As 2026 approaches, silver and copper have replaced gold as the hottest trading commodities in the metals market. Institutional and retail traders are actively positioning themselves, betting that their prices will continue to achieve historic gains.
As we approach 2026, silver and copper have replaced gold as the hottest metals trading commodities. Institutional and retail traders are positioning themselves to capitalize on their record-breaking price rallies.
The price of silver has nearly doubled this year, with most of the gains occurring in the past two months, driven by a historic supply crunch in the benchmark London market amid surging demand from India and silver-backed exchange-traded funds (ETFs). Although the tightness has eased in recent weeks as more silver has arrived at London vaults, other markets remain constrained: China’s silver inventories are at their lowest level in a decade.
Ed Meir, an analyst at Marex Group, noted that this rally in silver is more volatile. 'If you look at the chart, this upward move is forming a steeper parabolic curve than any previous rally. The buying is more concentrated, and the timeframe is much shorter.'
Silver has recently outperformed gold. Since gold prices hit an all-time high on October 20, they have mostly moved sideways, while silver has surged over 11% to new record highs, and copper has gained nearly 9%.
The implied option volatility of iShares Silver Trust, the largest ETF tracking silver, rose to its highest level since early 2021, when silver briefly captured the attention of meme stock traders. Over the past week, approximately $1 billion flowed into the ETF, surpassing inflows into the largest gold fund, further supporting spot prices.
Trevor Yates, senior investment analyst at Global X ETFs, pointed out that Western investors—whose allocations to precious metals have long been significantly underweight—have flocked into silver ETFs in recent months. As asset allocations gradually normalize, there remains significant room for further inflows.
With markets seeking protection against heightened volatility, particularly further upside moves, COMEX silver futures options have seen a surge in demand. Retail traders are flooding into the market—CME data shows that the five-day average trading volume of micro futures contracts has reached its second-highest level since mid-October.
One example of market frenzy is lottery-style options trading: Last Wednesday and Thursday, more than 5,000 lots of February COMEX silver call spreads with strike prices of $80 and $85 changed hands, equivalent to 25 million ounces, establishing positions betting on a frenzied rally in silver at the start of the new year.
To be sure, higher volatility requires further sharp swings to sustain, especially to support prices reaching unprecedented levels. Mike McGlone, senior commodity strategist at Bloomberg Intelligence, wrote in a client note that silver prices were already 82% above their five-year average as of December 2, nearing the most extreme year-end deviation relative to that average since 1979.
Marex's Meir believes it is difficult to ascertain where this rally in silver will end.
"When the price chart breaks out like this, there are no more resistance markers," he said. The top "could be $85 or it could be $60."
Although copper has weaker financial attributes, the growing electrification demand for powering artificial intelligence data centers and clean energy projects has led strategists to predict supply shortages in the coming years.
Over the past week, as copper prices reached a record high above $11,600 per ton on the London Metal Exchange (LME), the at-the-money option volatility for the COMEX March contract rose by more than four percentage points, with the largest open interest concentrated in call options priced above current market levels.
Since President Trump announced plans in February this year to impose additional tariffs on copper to boost domestic supply in the U.S., the pricing and trade flows of copper have been disrupted. This decision caused New York futures prices to surge above those on the LME, triggering a record spike in U.S. copper imports, with traders including Mercuria Energy Group, Trafigura Group, and Glencore capitalizing on the arbitrage opportunities.
Xiaoyu Zhu, a trader at StoneX Financial Inc., stated that due to copper’s fundamentally structural bullish factors, its downside price potential will remain limited. He noted that supply disruptions at major mines have exacerbated tightness just as electrification and energy transition demands are rising.
Although arbitrage flows slowed at the end of July after Trump unexpectedly exempted commodity-grade copper from tariffs at the end of July, trading companies have recently resumed rushing shipments of more copper metal following Trump’s pledge to reconsider imposing tariffs on raw copper next year.
Greg Sharenow, a portfolio manager at Pacific Investment Management Company (PIMCO), stated that the global supply-demand balance has tightened significantly due to materials being redirected to the U.S. because of actual or potential tariffs. Additionally, incentives—reflected in U.S. prices far exceeding global benchmark levels—are favorable for retaining copper within the United States.
Whether in precious metals or copper, one contributing factor to the tightening supplies in certain global metal markets has been the result of arbitrage trades.
"It is hard to say how long this situation will last, so these commodity prices may experience a 10% or 15% correction, but this will not alter their long-term fundamental story," Sharenow said.
Editor/jayden
