Silver Prices: Bubble Signals or Continued Growth?

?
The debate over whether silver is in a bubble has intensified among investors. On December 30, French bank Societe Generale reported that its quantitative models indicate bubble-like behavior in silver prices, prompting a deeper discussion on how to interpret these signals.
Dr. Mike Haigh, head of FIC & Commodity Research at Societe Generale, applied the Log-Periodic Power Law Singularity LPPLS framework to assess silver s price movements. The analysts noted a recent dramatic surge above 80 oz that some perceived as bubble-like. However, they emphasized that viewing the data on a logarithmic scale reveals a more stable trend, stating,
The logarithmic scale is the correct baseline because it clearly reveals the underlying exponential trend.
While the LPPLS framework suggests a potential bubble in the silver market, Societe Generale cautioned against interpreting these model outputs as standalone forecasts. They warned,
If one were to rely solely on this model, we could claim that the silver market is in a bubble. We firmly warn against this.
The bank s research also pointed out that silver s smaller and less liquid market structure compared to gold makes it more susceptible to herding behavior and amplified volatility. The analysts stated,
We therefore prefer to interpret the bubble regime as potential instability indicators, as we would always expect healthy corrections to extreme price moves.
Despite the technical indicators suggesting potential instability, Societe Generale highlighted fundamental factors supporting silver demand. These include de-dollarization trends, geopolitical uncertainty, and tightening physical supply. The bank noted upcoming export restrictions from China, which supplies a significant portion of refined silver globally and could exacerbate existing supply deficits.