BCA cautions against chasing silver prices higher. Here's why

Investing.com -- Silver’s rally may be poised for a sharp reversal, with BCA Research warning that “the odds of a major drawdown in silver prices have risen.”

In a note on Tuesday, BCA’s chief commodity strategist Roukaya Ibrahim urged investors to avoid chasing the metal’s surge, arguing that the latest gains are being fuelled more by speculation than fundamentals.

According to Ibrahim, “speculative forces appear to be driving silver’s latest upsurge,” with indicators pointing to “extremely overbought conditions.”

The strategist said the parabolic move looks “excessive against the backdrop of relatively disappointing industrial sector demand,” noting that industrial consumption actually fell in 2025.

BCA Research highlighted multiple signs of froth, including surging retail interest and “FOMO-driven buying.”

Investor sentiment has become extremely elevated, and the firm pointed to misinterpretations of Chinese export policy and tariff speculation as factors that contributed to the rally.

Despite market hype, BCA Research stressed that “there is essentially no change in China’s silver export policy.”

The firm also noted that high prices are already triggering “demand destruction,” citing Chinese solar manufacturers moving to base metals. Even though solar installations rose last year, silver demand from photovoltaics still declined due to “silver thrifting.”

Looking ahead, BCA Research believes silver’s surge is increasingly difficult to justify. “Silver and the broader precious-metals complex are showing clear signs of FOMO-driven buying,” it wrote, adding that stretched technical indicators and overbought signals “suggest that a major shakeout is likely.”

Gold, the firm concluded, offers “the most compelling risk-reward profile” in the precious-metals space.

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