Silver Falls 40% From January Peak, but Indian Buyers Still Won't Bite

Silver went on one of the wildest runs in commodity history over the past year, and it's now in the middle of an equally wild unwind.

According to the Times of India, silver hit an all-time high of over Rs 4 lakh per kg on the Multi Commodity Exchange in January 2026. That capped a rally of more than 300% year-on-year. By this week, the metal had fallen more than 40% from that peak, trading around Rs 2.35 lakh per kg in Mumbai's spot market.

Normally a crash that size brings buyers rushing back in. Not this time.

Demand Isn't Coming Back

Traders and analysts told the Times of India that investment demand across silver ETFs, bars, and coins has dropped off. The people who bought silver near the top are sitting on steep losses and don't want to add to the position, even at a 40% discount.

Chirag Sheth, global business head at Public Gold Bullion (SG) Pte, told the Economic Times that international prices are unlikely to break $100 per troy ounce anytime soon unless there's a resolution to the US-Iran conflict. Sheth argues silver is undervalued at current levels, but that's his call, and it's a call plenty of burned investors clearly aren't ready to make with their own money.

Carsten Menke, head of Next Generation Research at Julius Baer, offered a more sober read, telling the Economic Times that the market is "still digesting the aftermath of the speculation-driven frenzy." In plain terms, a lot of people chased the rally too late and are now nursing losses instead of buying the dip.

That's the story of every speculative mania. Prices go vertical, latecomers pile in near the top, and when the correction hits, those same people are the last ones willing to buy back in. No government bailout is coming for silver speculators, nor should one.

The Bigger Problem: 2,000 Tonnes Already on the Way

Indian bullion dealers and refiners had already placed orders for roughly 2,000 tonnes of silver, and that metal is currently in transit, according to the Times of India and Aman Shanti News.

India imports around 7,000 tonnes of silver a year, so 2,000 tonnes represents a significant chunk of annual demand arriving into a market that's already sitting on excess inventory with no buyers lining up.

James Jose, president of the Precious Metals Refiners Forum, said refiners and dealers are facing an inventory problem both internationally and at home, with no new investors stepping in and no clear signal that prices are about to turn higher.

That's a real squeeze for the industry heading into India's festive season, when jewelry and gifting demand for precious metals typically picks up. If that seasonal demand doesn't absorb the incoming supply, dealers could be stuck holding inventory at a loss, or forced to discount further to move it.

Industrial Demand Adds to the Pressure

Sheth told the Economic Times that the ongoing US-Iran tensions have weighed on the solar, semiconductor, and EV industries, all of which use silver as an industrial input.

Menke pointed to a broader shift toward cheaper substitutes like aluminum and copper in some applications, along with a softer growth outlook for Chinese solar module makers, historically among the largest industrial consumers of silver.

Investment demand has dried up because burned buyers won't chase a falling price, and industrial demand is softening because manufacturers are finding cheaper alternatives and facing their own uncertain outlook tied to the unresolved US-Iran situation.

What Happens Next

The open question is what dealers do with 2,000 tonnes of silver that's already committed and on the water. If festive-season demand in India doesn't materialize, or if global prices stay pinned below $100 an ounce as Sheth expects, refiners could be facing markdowns or extended inventory holding costs through the end of the year.

No one quoted in these reports is predicting a near-term price recovery. The bullish case rests entirely on either a resolution to the US-Iran conflict or a rebound in industrial and investment demand, neither of which has a confirmed timeline.