Silver is in a correction. But is it too soon to buy?

War and inflation are thought to be good for precious metals. But since the start of the US-Iran war, gold and silver have fallen. 

This has led some to wonder what is going on and others to wonder whether now is the time to buy the dip. 

The evidence suggests gold and silver are dropping because leveraged speculation is diminishing and traders are taking profits. Broadly speaking, the silver market is looking like a much more sensible place than in January. 

Why silver is falling 

Some kind of correction in precious metals was inevitable. In February, there were signs everywhere that the rally was getting out of hand. 

Retail buyers for gold and silver were everywhere, which matters as coin and bar sales are largely unregulated and the most prone to herding. 

Speculators were using a lot of leverage, particularly via geared ETFs and futures. As silver is a small market, large leveraged trades can create big intraday swings in precious metals. 

ETFs started dislocating. Silver ETFs were trading at premiums, according to the Bank for International Settlement. (They are meant to trade firmly in line with NAV, thanks to their “creation-redemption mechanism”.) 

Conspiracy theorists – peddling misinformation about manipulative bank short selling and commodities exchange fraud – had run amok in online investment forums. 

In this setting, the US-Iran has helped reset precious metals expectations. Expediting the reset is the threat of central bank rate hikes, which trigger margin calls and make leveraged speculation harder to finance. 

Is it time to buy the dip? 

Given the size of these dips now, some have questioned whether it’s a buying opportunity. 

No-one has a crystal ball. But evidence suggests it is still too soon. 

Trading volumes in precious metals instruments across the deck – options, futures, ETFs – have thinned the past two months. 

For the dip-buying thesis this is a problem. Dip buying is difficult in thin markets because thin markets are fragile markets. When there are fewer buyers there is less cushion for selling pressure. And given the strength of the gold and silver rally the past two years, a lot of traders are sitting on profits and looking to sell. 

At the same time, US 10-year Treasury yields are hovering at recent highs, supporting the US dollar across both spot and forward markets. Gold and silver are sometimes described as an inflation hedge. But in the short term they tend to trade inversely to the dollar, with little correlation to inflation gauges like 2-year breakevens. (Oil, given its weight in CPI baskets, tends to be the better short-term inflation hedge.) 

So while gold and silver prices have fallen, and lower prices are always nicer for buyers, the tape still suggests it’s too soon to rush in. 

The silver lining

That said, there is good news for gold and silver investors: early signs suggest the worst is likely behind us. 

Speculative activity has dropped sharply in March – driving out the froth. 

Futures positioning across precious metals has been cut by both retail and institutional investors. 

Silver ETFs, which tend to drive marginal flows globally, have seen outflows in 2026 and stopped trading on premiums. 

(Gold ETFs by contrast often feature in model portfolios, making their flows more disciplined.) 

That combination tells you “weak longs” are leaving the market. 

Adding to this: silver lease rates are falling, or more accurately returning to normal. A partial driver of the 2025 silver rally was that industrial consumers, solar panel makers among them, faced lease rates that spiked to 30% or more against a normal rate closer to prevailing central bank rates. Unable to absorb those costs, many were forced to buy silver in the physical market outright, adding further demand pressure. 

That dynamic is now easing too. In all, we have a more normal market that’s better positioned for another leg up. 

About ETF Shares

ETF Shares is a low-cost index ETF issuer, based at the Macquarie University Incubator. We specialise in US-focused ETFs, such as the ETFS Magnificent 7+ ETF (ASX: HUGE) and ETFS US Quality ETF (ASX: BEST)