Silver Snaps Back From Worst Monthly Rout in Decades as Shanghai Premium Widens

The Bounce

Silver entered March 31 down over 20% on the month — the worst monthly precious metals rout since October 2008. The selloff, triggered by Kevin Warsh's hawkish Fed chairmanship and a rising dollar, took silver from the $90s to a low near $67.75 on March 26. But on Q1's final session, the bid returned.

Spot silver opened around $71.19 and climbed to $73.03 by mid-morning, a 2.6% move. The Hyperliquid perp amplified that to 7%, pushing through $74.88 — thin perp-market liquidity and leveraged positioning exaggerating the underlying spot recovery.

The catalyst wasn't a single headline. A 0.37% pullback in the DXY gave metals room. Early-session rumors of a multilateral peace proposal to resolve the US-Iran crisis — including reopening the Strait of Hormuz — briefly pushed 10-year yields down to 4.31% before they snapped back to 4.43%. The intraday whipsaw in bonds was enough to give precious metals a window, and bargain hunters took it.

Shanghai Is Pulling Physical

The structural story beneath the bounce is the widening gap between Eastern and Western silver markets. The Shanghai silver premium has climbed to 12.6% over COMEX — and some estimates put the spread as high as 29% when accounting for China's 13% VAT and logistics costs. At those levels, the arbitrage is straightforward: buy Western vaults, ship East, pocket the spread.

The result is visible in COMEX data. Registered silver inventories fell below 100 million ounces for the first time, dropping from 167 million ounces in October 2025 to 98.1 million as of early February — a 38% decline in three months. India added 40 million ounces to exchange-traded funds over just two months. Shanghai Futures Exchange vaults have seen their largest weekly outflows on record.

2026 marks the sixth consecutive year of global silver supply deficit, with the Silver Institute projecting a 67-million-ounce shortfall. The paper selloff in March didn't change the physical reality — it just widened the premium Asia is willing to pay.

The April 6 Deadline

The Strait of Hormuz remains closed to most commercial shipping, and Trump's latest deadline for Iran to reopen it is April 6. Iran has rejected the US 15-point peace plan and demanded reparations, sovereignty recognition over the Strait, and sanctions relief. Tehran says Hormuz stays closed until a deal is reached.

For silver, this is the binary event into Q2. If April 6 passes without resolution — which looks likely given Iran's posture — expect the safe-haven bid to intensify. Brent already closed March with a roughly 55% monthly gain, the largest in the contract's history, and the oil-inflation feedback loop continues to pull capital into metals. Trump telling the Financial Times he wants to "take the oil" in Iran isn't exactly de-escalatory.

Silver at $74.88 is still down roughly 20% from its March highs and over 40% from January's $121 peak. Whether this is a dead-cat bounce or the start of a structural recovery depends almost entirely on what happens at Hormuz in the next week.

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