeat of last year’s gains.