Silver prices managed a 1.90 percent rebound on Wednesday, climbing to $78.10 per ounce. This recovery is notable given it occurred against a backdrop of severe geopolitical disruption and fresh uncertainty over U.S. monetary policy, highlighting the metal’s current volatility. Since the start of the year, silver remains roughly ten percent higher, yet it has shed more than 15 percent since the onset of the Iran war.
The immediate pressure stems from the Strait of Hormuz, a critical maritime chokepoint now in its second month of effective closure. Iran’s navy seized two container ships there on Wednesday, following reports of attacks on three other freighters. Data from Polymarket indicates only three to five vessels are now passing through the strait daily, a drastic drop from the pre-crisis flow of over 100. This artery normally handles about 20 percent of global oil and liquefied natural gas trade, leading the International Energy Agency to label the situation the largest supply disruption in the history of the global oil market. While U.S. President Trump has extended the ceasefire with Iran indefinitely, the passage remains blocked, driving energy prices higher and stoking inflationary pressures.
Simultaneously, testimony from Kevin Warsh, the nominee for Federal Reserve Chair, introduced new uncertainties for interest-rate sensitive assets. Warsh stated the Fed had lost credibility and called for a “regime change,” suggesting a narrower mandate, a revised inflation framework, and less reliance on forward guidance. He acknowledged positive inflation trends but noted the Iran war and rising gasoline prices complicate reaching the central bank’s target. Markets reacted swiftly: the 10-year Treasury yield rose 4 basis points to 4.29 percent during his hearing, while the 5-year yield jumped 6 basis points to 3.91 percent. Higher bond yields and a stronger dollar increase the opportunity cost of holding non-yielding silver, creating a classic headwind.
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Beneath this turbulent surface, silver’s fundamental picture remains supportive. The Silver Institute and Metals Focus forecast a sixth consecutive annual supply deficit for 2026, estimated at 46.3 million ounces, up from 40.3 million the previous year. Demand dynamics are shifting. Interest in coins and bars is projected to surge by 18 percent, fueled by a recovery in U.S. retail investment. Industrial demand is anchored by artificial intelligence infrastructure, the automotive sector, and power grids, with solar energy and electronics accounting for roughly 20 percent of annual consumption. However, demand for jewelry and silverware is expected to see a double-digit decline due to high prices.
This structural tightness informs analyst forecasts. J.P. Morgan anticipates a 2026 average silver price of $81 per ounce. Commerzbank is more bullish, projecting $90 by year-end and a rise to $95 by the close of 2027. One traditional valuation metric has shifted: the gold-silver ratio stood at 60.93 on Wednesday, below its long-term average near 70, indicating silver has lost its historically cheap status versus gold. The metal’s near-term path will be dictated by the duration of the Hormuz blockade and the evolving inflation fight under the next Fed leadership.
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