Silver Could Set a Peak for Years - Strategist Flags Silver's Rare Three-Sigma Extreme

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Silver is currently exhibiting rare statistical extremes in its pricing pattern, drawing attention from analysts and investors. Commodity strategist Mike McGlone has noted that the metal is approaching a historically significant phase. Observations from recent charts show silver nearing the upper bounds of a long-term trend channel.

McGlone highlighted on social media that these conditions mirror past turning points in the silver market. He explained that the metal's price is now reaching levels that have historically signaled major inflection points. These include extended consolidations or reversals following such extreme deviations from long-term trends.

The term "three-sigma asset" is being used to describe silver, referring to its position far beyond the typical statistical range. This has led to concerns about speculative excess and increased reversal risks. McGlone's analysis suggests that silver may reach a multiyear high by 2026.

Why Did This Happen?

Silver's position relative to the S&P 500 has reached a historically low point in terms of ounces per index. This metric has not seen such a deviation since 2013, signaling a shift in relative valuation. The metal is also trading at a 3.2x premium to its 60-month moving average, a level last seen in 1979 during the Hunt brothers' market corner.

The 60-month premium suggests that silver is significantly overextended in terms of its long-term valuation. This condition is commonly associated with speculative behavior and has historically preceded major market corrections. Analysts are therefore cautious about further price extensions.

How Did Markets React?

The broader precious metals market saw strong performance in 2025. Gold prices rose 65.2%, while silver surged 150.1% in the same period. These figures significantly outpaced equity market returns, with the S&P 500 and FTSE All-World gaining 17.2% and 23.1%, respectively.

Silver's rally was driven by a combination of supply constraints and investment demand. The market is expected to see its fifth consecutive annual deficit in 2025. This reflects tight supply and growing investor appetite, particularly for industrial applications in solar and semiconductor manufacturing.

What Are Analysts Watching Next?

Market participants are now watching for technical signals that may indicate a shift in trend. Silver's current price near $86.50 is in a consolidation phase, with traders closely monitoring whether it can hold above the 20-day EMA. A break below this level could signal a potential correction toward $73.85.

In addition to technical analysis, macroeconomic factors such as US Federal Reserve policy and geopolitical events remain key variables. The recent addition of silver to the USGS's critical minerals list has also increased its strategic importance in US markets.

Analysts are also examining the broader implications for portfolio allocations. With silver outperforming both gold and equities in certain metrics, investors are reassessing their exposure to the metal. This has led to increased ETF inflows and growing demand from institutional players.