EXCLUSIVE: Silver Is Overbought - But That Doesn't Mean The Story Is Over

Silver is flashing a classic short-term warning — and long-term investors shouldn't ignore it. After a powerful 12-month rally, momentum indicators show the metal entering overbought territory. RSI (relative strength index) levels above 70 often precede pullbacks. But this may be one of those moments where focusing only on the technical risks misses the bigger structural shift underway.

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Volatility Is The Price Of Admission

Silver's violent price swings are not a bug — they're the feature. In an exclusive email interview with Benzinga, Ed Egilinsky, managing director and head of Sales, Distribution & Alternatives at Direxion, was blunt about the risks, noting that "silver can be volatile and has experienced drawdowns (peak to valley declines) of over -50%."

History confirms it: silver rarely corrects gently, and overbought signals matter.

Chart created using Benzinga Pro

Why This Rally Feels Different

What makes the current setup unusual is what isn't driving it. There has been no volatility spike, no panic bid, and no classic risk-off backdrop, as can be witnessed in the price trend of the iShares Silver ETF (NYSE:SLV), which serves as a proxy for silver.

Instead, silver has rallied during a period when market volatility has remained mostly muted. That points to demand coming from somewhere else — namely industrial usage tied to AI infrastructure, semiconductors, and renewable energy.

Structural Demand Vs Tactical Exhaustion

While near-term cooling wouldn't be surprising, the demand drivers beneath silver look increasingly durable. These end markets are expanding regardless of short-term macro noise, giving silver something it has often lacked: a non-speculative floor.

Silver may be overheated in the short run, but pullbacks could increasingly look like volatility — not the end of the story. “For those individuals who find it difficult to time the Silver market or commodities in general, might consider more of a ‘buy and hold approach’ to commodities…Right now, based on price trends, the strategy continues to be long both Gold and Silver,” said Egilinsky.

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