Former JPMorgan Strategist Predicts Silver Prices to Plunge 50%

Silver prices have reached unprecedented levels, but a prominent market strategist warns of an imminent drop. Marko Kolanovic, the former head of quantitative research at JPMorgan, predicts that silver could plunge by nearly 50% within the next year. His assessment comes as the metal’s prices have surged, driven by a combination of geopolitical tensions, increased central bank purchases, and a wave of investor enthusiasm.

Kolanovic, who departed from JPMorgan in 2024, shared his bearish outlook on social media, stating, “Silver is almost guaranteed to drop ~50% from these levels within a year or so.” He argues that historical trends in commodities suggest that bubbles in this sector are usually short-lived. The current rally has seen silver prices exceed $100 per ounce, while gold has surpassed $5,000 for the first time.

The rise in silver prices has been influenced by various factors, including fears stemming from global conflicts and economic uncertainty. This has led to a significant influx of investors seeking refuge in precious metals. Kolanovic cautions that while the market appears bullish, the potential for a sharp correction looms large.

“Historically, episodes in commodities or various speculative assets point to that,” he explained in his post. He noted that betting against silver carries substantial risks due to the volatility and high market-to-market risks faced by short sellers.

Kolanovic’s insights resonate with those of other market experts. Notably, Peter Brandt, a seasoned futures and commodities trader, has echoed similar concerns. He highlighted that almost two years’ worth of global silver production, amounting to more than 1.5 billion ounces, has been traded on world exchanges. Brandt pointed out that such high trading volumes often precede sharp market corrections, recalling a similar situation on April 25, 2011, just before a significant market peak.

Kolanovic elaborated on the nature of commodity bubbles, emphasizing that they tend to burst more dramatically than speculative assets like non-fungible tokens (NFTs). He stated, “Unlike purely fictitious assets, bubbles in commodities can’t last long—industry demand dries up, supply, such as recycling, increases, and new production is hedged.”

As the market stands, the future of silver remains uncertain. With prices having soared recently, the warnings from Kolanovic and Brandt serve as a reminder for investors to exercise caution. The coming months will be crucial in determining whether the current rally is sustainable or if a significant correction is indeed on the horizon.