Why Silver Price Could Be Headed for a New All-Time High

Silver just went through one of those drops that makes it feel like the whole story is finished. A slide from around $121 down into the mid-$60s looks nasty on the chart, and the first reaction is usually: okay, the bull market’s over.

But Karel Mercx, an analyst on X, is looking at it completely differently. His take is that this wasn’t the end of silver’s run at all. It was the market doing what it always does in commodities, shaking out the weakest hands before the next move. And if he’s right, silver might actually be setting up for something much bigger from here.

This Was a Leverage Wipeout, Not a Demand Collapse

Mercx argues that the crash wasn’t about people suddenly losing interest in physical silver. It was about the futures market getting overloaded with reckless leverage.

On COMEX, some traders were controlling full silver positions with almost none of their own money, basically putting up a few cents and borrowing the rest. That works fine in calm conditions.

But once volatility hits and margin requirements jump, those positions don’t survive. Traders get margin calls, forced selling kicks in, liquidations pile up, and prices drop even harder. So in Mercx’s view, this wasn’t silver “breaking,” it was paper leverage getting flushed out.

Read Also: The Next Dollar Collapse Has Started—And Silver Could Be the Trade of the Decade

Open Interest Dropping Is Actually a Healthy Sign

One of the more interesting points he makes is about open interest. Mercx notes that outstanding futures contracts peaked around 176,000 when silver was trading near $50, and that number has now fallen closer to 137,000.

That’s a big deal because it shows a lot of speculative excess has already been cleared out.

When that froth disappears, it often leaves the market in stronger hands, with less forced selling pressure hanging over the next move. In other words, the reset may actually be bullish.

The Physical Market Is Still Flashing Stress

The futures market is one thing, but Mercx points out that the real story is underneath it, in physical silver. He highlights lease rates in London, the biggest physical trading hub in the world, sitting around 4.5%.

Normally, short-term silver lending rates hover near zero. Anything above 1% already signals stress. At 4.5%, the message is loud: supply is tight.

He also points to extreme backwardation, where buyers are willing to pay more to get silver right now instead of later. That’s unusual for a storable metal, and it’s usually a sign that industrial users and fabricators need immediate supply.

Why Silver’s Next Move Could Be Much Bigger

Mercx’s core argument is that the structure of the market has changed. The leverage that caused the crash has mostly been washed out, but the physical tightness hasn’t gone anywhere.

Inventories at COMEX and in Shanghai are still falling. China has tightened export permits, and the U.S. has added silver to its list of critical minerals. That’s not the kind of backdrop that usually leads to a long-term collapse.

Mercx believes that if silver can form a higher low around the $70 area, that could become the new floor, and the base for the next leg higher.

Silver’s crash scared a lot of people out. That’s what shakeouts are designed to do. But Mercx’s point is that this wasn’t fundamentals breaking. It was leverage breaking.

With speculators forced out, open interest falling, inventories tightening, and physical demand still pressing, silver may be entering the kind of environment where new highs become realistic again.

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