Silver tumbles but mining stocks eye restart as Sprott bets on AI bust

Silver has endured a volatile 2026 after being the best-performing commodity in 2024 and 2025. The metal reached a record of more than US$120/oz in late January before quickly falling to around US$70/oz in early February. In the past week, it has hit even lower ground, dropping below US$60/oz. Canadian mining billionaire Eric Sprott, in a Sprott Money interview last week, blamed the sharp January fall on commercial banks holding large short positions. "Oh my god, their losses when silver was US$120 were just incredible," he said. He attributed subsequent weakness to the sustained strength of technology and artificial intelligence stocks, which have drawn investor capital away from precious metals.

Sprott's outlook for a rebound centers on both fundamental macroeconomic shifts and equity market risk. He cited currency debasement and spiralling US debt, aggravated by geopolitical tensions with Iran, as longer-term tailwinds for precious metals. On the near-term catalyst, Sprott expressed concern about warnings from large companies on unsustainable AI spending levels. He noted already-visible weakness in housing, commercial real estate, private equity, and private bonds, and said: "If the general market wants to roll over because AI doesn't make it, I think people will have to look again at the precious metals." Sprott highlighted an asymmetry he views as suppression: when gold and silver were currencies, they traded at a 15-to-1 ratio. With gold at US$4,500, silver should logically trade at US$300 by that historical measure, yet he believes banks have suppressed the market for "all these 50-odd years." His largest personal position is Hycroft Mining, a US-listed Nevada silver developer. When redeploying capital into precious metals, Sprott said silver stocks would be "by far the best" option.

On the ASX, multiple silver developers have been battered alongside spot prices but are advancing toward production. Broken Hill Mines (ASX:BHM), one of Australia's few silver producers, recently restarted mining at the silver-rich Pinnacles deposit and this week announced delivery of the first silver-lead-zinc ore for processing. Pinnacles carries a historical resource of 6 million tonnes at 132 grams per tonne silver, 3.3% lead, and 4.7% zinc; recent drilling has returned grades exceeding 1,500g/t silver equivalent, and an updated resource is due later this year. Boab Metals (ASX:BML) confirmed this week that its Sorby Hills silver-lead project in Western Australia remains on track for first production in the June half of next year; the company is relocating the former DeGrussa copper plant to site and will release updated economics this quarter. Silver Mines (ASX:SVL) is preparing to release a definitive feasibility study for its Bowdens project in New South Wales and recently spent $12.5 million（約20億円） on land and water entitlements adjacent to the site. Maronan Metals (ASX:MMA) attracted a $22 million（約35億円） investment this week from US private equity firm Kinterra Critical Materials & Infrastructure Opportunities Fund II, which took a 19.99% stake; the Maronan project in Queensland holds a resource of 33.1 million tonnes at 108g/t silver and 6% lead, plus copper and gold, and Kinterra's capital will fund 2026 drilling and prefeasibility work. Offshore, Andean Silver (ASX:ASL) updated its Cerro Bayo resource in Chile to 20 million tonnes at 211g/t AgEq for 136 million ounces of AgEq, laying the foundation for feasibility studies. Black Bear Minerals (ASX:BKB) is pursuing a restart at the Shafter silver project in Texas; benefitting from $150 million（約240億円） of existing infrastructure, the company last month appointed Ausenco to lead restart studies and received a non-binding letter of support from Export Finance Australia for potential financing.

Silver's journey in 2026 has been dramatic. After strong performance in 2024 and 2025, the metal surged above US$120/oz in late January before collapsing roughly in half by early February, hitting new lows below US$60/oz in the past week. Eric Sprott, a high-profile mining investor with substantial positions in dozens of mining companies, attributes much of the volatility to commercial bank short positions and the ongoing strength of technology and AI stocks, which have captured investor capital that might otherwise flow into precious metals. His broader thesis ties silver's weakness to the same forces driving equity markets higher: enthusiasm for AI spending and equity valuations rather than macroeconomic fundamentals.

Sprott's bullish case for silver rests on two pillars: medium-term monetary and geopolitical factors, and near-term downside risk in equities. He cites currency debasement, rising US debt, and loss of US allies as reasons precious metals will ultimately re-rate. More immediately, he expresses concern about "large companies sounding the alarm on unsustainable AI spending" and notes existing weakness in housing, commercial real estate, private equity, and private bonds—suggesting the market may be overextended in equities. His stated strategy is to move capital into silver stocks first when he judges the time is right, signaling his conviction that junior and developing silver producers will see outsized gains once fundamentals reassert themselves over sentiment.

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