Silver is having its worst month in 46 years. A war did it — just not in the way anyone expected.
The metal that hit an all-time high of $121.67 per ounce on January 29 traded near $73 on March 31 — down more than 40% in under two months, and approximately 25% in March alone. Rather than triggering a flight to safety, the conflict unleashed an oil shock that has made silver far less attractive to hold.
Iran’s effective closure of the Strait of Hormuz pushed Brent crude above $112 a barrel by month’s end — up more than 55% in March, the largest monthly gain on record for the contract — stoking inflation fears across global markets.
Those fears led the Federal Reserve and other major central banks to signal higher-for-longer interest rates, erasing prior expectations for 2026 cuts. A stronger dollar and rising Treasury yields followed — both direct headwinds for non-yielding assets like silver and gold. Institutional investors sold their most liquid holdings to cover margin calls, and after 2025’s historic rally, that meant metals.
The scale of the unwinding reflects how crowded the trade had become. Silver surged 135% in 2025, pulling in retail investors, momentum traders, and hedge funds with little long-term commitment to the position.
When the Iran war broke out February 28, spot silver stood near $117. By March 23 it had touched $61.21. The month also absorbed a separate shock: on January 30, silver futures plummeted 31% in a single session — their worst one-day drop since March 1980 — after Trump’s nomination of Kevin Warsh as Federal Reserve chair sent the dollar soaring.
Unlike gold, silver carries significant industrial demand — it is a key input for photovoltaic cells, semiconductors, and data center hardware — making it more exposed to the growth fears the Iran war has amplified. The OECD raised its 2026 US inflation forecast to 4.2% from a prior projection of 2.8%, and cut its 2026 global growth projection to 2.9%, down from 3.3% in 2025.
Monday brought a partial bounce, with silver climbing 2.13% to $71.46 as buyers returned at depressed levels — only to stall again as ceasefire talks remained unresolved as of Tuesday, March 31.
The pattern has become the story. Silver is now trading almost entirely on ceasefire probability, swinging several percentage points on each headline and surrendering the gains whenever Tehran rejects a proposal.
Analysts at FX Empire have flagged $70 as the key psychological threshold: a sustained close above it would open a path toward recovery, but every time diplomacy collapses, silver retreats toward or below that level. The metal has now tested $70 multiple times without a convincing hold.
JP Morgan currently expects silver to average $81 per ounce in 2026. Whether it gets there depends less on the Fed’s posture and more on a single variable: whether Iran and the US find a path to reopen the Strait of Hormuz — and whether that path holds.
Information for this story was found via the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
