Silver prices are on a hot streak and have set off a firestorm in the commodity markets, breaking a 14-year high and leaving investors stunned. As of this writing, the greyish metal was trading at $42.80 per ounce. That is equivalent to a blazing 39% gain since the beginning of the year and a 12% jump in just the last month.
Despite gold’s strong performance, silver’s recent surge has surpassed it. The gold-silver ratio has dropped below 70, affirming that silver has outperformed gold.
Silver price has been on a sharp ascent and is currently trading at 14-year-highs as seen on the chart above. Source: TradingView
Why is silver price rising?
The rise of silver is due to more than just speculation; it is a result of a number of factors, including manufacturing appetite, supply constraints, and macroeconomic tailwinds. First expectations regarding what the Federal Reserve will do to interest rates have made the metal much stronger.
The weak jobs statistics in August—NFP only adding 142,000 jobs—made people bet on big rate cut. The markets were expecting a 50-basis-point decrease at the September FOMC meeting. This dovish shift makes the US dollar weaker and real yields lower, which makes assets that don’t pay interest, like silver, a great way to protect against inflation and a safe place to put your money.
A big part of silver’s rise is because it is a vital component of the global shift to renewable energy. Silver is an important part of solar panels because it conducts electricity better than anything else. The fast growth of solar power installations around the world has led to a “insatiable” demand.
Can XAGUSD Keep Going Up?
The rising supply deficit is one of the strongest reasons why the surge is likely to endure. For several years in a row, the demand for silver has been higher than what mines can produce and what can be recycled. The market had a structural shortfall of more than 148 million ounces in 2024 alone. The fact that silver mining is so different is a big reason for this shortage. Primary silver mines only produce about 30% of the world’s silver. The rest comes from mining for other metals like lead, zinc, and copper.
This means that fluctuations in the price of silver don’t have as big of an effect on the supply, since production decisions are mostly based on the economics of the other metals. Even while prices are going up, the supply is still not growing since ore grades are getting lower and production costs are going up. A growing demand from businesses and a “sticky” supply side have made it so that above-ground inventories are slowly running out.
There are always risks with a rise, but the fundamentals suggest that silver’s current price trend will last for a long time. Many analysts are becoming more positive, and they are raising their price targets for 2025 and 2026. Many think that silver’s function as a “green metal” will only get increasingly important as the world works toward a future with less carbon and more renewable energy.
What Are the Risks?
There are some potential problems ahead. An abrupt change in monetary policy or a US dollar that is stronger than projected could make investors less excited. Also, if silver prices go up too fast, manufacturers could be encouraged to “thrift,” which means they use less silver or look for other materials. This could lower demand.
Silver price is rallying because of the high demand from green energy like solar panels, a structural supply deficit, and its appeal as a safe-haven asset amid global economic uncertainty.
A primary risk to the rally is a potential shift in monetary policy, such as unexpected interest rate hikes, which could reduce silver’s appeal as an investment.
Many analysts believe the rally is sustainable, driven by long-term industrial demand from green technologies and a persistent global supply deficit.
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