The Silver Dual Market Phenomenon: Why Are Silver Prices in Shanghai Far Higher Than in New York?
On Wednesday, January 28, 2026, global financial markets showed significant volatility. Indonesia’s stock index (IHSG) experienced a sharp correction before eventually closing slightly higher. Meanwhile, global equity markets and risk assets such as cryptocurrencies had yet to display any meaningful euphoria. However, amid these conditions, one commodity stood out as the main spotlight: silver.
Investors’ attention was drawn to the striking price disparity between silver prices in two of the world’s main trading hubs, namely New York and Shanghai. This phenomenon is known as a dual market and could have major implications for silver price movements going forward.
Silver Prices: New York vs Shanghai
In today’s trading session, silver prices in New York (COMEX) were recorded at around USD 112–113 per troy ounce. Prices had previously reached higher levels, even approaching USD 118, before undergoing a correction.
In contrast, silver in Shanghai was trading at a much higher level, around USD 130–131 per troy ounce. A price gap of nearly USD 20 raises a major question: how can such a wide disparity occur?
Differences in Market Mechanisms: Paper vs Physical
The core reason behind this dual market phenomenon lies in the trading mechanisms of each exchange. In the United States, silver trading is centered on COMEX (New York), where the majority of transactions are based on futures contracts (paper trading).
Although COMEX holds physical silver reserves in official warehouses, only a small portion of that silver is actually ready for delivery. Currently, total registered inventories are estimated at around 124 million ounces, but only about 30% are considered deliverable.
In contrast, the silver market in Shanghai more accurately reflects physical trading. Prices there represent real conditions between available supply and surging actual demand.
Arbitrage and Pressure on COMEX
When silver prices in Shanghai are significantly higher than those in New York, economic theory suggests that arbitrage opportunities will emerge. Market participants are incentivized to buy silver from the cheaper market (New York) and ship it to the more expensive one (Shanghai).
If this arbitrage-driven demand continues, COMEX will eventually be forced to deliver physical silver to Asia. Over the long term, this situation could pressure available physical inventories and test the resilience of a contract-based trading system.
Short Positions and Alleged Price Suppression
One widely discussed theory in the market suggests that several major U.S. banks hold significant short positions in silver. A rapid surge in silver prices could trigger massive losses and even forced liquidations.
As a result, speculation has emerged that silver prices in Western markets are being restrained through paper trading mechanisms. Whether this is true or not, the market will ultimately test this narrative through the Western market’s ability to meet global physical demand.
Surging Global Demand for Silver
On the other hand, global demand for silver continues to rise structurally. Silver has become a vital material for various strategic sectors, including:
- AI data centers and semiconductor technology
- Solar panels and renewable energy
- Electronics and electric vehicle industries
- National strategic reserves
The United States and European countries have even classified silver as a critical metal in the interest of national security. Many governments around the world are now stockpiling silver as a long-term strategic asset.
In this context, silver is increasingly viewed like oil 40–50 years ago: not merely a commodity, but a foundational pillar of future economic and technological systems.
Where Are Silver Prices Headed Next?
The big question is: how long can Western markets sustain this price gap? If physical demand continues to rise while deliverable inventories become increasingly limited, then prices in New York may eventually adjust upward toward Shanghai levels, not the other way around.
For investors, it is important to understand that volatility remains a real possibility. Silver prices could experience sharp short-term corrections. Ultimately, investment decisions depend on each individual’s readiness to manage and withstand such risks.
Conclusion
The silver dual market phenomenon between New York and Shanghai is not merely a pricing anomaly, but a reflection of major structural shifts in global supply and demand. Silver now sits at the center of the world’s technological, energy, and geopolitical transitions.
Understanding these dynamics is crucial for investors seeking to make more rational, measured decisions aligned with their individual risk profiles.
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