Silver, Copper Eclipse Gold as Top Metals Bets on Supply Fears

Core Viewpoint - Silver and copper are emerging as the leading metals in trading, surpassing gold, with both institutional and retail traders anticipating significant price rallies heading into 2026 [1] Group 1: Silver Market Dynamics - Silver prices have nearly doubled in 2023, with most gains occurring in the last two months due to a historic supply squeeze in the London market, driven by increased demand from India and silver-backed ETFs [2] - Recent weeks have seen a slight easing of the supply crunch in London, but other markets, particularly China, are experiencing decade-low inventories [2] - The volatility of silver has increased, with a steeper parabolic price movement observed compared to previous rallies, indicating concentrated buying in a shorter timeframe [3] Group 2: Investment Trends - Implied options volatility in the iShares Silver Trust reached its highest level since early 2021, with nearly $1 billion flowing into the ETF over the past week, surpassing inflows into the largest gold fund [4] - Western investors, previously under-allocated to precious metals, are increasingly investing in silver ETFs, suggesting potential for further inflows as allocations normalize [5] - There has been a surge in options trading on Comex silver futures, with retail traders actively participating, as evidenced by high trading volumes on micro futures contracts [6] Group 3: Speculative Trading Activity - A notable example of speculative trading is the transaction of over 5,000 lots of Comex silver February $80/$85 call spreads, equivalent to 25 million troy ounces, indicating a strong belief in a rally at the start of the new year [7]