Société Générale’s quantitative model is signalling "bubble conditions" in the silver market, but the bank’s analysts are less certain the rally is driven only by speculation.

Silver fell sharply yesterday (Monday) after margin requirements were raised. The move marked its largest single-day percentage drop since early February 2021. Prices recovered today and remain up about 153% this year.

Silver Rebounds Amid Mixed Global Markets

Société Générale’s commodities research team, led by Mike Haigh, said the rally looks less extreme when viewed on a logarithmic scale rather than a standard linear chart.

From that perspective, the move reflects “the same compounding story” seen in silver over the past 25 years.

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Market conditions were mixed on Tuesday. European equities opened slightly higher. US futures traded lower. Silver rebounded and recovered part of the previous session’s losses.

Rebound Continues Despite Bubble Framework Warning

Kathleen Brooks, research director at XTB, said silver was “up more than 2.5%” on the day. She said that “supply concerns limit the downside for the precious metal.”

Brooks added that the price had “clawed back some of Monday’s losses” as tight physical supply supported the market.

Despite the rebound, Société Générale said this year still stands out. Using a log-periodic power law framework that flagged earlier bubbles in 2010 and 2020, the bank said the current move also fits its definition of a bubble.

In that model, prices accelerate rapidly toward a critical point. However, Haigh warned against relying only on quantitative signals, saying structural changes linked to de-dollarization and geopolitical risks are factors “a model cannot capture.”

China Export Curbs Threaten Silver Supply

The bank also pointed to rising supply-side pressures. China plans to impose export restrictions from January 1. The country accounts for 60% to 70% of global refined silver supply. Société Générale estimates exports could fall by 30%. This could deepen an existing global deficit of about 200 to 230 million ounces.

Possible regulatory action in the United States could add further strain. If silver is classified as a national security concern, market tightness could increase. Physical silver is already trading at premiums of 10% to 15% in several major markets.