MUMBAI – In an unprecedented move that has rewritten the history of Indian commodity markets, silver futures on the Multi Commodity Exchange (MCX) breached the psychological barrier of ₹4,00,000 per kilogram on Thursday, January 29, 2026. The “white metal” surged over ₹22,000 in a single session, outshining gold and delivering a staggering 73% return in the first 29 days of the year alone.
While the rally has sparked a frenzy among retail investors, veteran market analysts are sounding the alarm, drawing chilling parallels to the infamous 1980 “Hunt Brothers” silver cornering and subsequent crash.
The Perfect Storm: Why Prices Scaled ₹4 Lakh
The ascent to ₹4 lakh was not driven by a single event but a rare alignment of industrial scarcity and geopolitical panic.
- The Greenland Crisis: U.S. President Donald Trump’s threat of 25% tariffs on EU members over a strategic standoff regarding Greenland has triggered massive “safe-haven” inflows.
- Industrial Deficit: Silver is now a critical “green tech” mineral. Demand for AI data centers, solar photovoltaics, and EV battery management systems currently accounts for 55% of global consumption, while mine supply has remained stagnant for five consecutive years.
- China’s Export Curb: New licensing requirements on silver exports from China, effective January 1, 2026, have effectively choked global supply chains.
- Rupee at Record Lows: With the Indian Rupee sliding toward ₹92 against the dollar, the landed cost of imported silver has surged, creating a “currency multiplier” for domestic prices.
The “Death Zone”: Is a Crash Imminent?
Despite the bullish headlines, technical indicators suggest the market has entered what traders call the “Death Zone.” The Relative Strength Index (RSI) is hovering near 88, indicating extreme overbought conditions rarely seen in commodity history.
Critics warn of a “Speculative Bubble” similar to 1980, when silver crashed from $50 to below $10 in a matter of weeks. Current warning signs include:
- Margin Hikes: The CME and MCX have already implemented aggressive, percentage-based margin increases to curb speculation, a move that historically precedes forced liquidations.
- Substitution Risk: Major solar manufacturers like Longi Green Energy announced this month a shift to silver-free, copper-based cells starting Q2 2026. This “thrifting” could permanently erode the industrial demand floor.
- The “Inception” Trap: Large institutional players are reportedly planting “₹5 lakh targets” to create exit liquidity, leaving retail investors at risk of holding the bag during a sharp mean reversion.
What Retailers Should Watch For
As the market heads toward the Union Budget on February 1, retail participants should monitor three critical “tripwires”:
- The $120 International Resistance: On the global Comex market, $120 per ounce is a massive technical ceiling. A failure to hold this level could trigger a 20-25% “flash crash” in India.
- Gold-Silver Ratio (GSR): The GSR has plummeted to 50, its lowest since 2012. Historically, when silver becomes “too expensive” relative to gold, a sharp correction in silver follows to restore the historical balance.
- Budget Duties: Any reduction in silver import duties in the upcoming Budget could lead to an immediate domestic price correction of 6-10%.
Expert Verdict: Phase Your Entries
“Don’t go all-in at ₹4 lakh,” warns a senior commodity analyst at Motilal Oswal. “The smart move is to harvest partial profits and wait for a 10-15% cooling-off period. Silver is a high-beta asset; it climbs by the stairs but often falls by the elevator.”