Silver is doing that thing again. You know, the heart-stopping plunge that makes everyone who bought at the top sweat through their shirts. Just a few days ago, on January 14, 2026, the metal was screaming toward the moon, hitting an all-time high of $93.75 per ounce. It felt like triple digits were a given. Then, the floor fell out.
By January 15 and 16, spot prices took a 7% dive, settling back toward the $90 mark and even dipping lower in intraday trading. Honestly, if you’re looking at your portfolio and wondering why is silver price dropping after such a legendary run, you aren't alone. It’s a mix of "buy the rumor, sell the news" and some very specific political maneuvering in Washington that caught the big money off guard.
The Tariff Tease and the Trump Factor
The biggest immediate trigger for this sudden cooling was a curveball from the White House. For weeks, the market had been pricing in massive, broad-based tariffs on critical minerals. Since silver was added to the US Critical Minerals List in 2025, traders bet big that a new wall of taxes would make importing the stuff a nightmare. Naturally, people hoarded it. US warehouses saw inventories spike to roughly 434 million ounces—that’s a massive 100-million-ounce jump from where we were just two years ago.
But then, President Trump hit the pause button.
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He instructed Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick to "negotiate" rather than just slapping 232 tariffs on everything immediately. This "surgical approach" basically let the air out of the room. When the fear of immediate, massive import costs evaporated, the speculative "tariff premium" evaporated with it. People who bought silver just to front-run a trade war suddenly had no reason to hold the bag.
The Massive Rebalancing Act
There’s also a boring, technical reason that’s actually quite huge. It’s called index rebalancing. Because silver (and gold) had such a monster year in 2025—silver was up about 150%—these metals now take up way too much space in passive commodity indexes like the Bloomberg Commodities Index (BCOM).
Basically, these funds have rules. If silver is supposed to be 4% of the index but it’s grown to 9% because the price exploded, the fund has to sell. Analysts at TD Securities, specifically Daniel Ghali, pointed out that something like 13% of the total open interest in COMEX silver was slated for sale in mid-January. You can’t dump $5 billion worth of silver contracts into the market without the price getting a bruise.
Why the Dollar’s Sudden Strength Matters
Precious metals usually hate a strong dollar. It’s a simple relationship, kinda like a seesaw. Recently, the US Dollar Index (DXY) found some legs because of drama over who will lead the Federal Reserve. When the administration signaled a preference for more "hawkish" candidates—people like Kevin Warsh who might keep interest rates higher for longer—the dollar ticked up.
Since silver is priced in those dollars, a more expensive greenback makes the metal look pricier to international buyers. Throw in some better-than-expected manufacturing data from December, and you have a recipe for a "risk-off" correction.
Why the "Drop" Might Be a Head Fake
It’s easy to get spooked, but looking at the context is vital. Even with this drop, silver is still up about 15% to 25% since the start of 2026. We are coming off a year where silver outperformed almost everything, including Bitcoin.
The fundamentals are still, frankly, a bit terrifying if you’re a buyer:
- The Solar Squeeze: Solar panels now account for nearly 30% of all industrial silver demand.
- The EV Load: An electric vehicle uses up to 50 grams of silver. That’s double what a gas car uses.
- The Refining Gap: China still controls about 70% of the world’s refining capacity for 19 out of 20 strategic minerals.
Basically, the world is still in a structural silver deficit. We’ve been under-producing compared to what we use for five years straight. This "drop" looks more like a healthy correction in a market that got a little too high on its own supply.
Moving Forward: What to Watch
If you're trying to time your next move, stop obsessing over the daily charts for a second. The real story isn't the 7% dip; it's whether the physical shortage actually forces a default on the COMEX, which some veterans like Thomas Parilla have been warning about.
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Watch the $82 to $84 support levels. If silver holds there, the "drop" is just a discount. If it breaks below $70, then we’re talking about a deeper shift in sentiment. But with data centers needing more silver for AI cooling and circuitry than ever before, the industrial floor under this metal is a lot higher than it used to be.
Don’t let the volatility blind you to the fact that silver has transitioned from a "precious metal" to a "strategic asset." That change is permanent, even if the price is having a bad week.
Next Steps for Investors: Keep an eye on the COMEX inventory levels. If you see those 434 million ounces start to bleed out rapidly despite the higher prices, it means the industrial users are bypasssing the "paper" market to get the physical metal they need. Also, monitor the Federal Reserve chair nominations; a "dove" will likely send silver right back toward $100, while a "hawk" might keep this correction going through February.