Record Silver Prices Surpass Gold: Here’s Why

Silver prices have reached unprecedented heights, surpassing the $60 mark for the first time in history. This remarkable increase has occurred alongside a notable supply squeeze and expectations of an interest rate cut by the Federal Reserve.

Current Silver Price Trends

As of Tuesday, spot silver prices were hovering around $60.82 per troy ounce on New York’s Commodity Exchange, reflecting a daily increase of nearly 4%. Meanwhile, silver futures experienced an upward surge of more than 4%, approaching $61 and even hitting an intraday high of $61.06.

Contributing Factors to Price Surge

• The likelihood of an interest rate cut by the Federal Reserve has been tagged at 87%.
• This anticipated rate reduction would adjust rates to a range of 3.5% to 3.75%.
• A decrease in interest rates typically bolsters precious metal prices and weakens the U.S. dollar.

The U.S. dollar index has deteriorated by 8.5% throughout this year, including a 0.5% decline in the past month. This persistent decline in the dollar is contributing to the rising appeal of silver and other precious metals.

Significant Developments in Supply

In November, silver was designated as a critical mineral by the U.S. Geological Survey. This classification underscores its significance to the U.S. economy and potential vulnerabilities posed by supply chain disruptions.

• Experts warn that tariffs on silver may be on the horizon due to shrinking global inventories.
• Issues with supply have emerged, particularly in London’s silver trading market, where liquidity issues were reported.

Anant Jatia, Chief Investment Officer at Greenland Investment Management, emphasized the lack of market liquidity. He remarked, “What we are seeing in silver is entirely unprecedented.”

Comparative Performance Against Other Precious Metals

Year-to-date, spot silver has experienced an impressive increase of nearly 109%, far outpacing gold’s 60% rise. Gold has recently stabilized around $4,226 after seeing a peak above $4,381 in October.

Platinum has also shown robust growth, up 86% as demand for electric vehicles continues to drive its value amidst declining global supplies.

The rising silver prices are creating a dynamic shift in the precious metals market, highlighting silver’s growing importance amid changing economic conditions.